Institutional development

About this guide

Literature has not yet settled on a standard definition of 'institution', and the term is often used to satisfy a range of different meanings. This guide defines institutions as 'formal rules, informal constraints - norms of behaviour, conventions, and self imposed codes of conduct - and their enforcement characteristics.' (North, 1991)

A considerable amount of development activity is concerned with helping organisations to improve their performance, but organisations are subject to laws, policies, cultures and norms. To distinguish these formal and informal 'institutions' from organisations, institutions can be viewed as the 'rules of the game' and organisations the 'players.'

Institutions that are created and maintained by rich and powerful elites can discriminate against the poor, excluding them from the benefits of economic growth and social development. Improving institutions is therefore viewed as an important step in supporting structural poverty reduction and promoting sustainable development.

This topic guide was prepared by Anna Orrnert, and updated by Seema Khan in December 2008 and September 2009. The GSDRC appreciates the contribution of George Larbi (International Development Department, University of Birmingham). Comments, questions or documents for considerations should be sent to Sarah O'Connor.

Latest additions

The following document summaries were added in September 2009:

• Luiz, J. M., 2009, ‘Institutions and Economic Performance: Implications for African Development’, Journal of International Development, Volume 21, Issue 1, pp. 58-75
• Bourdeaux, K., Aligica, D., 2008, ‘Paths to Property: Approaches to Institutional Change in International Development’, Mercatus Center, George Mason University
  Faguet, J-P. and Ali, Z., 2009, ‘Making Reform Work: Institutions, Dispositions and the Improving Health of Bangladesh’, World Development, Volume 37, Issue 1, pp. 208-218
• Shirley, M., 2008, ‘The Role of Scholars and Scholarship in Economic Development’, in ‘Institutions and Development: Advances in New Institutional Analysis’, Edward Elgar Publishing, Cheltenham, UK (Document summary available shortly)
• Khwaja, M. I. and Khan, S., 2009, ‘Reforming Institutions: Where to Begin?’, Pakistan Institute of Development Economics, Islamabad
• Adler, D. Sage, C. and Woolcock, M., 2009, ‘Interim Institutions and the Development Process: Opening Spaces for Reform in Cambodia and Indonesia’, Brooks World Poverty Institute Working Paper 86, Manchester

The following document summaries were added in December 2008:

• Leftwich, A. 2007, ‘The Political Approach to Institutional Formation, Maintenance and Change: a Literature Review Essay’, Research Consortium on Improving Institutions for Pro-Poor Growth, Manchester
• Chakravarti, A., 2008, ‘A Theory of Discontinuous Change’, Queen Elizabeth House, Oxford
• Easterly, W., 2006, ‘Social Cohesion, Institutions and Growth’, Center for Global Development
• Voors, M. J. and Bulte, E. H., 2008, ‘Unbundling Institutions at the Local Level: Conflict, Institutions and Income in Burundi’, Households in Conflict Network, IDS, Brighton
• Hyden, G., 2008, ‘Institutions, Power and Policy Outcomes in Africa’, Overseas Development Institute, London
• Dani, A. A. and Dehaan, A., 2008, ‘Social Policy in a Development Context: Social Inequalities and Inclusive Institutions’, in Dehaan, A. and Dani, A. A. (eds.), ‘Inclusive States: Social Policy and Structural Inequalities’, World Bank, pp. 1-37

New additions