Summary: An analytical framework for explaining the ways in which institutions and institutional change affect the performance of economies is developed in this analysis of economic structures. The author offers a "theoretical structure for the study of how institutions and organizations affect economic performance and shape economic history.In his view, institutions are constraints devised by humans to serve as rules of the game in social, political, and economic inte ...show moreractions and to reduce uncertainty.These institutions, both formal and informal, either prohibit orencourage certain activities and provide opportunity for the emergence of organizations, defined as groups of individuals bound together to achieve common objectives. In turn, organizations (working within opportunities provided by institutions) have the capacity to alter institutional structure. Together with technology, institutions affect the cost of transaction and transformation of political and economic organizations. Divergent paths of development can be explained by the emergence of efficient or inefficient institutional and organizational structures which contribute to either successful development or persistent economic failure."(Choice)
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