Economic Welfare, International Business and Global Institutional Change

'The book ...throws lights on the relationship between various institutions, in particular between the market and the state. It is strongly argued that the establishment of law and order, and an effective guarantee of property rights, must precede the introduction of the price system; if done in reverse order, failure and injustice result. Without a doubt, readers, whatever their own particular standpoint, will be able to derive considerable benefit from this collection.' - From the preface by Bruno Frey, University of Zurich, Switzerland and Netherlands Institute for Advanced Studies Global economic progress in the twentieth century, while generally encouraging, was neither continuous nor uniform. With the exception of some Asian nations, countries that were more developed at the beginning of the twentieth century still rank amongst the wealthiest nations, while countries that were poorer, still lag behind. The distinguished authors in this volume address the fundamental causes for such heterogeneous international experiences, placing particular emphasis on the role of institutions. They demonstrate how the study of economic development is increasingly linked to the development of institutions, which allow for more complex exchanges to occur in markets and societies. Institutions can be understood as rules or constraints that channel individuals' actions in specific directions, and can be formal or informal depending on their genesis. The book highlights the connection between institutions and economic welfare by examining countries at different stages of development. Although the authors' study material effects, they also look at individual well-being which is more strongly influenced by the non-material products of institutions such as opportunity, freedom and relationships. They move on to highlight the role of institutions in global business, in terms of innovation, entrepreneurship and foreign direct investment. In the concluding chapters they focus on the actual process of transition from one institutional framework to another. Amongst other examples, they examine reforms to international financial institutions and constitutional adjustments in transition countries. This varied yet highly topical book will be invaluable to institutional and public-choice economists, students and researchers of the theory and policy of international business, and social and political scientists interested in the role and evolution of institutions.