Rural institutions within the framework of structural adjustment programmes

Schrieder, G.

Entwicklung + Landlicher Raum 31(1): 21-24

1997


Document Number: 366287
Well functioning institutions can make a relevant contribution to rural development. New Institution Economics (NIE) supplements neoclassical economic theory in suggesting supplementary measures required within the framework of the World Bank's structural adjustment programmes. NIE defines an 'institution' as a commonly accepted set of formal or informal rules or norms which determine coordination among individuals and their incentives towards a common goal. Examples are markets, property rights, tenure systems. While neoclassical theory hypothesizes that privatization of such institutions improves allocative efficiency, NIE suggests that these existing non-anonymous institutions should be used as steering mechanisms to reduce risk and improve information under free market conditions.

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