January, 2011

Institutions First

  • Peter J. Boettke

    Director, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
  • Alexander Fink

    Lecturer, University of Leipzig
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Chang (2011) raises doubts about the effects of institutions on economic development and questions the positive effects of entirely free markets based on secure private property rights. We respond by stressing that institutions structure the incentives underlying individual action, secure private property rights are indispensable for prosperity, institutions have a first-order effect whereas policies only have a second-order effect, successful institutional change comes from within a society, and given the status quo of developing countries first-world institutions are likely not to be available to them.

Read the full article at SSRN.com.

Citation (Chicago Style)

Boettke, Peter J. and Fink, Alexander, Institutions First (January 19, 2011). GMU Working Paper in Economics No. 11-09.