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Economic development and institutions (EDI): cutting-edge research to shape policy reform

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This multi-year research programme will provide a body of evidence and insights into institutional changes and their impact on economic development.

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Mark Henstridge

Mark Henstridge Rob Morris Yasmina Yusuf Zoë Scott A0014 EDI

While the importance of institutions in shaping trajectories of economic development is broadly acknowledged, research to date has neglected the impact of institutional change and the policy implications of this. We are working with a consortium of partners – including the Paris School of Economics and the Centre de Recherche en Économie de Développement (CRED) at the University of Namur – combining world-leading academic researchers with experienced policy influencers to address these evidence gaps.

Our work is divided into four research activities: (i) path-finding papers that take stock of existing evidence on specific issues; (ii) a new institutional diagnostic that builds on Hausmann, Rodrik, and Velasco’s growth diagnostic; (iii) coordinated Randomised Control Trials (RCTs) that seek to provide robust evidence on the effectiveness of different levers for change; and (iv) in-depth case studies.

Our findings will provide the basis for a better understanding of what really drives economic development, providing valuable evidence-based insights to support effective policymaking.

Challenges

Over recent years, academic research has driven major advances in our understanding of the relationship between institutions and economic development. However, the existing literature suffers from a number of limitations.

Firstly, by focusing on the question of which institutions matter for growth rather than how institutions change over time, the current research agenda often fails to answer the practical questions that policymakers face. Academic research needs to start from the challenges imposed on decision makers by current institutional constraints rather than simply flagging historically-determined barriers to growth. At the other end of the spectrum, action-oriented research has frequently ignored the question of institutions altogether, and as a result addressed marginal, rather than transformational, changes.

Further, conceptual vagueness has made it difficult to build a body of evidence that synthesises findings. Finally, the lack of integration between different research disciplines has resulted in the emergence of fragmented knowledge, duplications, and limited triangulation of results.

This project has been established to address these knowledge gaps, help shift the research angle towards the impact of institutional changes and provide a detailed conceptual framework to approach further analysis in the area.

Our approach

Our team of experts is supporting the delivery of a five year research programme that brings together a world-leading group of academics, under the intellectual leadership of François Bourguignon (Paris School of Economics) and Jean-Philippe Platteau (CRED).

Ensuring the policy value of findings is a key focus of the programme. We will work closely with policymakers at every stage – from framing the research questions through to dissemination of final outputs. We will also coordinate with existing research initiatives – such as WIDER’s ‘Gender and Development’ research programme – to help maximise the impact of our collective findings.

Our approach is guided by the principle of ‘pluridisciplinarity’: we will select disciplinary approaches that are relevant to each research question, rather than applying a standard set of disciplinary lenses to every problem. Alongside economists, our research will benefit from the input of political scientists, legal scholars and historians, ensuring more comprehensive analysis and greater policy relevance.

Our research programme will produce four deliverables:

  • Path-finding papers that take stock of existing evidence on specific issues and identifying gaps for further investigation;
  • A new institutional diagnostic that builds on Hausmann, Rodrik, and Velasco’s growth diagnostic;
  • Coordinated Randomised Control Trials (RCTs) that seek to provide robust evidence on the effectiveness of different levers for institutional change; and
  • Case studies that examine the interactions between institutions.

Outcomes

The research conducted by our team will help promote a deeper understanding of the key processes that influence economic growth across the globe – and the role of institutional change in shaping these processes.

By focusing on the practical questions that matter to policymakers, our work will help support evidence-based decision making that can underpin real change at both the national and international level.