rural institutions and development unit i (1)

8/3/2019 Rural Institutions and Development Unit I (1)

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Nandini Sen

KSRM, 2011

Rural Institutions and Development


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Various Meanings/ Usages ofInstitutions

The rules of the game in a society [or] the humanlydevised constraints that shape human interaction

( Douglas North, 1990)

Institutions prohibit, permit or require specific type of action ie political, economic orsocial, that are important for reducing transaction costs, for improving informationflows and for defining and enforcing property rights.

Institutions include organisational entities, proceduresand regulatory frameworks.( Williamson, 2000)

Broad definition- linking various different measures ofinstitutional quality to development outcomes


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Meaning of Institutions Institutions refer to complex of norms and

behaviours that persist over time by serving asocially valued purpose ( Uphoff , 1986: 8-9).

Organisations are structures of recognized andaccepted roles ( Uphoff , 1986: 8-9).

Institutions and Organisations- Whats the

Relationship? Eg: government, bank , court, money, taxation,

law.


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Relevance of InstitutionsEconomic Impact

Income, Growth, Investment and Per Capita Income (Rodrik et.al 2002)

Institutions that protect rights are crucial to economic growth andinvestment ( Knack and Keefer, 1995)

Social Impact

Increase Human Capital Formation, Agent voice/ Social Capitaland Income ( Campos and Nugent, 1998, Aron 2000

Political /Governance Impact

Good institutions lower political instability, risk of wars andgenocides . (Aron ,2000, Gaviria et al, 2000, Easterly 2001)


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Classification of Rural Institutions Degree of Formality: Formal and Informal

Who Initiated the Institution? Sponsored and

Endogeneous

Levels of Hierarchy: Level I, II, III, IV

Areas of Analysis: Economic, Political, LawSocial, Environmental


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CLASSIFICATION OFINSTITUTIONS

INSTITUTIONS

FORMALITY HIERARCHY AREAS

LEVEL I

LEVEL II

LEVEL III

LEVEL IV

FORMAL

INFORMAL

ECONOMIC

POLITICAL

LAW

SOCIAL


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10 Levels of Decision Making and Action

Level/ Actor State Corporates Civil Society InternationalAgencies

International

National

RegionalDistrict level

Sub- DistrictLevel

Locality

Community

Group

Household

Individual


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Debates and TensionsCross Sectional Studies

Framework for Analysing Impact of Institutionson Developmental Outcomes

Importance of institutions vis a vis trade and geography.Which is more important in the short term and long term?

Channels of influence:

Are growth and development an outcome of goodinstitutions or are formal , modern , effective institutionsoutcome of a prospering economy?

Meaning of institutions, causality, interpretation of findings

Have rules to be formally written down or can stronginformal codes of conduct be sufficient? Is moreparticipation of civil society in political process alwaysdesirable?


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Country Case Studies Informal Local Institutions are key to all three areas

NRM, Market Development, Conflict Management

NRM- Prevent degradation of common resources by

defining access to / rights of use

Promote market development by lowering transactioncosts and risks but may lead to social exclusion

Are Formal better able than Informal institutions toprovide justice to poor and powerless? ( Khadiagala,2001, Mc Millan and Woodruff 2001)


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Local Institutions : Essential Elements

Face to face interaction- People within know each other

or have a chance to know each other.

Common Interest-Relationships where common interestsexist and are understood, which promote self- help.

Collective Action-People engage in collective action andmutual assistance for mobilising and managing resourceson their own.

Consensual decision making-Decisions and activitiesare arrived at through discussions and mutualunderstanding


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Why are Local Institutions Important for RuralDevelopment?

Framework for Analysing Impact of Institutionson Developmental Outcomes

Decentralized mechanism for undertaking developmentthatdriven by peoplethemselves. This inculcates a sense of sharedownership amongst the local community for the process ofdevelopment.

Context specific development that is driven by local vision and

strategy.

Local institutions provide a platform for co-ordinating ruraldevelopment effortsundertaken in different sectors. (Vertical andhorizontal co-ordination)

Local institutions assist in creation and effective utilization ofsocial capitalfor community development. Strengthening thebonds of trust and communication, and the norms of groupfunctioning for a common goal.


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Range of Local Institutions Localities, Communities, Groups

Public Sector, Participatory Sector, Private Sector

Citizen/ subject; member; client/ customer


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Issues For the Future How to create modern, efficient, participatory

institutions?

How to link formal and informal institutions?

How to judge whether an institution is functioningeffectively?


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Local SettingGeography

Exogenous InstitutionsCharacteristics of the

Good

Endogenous

Institutions

Area of InteractionIncentives/

Disencentives

Behaviour of Actors

Distribution of PowerTransaction Costs

Outcomes ofInstitutional

Arrangements

Degree ofenforcement ofproperty rights

Strength of the stockof social capital

Extent of politicalinstability and

corruption

FinalOutcome

Growth and

Investment

EXOGENOUS

Outcomes ofInstitutional

Arrangements

Degree ofenforcement ofproperty rights

Strength of thestock of social

capital

Extent of politicalinstability and

corruption

ENDOGENOUS Framework for Analysing Impact of Institutions onDevelopmental Outcomes, Jutting 2003

rural institutions and development unit i (1)

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