The Economics of Belonging: Institutions, Participation, and a Structural Reinterpretation of the Capability Approach

Obregon Diaz, Carlos Federico (2026): The Economics of Belonging: Institutions, Participation, and a Structural Reinterpretation of the Capability Approach.

Abstract

This paper develops the Economics of Belonging as a structural extension of the capability approach. It proposes that capabilities are not primary units of analysis but outcomes of institutional belonging, defined as effective participation within institutional structures.

The analysis integrates institutional economics, social choice theory, mechanism design, and game theory to demonstrate that aggregation from individual states is structurally infeasible under incomplete information and multiple equilibria. A dynamic framework is developed in which belonging drives effective demand and sustained economic growth through middle-class expansion.

The paper contributes to development theory by providing a unified institutional and relational framework linking participation, demand, and long-term growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economics of Belonging; Institutions; Effective Demand; Economic Development; Social Choice; Game Theory; Middle Class
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B4 - Economic Methodology > B41 - Economic Methodology; D - Microeconomics > D0 - General > D02 - Institutions: Design, Formation, Operations, and Impact; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth

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