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Institutions and Development Processes: the Role of Strategic Complementarities. A Review of main Literature

Senatore, Luigi (2006): Institutions and Development Processes: the Role of Strategic Complementarities. A Review of main Literature.

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This survey is an overview on the literature that investigates the relationship between the institutions and development processes. The attention it has been focus, in sequence, on the ways in which it has been performed the empirical and the theoretical analysis of the relationship between the economic development and the role of institutions. As it is clear the first difficulty is the definition of what an institution is, so the survey gives dig relevance to the different manners to conceptualize the notion of institution. Another difficulty arises from the perplexity about how the efficiency of the institutions can be evaluated. This problem is related to the necessity to close off in the right way the weight and the influence of the institutions respect to the other variables on the economic development. The analysis of the complementarities involved in the development processes, can be a useful way to explain some kinds of relationship between institutions and development processes especially in the short run. The use of more elaborated indices to measure the in�uence of institutions in the economic system and of the coentegration models can improve the reliability of the empirical analysis. In the same manner the supermodularity and the supermodular games can efficiently explain the mechanism of the strategic complementarity between di¤erent kinds of institution generating virtuous development processes from a theoretical point of view. Necessarily, in the future, both the analysis must be integrated but, for the time being, the state of art in the two approaches represent a very good starting point for new outcomes related to the investigation on these type of kind of economic phenomena.

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