Douglass Cecil North


  • Abstract

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Keywords: Change; Cultural System; Development; Economic Performance; Institutions.

The article investigates the role of the State in the development of economies to understand why historically some systems advanced and others retreated. North described Institutions as "the humanly devised constraints" that structure human interaction. He believed that a major part of the social behavior in the economic performance was influenced by the institutional framework, and comparing different economic performances he finally highlighted the fundamental responsibility of the State. In fact, through their institutions, States guarantee property rights and the enforcement of contracts, influencing the structure of the transaction costs and consequently the behavior (and success) of economic organizations. This model was then applied to several historical experiences of the western world in order to compare their different process of development. North's innovative conclusion underlined the relevance of an efficient institutional framework for the growth of the economic system.

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