Abstract

This article discusses the institutional endowment explanation of economic development by contrasting what is often referred to as the Washington Consensus view with the emerging heterodox view, associated with the early work of Dani Rodrik. This process or bootstrapping view of development assumes that even in the absence of market distortions, growth requires continuing social learning. The goal therefore is to create institutions that can learn to identify and mitigate different, successive constraints on growth, including of course such constraints as arise from defects in the current organization of the learning institutions themselves. This article aims to contribute to the emerging process agenda by detailing some of the key steps leading to the new view and specifying some organizational features of and open questions regarding the corrigible, learning institutions at its core. Section two marshals the growing body of evidence weighing at once against the endowment view and for the bootstrapping alternative. Section three connects the discussion of learning institutions as it arises from evaluation of the evidence in developing economies to discussion of the rapid diffusion of like organizations in the private and public sectors of the advanced democracies, and shows how related ideas are coming to shape development policy.