Institutions Hub

Welcome to the Institutions Hub

As part of the CLIO-INFRA, the Research Institute for History and Culture of Utrecht University has taken the initiative to set up this website on institutions related data. The aim is to extend the data availability during the coming years in order to create a comprehensive dataset on institutions with annual and historical data and a global coverage. The Institutions hub provides links to exiting online data sources on different aspects of institutions and hosts new datasets.

What are institutions?

To put it simply, institutions are the rules of the game. They consist of structures and mechanisms that govern the behavior of individuals within a human community. They include customs, taboos, written or unwritten laws as well as markets, family or even culture and languages.

Why do they matter?

During the last 50 years of economics and historical economics, social scientists have examined a wide range of candidates to explain persistent income differences among countries. Growth and development theories of the 1950s and 60s were mostly concerned about capital accumulation and saw economic take-off as part of a universal development process that is accessible to anyone. The failure of many developing countries (especially in Sub-Saharan Africa) forced a change in paradigms from the 1970s. New research focused on alternative forms of capital like human or social capital (Robert Lucas), innovations and patents (Philippe Aghion and Peter Howitt, Paul M. Romer), while others, like Ronald Coase, Douglass North, Olivier Williamson, Elinor Ostrom found institutions to be major factor behind a society’s ability to efficiently use its resources. Their view has by now become part of the mainstream as a growing number of empirical studies confirmed their hypothesis. Institutional economics is a field of economics where incorporating historical horizon and knowledge has led to fruitful results, just to mention a few of these: the widely known theory of the reversal of fortune by Acemoglu, Johnson and Robinson, the theory about China’s lagging behind Europe by David Landes and Avner Greif’s work on medieval merchant institutions.

Below are a few examples of contemporary attempts to measure institutions.


Economic Freedom of the World 1970, 1985, 2009

The Economic Freedom of the World index attempts to measure the degree to which the policies and institutions of countries support economic freedom. The index takes the essentials of economic freedom being personal choice, voluntary exchange, freedom to compete and secure private property rights. 42 variables are then used to construct the summary index, measuring the degree of economic freedom in five broad categories; 1) size of government; 2) legal structure and security of property rights; 3) access to sound money; 4) freedom to trade internationally; and 5) regulation of credit, labour and business (Gwartney, Lawson and Norton, 2008).

Note: the value of the index is between 0 and 10, higher value corresponds to more economic freedom

1970


1985

2009


 

Political Stability and Absence of Violence/Terrorism, 2000

 

Note: the political stability variable is created so that is follows a standard normal distribution, with mean zero, standard deviation of one, and running from approximately -2.5 to 2.5, with higher values corresponding to better governance

Source: World Governance Indicators

Scattergram of per capita GDP and political stability in 2000