How Institutions Change Over Time

In this paper the author examines the forces that lead institutions to persist and change. He argues that the equilibrium institutions of society are the outcome of a political process which may be highly persistent and path dependent. This explains why patterns of underdevelopment are so persistent and policy advice is often so fruitless. Institutional change will arise if there is a real change in the political equilibrium – in the distribution of power in society, for example towards those with a vested interest in socially more desirable institutions. Change can also happen when the parameters of the system alter in a way which leads the interests of those in power to change. The author illustrates the nature of persistence and change by examples from the history of the United States, Bolivia, and Africa.