INSTITUTIONS AND ECONOMICS

What do we mean by institutions? In everyday speaking, institutions mean all sorts of public and private organizations. Banks, corporations, and universities are all institutions. However, institutional development economics is mainly dealing with government institutions. This means not only ministries or departments where government policy and decisions are made. Government institutions also include the courts and the legal system.

An idea that comes out of institutional economics, though, is that institutions are not limited to formal organizations. According to one source, "an institution is defined as the set of formal and informal rules which constrain and govern the interaction of agents subject to that institution" (Harriss, Hunter, and Lewis, 1995, pp. 71-72). So, institutions also s

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robably have to bribe the policeman anyway. It might seem that this would not really matter so much. Businesses do get created in these countries, even if they don't have all the legal permits they are supposed to have gotten. However, this limits how much a business can grow. You can not go to the bank and take out a loan for a business, if it is not legal and "officially" does not exist. Even if the banker did not really care, how could you show the banker that you owned the business. The result is that the only way for these small businesses to get capital is for the owner to borrow the money from family members or friends. However, this way of getting capital is very limited. The family members and friends have the same problem that the business owner has. They may have capital such as houses, or businesses of their own. However, they often do not have any legal record to show that they have capital assets, even if they are not technically illegal. So, they can not offer them as collateral for a loan. All they can lend is the small amount of cash they have on hand. The result is that small businesses can not grow, because they do not have practical access to capital. The capital is there, but it can not be pu
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Some common words found in the essay are:
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Approximate Word count = 2537
Approximate Pages = 10 (250 words per page)

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