A Theory of Discontinuous Change

Date: Mar, 2008
ODID Working Paper No. 164
Author(s): Ashok Chakravarti

Neo-classical theory argues that sustained economic growth depends on an adequacy of resources - mainly physical and human capital. The empirical evidence on the sources of growth however, does not substantiate this view. Rather, the vast majority of studies show that institutional variables, in particular those associated with good economic and political governance are central to economic performance and developmental outcomes. In Western Europe the necessary favourable institutions emerged through a gradual evolutionary process. However, a study of institutional change during the past 100 years or so in the non-western world indicates that this is a discontinuous process, with the occurrence of favourable developments requiring the intervention of human agency, either through an enlightened domestic group or an external force. Using this model of institutional change, since 2005 a program of externally supported deep institutional interventions has been undertaken in Southern Sudan, an area which has suffered 50 years of civil war. This program is described and analyzed.

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