International Food Policy Research Institute
sustainable solutions for ending hunger and poverty
Professor Bromley will address issues raised in his paper coauthored with Yang Yao of the China Center for Economic Research, Peking University.
Institutions matter for development, and therefore coherent institutional change is the starting point for bringing about new economic and social outcomes. In this paper, Daniel W. Bromley and Yang Yao develop a model of institutional change that pays explicit attention to exogenous institutional change initiated by authoritative agents (the parliament, the executive, the courts, for example), and the institutional response induced within firms and households.
The model is applied to China, where the Central Committee of the Chinese Communist Party (the authoritative agent) embarked on a series of permissive institutional reforms that in turn induced a number of profound responses within firms and households. The authors highlight the recursive nature of institutional change by calling attention to the repeated incidences of feedback and learning that take place as both agents and individuals engage in this game.
The outcomes of institutional change in China since 1978 are well known. A theory of how that process got started and how it has evolved is presented.