The Role of Institutions in Economic Development: An Empirical Analysis of State Capacity and Economic Development in a Small Island State in the Pacific

Scott Hook (2011). The Role of Institutions in Economic Development: An Empirical Analysis of State Capacity and Economic Development in a Small Island State in the Pacific PhD Thesis, School of Political Science & Internat'l Studies, The University of Queensland.

       
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Author Scott Hook
Thesis Title The Role of Institutions in Economic Development: An Empirical Analysis of State Capacity and Economic Development in a Small Island State in the Pacific
School, Centre or Institute School of Political Science & Internat'l Studies
Institution The University of Queensland
Publication date 2011-10
Thesis type PhD Thesis
Supervisor Paul Boreham
Stephen Bell
Total pages 269
Total black and white pages 269
Language eng
Subjects 160505 Economic Development Policy
160606 Government and Politics of Asia and the Pacific
160510 Public Policy
140299 Applied Economics not elsewhere classified
Abstract/Summary This thesis reviews the experience of Fiji in the context of the evolution of development thinking in the last 20 years. The rise and decline of the Washington Consensus, the rise of institutional analysis and the new direction in development economics has meant that, in the twenty-first century, there is a different understanding about development. In particular, there is greater need to understand the capacity of states to develop and implement any reform agenda and an acceptance that building on local institutions is more likely to succeed. This thesis argues that the failure of the Pacific reform agendas in the past has been because of a poor understanding of the capabilities of organisations in states and the capacity of the people to implement reform. In particular, there has been little assessment of alternative approaches to policy implementation such as the capacity of local and indigenous institutions to guide the policy development and implementation process more effectively. The importance of state institutional capacity to reform program outcomes has long been underestimated by the designers of policy reform programs. North (1993) suggested that successful economic growth is the story of the evolution of more complex institutions, composed of rules, norms of behaviour and the way they are enforced. These institutions make the level of cooperative relations necessary for businesses and individuals to trade and participate in economic activity with confidence. Thus, without an understanding of the development of institutions and their role in better outcomes, there will be inadequate outcomes and an absence of support for the reform process. Fiji has had several coups that have precipitated three changes in the highest law: the constitution. This presents problems for state institutions and organisations to operate as the changes can lead to different roles and particular movements in power and influence. Changes in constitutions, instability in government and weakening of bureaucratic capacity have made reform more difficult. At the other end of the scale, village communities have changed little and retain many traditional governance structures. External groups can supply alternative institutions but the reality of development is that it is the demand side of governance that holds the potential for a different development path. The LMMA process reflects the reality that local level demand for change is effective for good policy. Thus, a governance and institutional reform strategy focused on promoting links between communities and government to make government more accountable, and supporting the emergence of civil society institutions such as non-government organisations, the media and the private sector to engage proactively with government in shaping the development process is likely to lead to better policy outcomes. The success of any reform, economic or otherwise, will be determined primarily by the political and cultural climate in which it operates: a ‘one-size-fits-all’ reform recipe simply does not exist. This needs to be backed by representative, democratic institutions and driven by political direction. Reform in Fiji may need to be somewhat slower to ensure that the transaction costs do not outweigh the benefits expected from reform. Charting such a course requires better skills and understanding by donor nations, non-government organisations and international financial institutions. The research reported in this thesis reinforces the view that one of the key reasons some groups block change or make it difficult is because it typically erodes the potential for power to be secured and utilised. These responses can also facilitate the entry of competitors, potentially displacing incumbents or requiring new power sharing arrangements. It is towards a better understanding of such factors that this thesis contributes.
Keyword Pacific Island countries
Institutions
capacity building
capability
Additional Notes None.

 
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