Tag Archives: patterns

change

How institutions change – and why nations fail

In my last post, I wrote about why institutions matter for economic development. I also highlighted that the theories of institutional economics and of complex systems actually come to very similar conclusions about how institutional structures, underpinned by basic beliefs or paradigms of how the world works, shape relatively persistent patterns of behaviour, which can be both beneficial for, or holding back development. In this post, I want to share a model that describes the dynamics of institutional change. It is largely based on Douglas North’s book ‘Understanding the Process of Economic Change’ [1], but uses the systems iceberg as a canvas. If you haven’t read my last post, I recommend you head over there and read that one first.

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Is it systemic change or is it not? These two concepts help answer the question.

Quite a few market systems development projects I have come across in my practice have a goal in their logframe to achieve systemic change. In most cases this is spelled out around some or other market function that is supposed to be improved (e.g. improved access of poor farmers to seed). But in some cases, the log frame simply asks for a number of unspecified systemic changes to be achieved. Both cases are interesting in their own right, but particularly in the latter case evaluators need to be able to answer the question “is it systemic change or is it not?”. There has not been a clear way to answer the question.

In this post, I want to introduce two concepts that can be helpful to answer this question. Firstly, the idea of ‘depth of change’ taken from the systems thinking literature, which helps us understand how fundamental a change is with regards to a system’s architecture. Secondly, the idea of resilience and the question if development interventions build the resilience of the market system or economy.  Continue reading