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’ , 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.Continue reading
As external development agents, we cannot create impacts with all the qualities we want them to have: sustainable, inclusive, gender-equal, etc. We can only work with and through the system, so these qualities become an inherent part of how the system does things. Let’s say we call a system ‘healthy’ when it is creating these qualities we would like to see (although I’m not sure ‘healthy’ is the best term, it sounds a bit judgemental, but it has been used by others before). The question is how does a healthy system look like that is more likely to deliver impacts with the desired qualities? And how can we improve the health of a system?
There are various bodies of knowledge, all rooted in systems and complexity thinking, that give us some ideas to help answer this question. They all answer them from a different perspective and some are clearly limited in scope while others claim universality. I want to introduce three sets of principles or maybe sets of favourable behaviours here. Continue reading