Political Economy of Institutions

Key information

Start date
End date
Term 1
Module code
FHEQ Level
Department of Economics

Module overview

This course introduces students to the economics of institutions and the role of political economy in understanding institutional performance in developing countries. This covers the growing interest and literature on governance, on the role of corruption and rent-seeking, the transition to capitalism and the institutions appropriate to that transition, the role of property rights and property right stability during this transition, the role of the state and of different strategies of catching up, the role of democracy and of authoritarianism in economic transitions.
The course will deal with both the “new institutional” approaches to these questions and the mainstream policy agenda, as well as introducing students to alternative approaches based on a comparative historical analysis and the policy implications of these “political economy” approaches to the capitalist transition. Students pursuing a degree external to the Department of Economics should contact the convenor for approval to take this module.

Objectives and learning outcomes of the module


On successful completion of the course, students will be able to:

  • Relate how institutional performance in developing countries is influenced by the economics of institutions and the role of political economy.
  • Discuss the transition to capitalism and identify institutions appropriate to that transition.
  • Summarise new institutional approaches in contrast to mainstream policy agendas.


Method of assessment

AS1 - 30% / EXAM - 70%

Suggested reading

Background Reading
  • Khan, M and Jomo K.S. eds. Rents, Rent-Seeking and Economic Development. Cambridge: Cambridge University Press, 2000. Introduction, Chapters 1 & 2.
  • Hariss, J., Hunter, J. and Lewis, C.M., (eds), The New Institutional Economics and Third World Development , London: Routledge, 1995.
  • North, D., Institutions, Institutional Change and Economic Performance , Cambridge: Cambridge University Press, 1990
  • Khan, M. State Failure in Developing Countries and Strategies of Institutional Reform , in Tungodden, Bertil, Nicholas Stern and Ivar Kolstad (eds) Annual World Bank Conference on Development Economics Europe: Toward Pro-Poor Policies: Aid Institutions and Globalization , Oxford: Oxford University Press and World Bank 2004.


Important notice regarding changes to programmes and modules