@techreport{NBERw14050,
 title = "Second-Best Institutions",
 author = "Dani Rodrik",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "14050",
 year = "2008",
 month = "June",
 URL = "http://www.nber.org/papers/w14050",
 abstract = {The focus of policy reform in developing countries has moved from getting prices right to getting institutions right, and accordingly countries are increasingly being advised to move towards "best-practice" institutions.  This paper argues that appropriate institutions for developing countries are instead "second-best" institutions -- those that take into account context-specific market and government failures that cannot be removed in short order.  Such institutions will often diverge greatly from best practice.  The argument is illustrated using examples from four areas: contract enforcement, entrepreneurship, trade openness, and macroeconomic stability.},
}