TY  - JOUR
AU  - Rodrik,Dani
TI  - Second-Best Institutions
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14050
PY  - 2008
Y2  - June 2008
UR  - http://www.nber.org/papers/w14050
L1  - http://www.nber.org/papers/w14050.pdf
N1  - Author contact info:
Dani Rodrik
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9454
Fax: 617/496-5747
E-Mail: dani_rodrik@harvard.edu
AB  - 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.
ER  -