Definition of under-performance.
There is no doubt that institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction. In consequence, they structure incentives in human exchange, whether political, social, economic or military. Institutional change shapes the way societies evolve through time and hence is the key to understanding historical change.
That institution affects the performance of economies is hardly controversial. That the differential of under-performance of the Muslim states, economies over time is fundamentally influenced by the way institutions evolve is also not controversial. Yet neither current economic theory nor biometric history shows many signs of appreciating the role of institutions in economic performance because there as yet has been no analytical framework to integrate institutional analysis into economics and economic history.
The role of institutions.
The factors contributing to economic growth in developed and developing states is a topic that is hotly debated amongst economists. One thing that is for certain is that the strength and functionality of a state’s institutions plays a vital role in the Muslim states whether or not the policies set forth by the leaders of the state will be successful. There seems to be no other explanation for the lack of development in certain countries in which good economic policy reforms have been applied, other than they did not possess the quality institutions necessary to support such reform. Before attempting to analyze the relationship between quality institutions and economic development I feel it is important to address the issue of defining what it is that constitutes an institution that is invaluable to economic growth. It would be impossible to make a logical case for the necessity of strong institutions in a developing economy if there was not first a definition set forth defining what that is. It is difficult to argue the purpose of something if there is no definition of what that something is. The problem that arises when attempting to come up with a universal definition for institutions is the variety of ways that institutions can function. A form of institution that functions a certain way in one country may not necessarily function the same in another. It is therefore extremely difficult to establish a set of institutions that are necessary for the development of an economy when different countries are run in ways that dictate the need for different institutions to be emphasized and to serve varying functions. Because of the fact that different institutions serve different functions in different countries, it is my conclusion that there can be no set standard that defines what institutions are necessary for the development of a states’ economy.
Reasons for this negative trends.
Despite the disparity in the levels of development that have occurred, there is evidence to suggest that some countries have experienced an accelerated rate of catch up. It is my belief that this rapid acceleration of some formerly underdeveloped states is a result of them applying policy reforms and strengthening institutions that they have seen to be successful in already developed states. It has taken decades, even centuries, for today’s developed states to establish the policies and institutions they have in place today.
Exceptions from this general trend and their recipe for relative success.
After the fall of the U.S.S.R., the communist leaders were removed from office and new leaders assumed control. This caused the Islamic states that were experiencing this transition to walking a fine line of reducing autonomy while still retaining enough power to implement and enforce the new policies. One of the most critical tasks of the new governments was to establish a rule of Islamic law.
The role of political Islam or Islamisation campaigns.
This involved creating certain critical institutions: revising or rewriting the constitution to establish civil rights and freedoms, creating a separation of powers between branches of government, revamping judicial bodies and high courts, generating electoral laws and regulating political parties, and doing all of this in such a way as to generate support among the majority of actors in society.
These Islamic countries looked to the most developed states (United States, Western Europe) as a guide for their own political system. A critical part of the transition towards becoming a liberal democracy was for states to alter or replace any existing constitution that had so long been ignored by the communist rulers. A good constitution is a cornerstone upon which the laws of a country are built. The new constitutions had to be designed in a way so as to ensure the freedoms and liberties of the people of that country as well as to keep the political rulers in check. This establishment of Islamic laws that were intended to actually last and be adhered to require the strengthening of the judicial system. Under communist rule, the laws of a country could simply be changed when they conflicted with the will of those who governed, thus rendering the judicial system practically non-existent. Strengthening the judicial system was necessary in order to uphold and interpret the laws of the new constitution.
These Islamic institutions all had to be implemented in such a way as to generate support among the majority of actors in their society. However, not all of the post-communist states have fared the same. Some states have managed to develop more rapidly and successfully than others and some have become “more free” than others. One reason behind the varying amounts of success experienced by post-communist countries in their attempts to become democratized is their geographical location. The farther Islamic states are from Western-Europe, the less strong the pro-democratic pull seems to be. Another reason for this is that this was the first time in history that Islamic states had attempted to make the transition out of communism and into capitalism. This meant that there was no model in existence for the post-communist countries to follow. They simply saw the institutions, and functions thereof, which had proven successful in the economic development of previously established liberal democracies and did their best to replicate them. Those post-communist countries that have shown the greatest improvement in their levels of political rights and civil liberties since the fall of the Soviet Union stand as evidence that strong institutions are at the core of successful economic development.
1- Institutions institutional change and economic performance by Douglass C. North.
2- Videos, Dr. Ebrahim Afsah, 1.7 , 9.4.
Here comes my course certificate‘s link.