Institutions are the rules of the game in a society that guide or shape human interactions in the society. Not only formal institutions like legal system, property rights, contract enforcement mechanism but also the informal institutions like code of conduct, customs and traditions play a vital role in determining whether an economy evolves or stagnates or how fast the economy evolves.
I stumbled upon this video in which Nobel Laureate Economist Douglass C. North and Prof. Timur Kuran, professor of Economics and Political Science at Duke University talk about the evolution of institutions, the role institutions played in stagnation of Islamic societies after 12th century, how lack of feedback mechanism towards institutions in Soviet society led to its downfall and how internet and the free flow of information it has brought, is transforming closed societies of Middle East and elsewhere into more open and thereby, more prosperous societies.
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