Institutional Change: Evidence from Some Emerging Market Economies

The difference in the functions of (economic, social, and political) institutions is one of the main reasons accounting for the differences in the level of economic development between countries. Different institutions can provide the necessary conditions for the orientation and allocation of existing community resources to promoting innovative and productive activities. The attraction of human and social capital, on the one hand, and foreign and domestic physical capital, on the other hand, can bring prosperity to countries. This chapter provides an overview of institutional changes in some emerging market economies, the factors contributing to the successful interaction with and exploitation of various institutions in some countries to achieve sustainable growth and development, and the causes of failure in some countries to achieve this goal. The overall conclusion of this chapter is that East Asian and Southeast Asian countries have been able to experience significant economic progress by implementing economic, cultural, and political institutional changes. Other emerging market economies, however, have failed to implement the same changes because of the diminished institutional quality in these countries and the unwillingness of their governments to introduce radical changes.