• Offered by Crawford School of Public Policy
  • ANU College ANU College of Asia and the Pacific
  • Classification Advanced
  • Course subject International and Developmental Economics
  • Areas of interest Economics

This course is available for in-person and remote (online) learning.

Institutions are the engine of history as they constitute much of the structure that influences behaviour, including behaviour leading to new institutions (Greif 2006).

Individuals, firms as well as the states are facing choices in their decision-makings all the time. They are not, however, making decisions independently from the economic, legal, political and social institutions in which they operate. This is because institutions embody incentives to which all players are reacting. The ways in which institutions determine incentives are not given as often assumed in theory, but are an endogenous process in which incentives could be modified or changed in response to changes in institutions. At the same time, institutions are constantly forced to readjust in responding to changes in the behaviour of individuals, firms and the state resulting from changed incentives.

The key concerns of this course are therefore twofold: How do institutions evolve in response to changes in incentives, strategies, and choices made by individuals, firms and the states; and how do institutions affect the economic performance over time. The course examines this interrelationship between incentive and institutions and the role of institutions in societal progress more broadly by, 1) introducing the essential theories of and methodologies applied in institutional economics; 2) providing the historical and empirical evidence in applications of institutional economics; 3) discussing how individuals (entrepreneurship), firms and the states are responding to changes in institutions thereby affecting economic performance; and 4) analyzing the role of institutions in economic transition. The course will apply case study method that extensively relies on institutional theories, contextual knowledge of the situation and its history, and context-specific modeling.

The course is designed for students with the undergraduate-level training in microeconomics and an interest in advanced study and policy-oriented research in institution related areas.

Learning Outcomes

Upon successful completion, students will have the knowledge and skills to:

  1. Demonstrate knowledge of the key theories of institutional economies and their applications;
  2. Demonstrate an understanding of the analytical approaches (methodologies or techniques) used to study the issues relating to incentives and institutions;
  3. Apply the theoretical and empirical techniques to constructively design and analyse related institutional change and its impact as well as public policy issues with respect to nurturing good institutions;
  4. Carry out research on a topic explaining the cross-country differences in economic growth performance due to institutional constraints.

Other Information

Course outline

Week 1: Institutions, institutional change and economic performance: an introduction

Week 2: Institutional economics: theories and evidence

Week 3: Institutional approaches on economic change: methodology and applications

Week 4: Institutions in a historical perspective: the path to the modern economy

Week 5: Firms, transaction costs and market mechanisms: information and coordination

Week 6: Institutions, contracts and organizations: towards the institutional evolution

Week 7: Institutions and the role of the state: enforcement issues

Week 8: Competition, incentives and regulations: formal versus informal constraints

Week 9: Entrepreneurship, innovation and technological progress: adaptive versus allocative efficiency

Week 10: Institutions in economic transition: the comparative incentive features of different institutional regimes

Week 11: Ethical values and the working of institutions: a missing link?

Week 12: Institutions, history and development: a summary

Indicative Assessment

  1. Research Essay 50% (50) [LO null]
  2. Final Exam 50% (50) [LO null]

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One two-hour lecture and one one-hour tutorial per week.

Inherent Requirements

Not applicable

Prescribed Texts

The primary textbook for this course is Institutions, Institutional Change and Economic Performance, Author: North, C. Douglass

Publisher: Cambridge University Press: Cambridge. Edition: First Edition, 1990

This book, however, will not provide the full reference of the materials covered in this course. The course material will also draw on the following books supplemented by journal articles and book chapters on the relevant issues.

North, Douglass C., 2005, Understanding the Process of Economic Change, Princeton University Press

Greif, Avner, 2006, Institutions and the Path to the Modern Economy, Cambridge University Press: Cambridge

Menard, Claude (ed.), 2000, Institutions, Contracts and Organizations, Edward Elgar: Cheltenham

Eggertsson, Trainn, 1990, Economic Behaviour and Institutions, Cambridge University Press: Cambridge

Kasper, Wolfgang and Manfred E. Streit, 1998, Institutional Economics: Social Order and Public Policy, Edward Elgar: Cheltenham

Assumed Knowledge

Assumed Knowledge: Advanced undergraduate-level microeconomics and econometrics.


Tuition fees are for the academic year indicated at the top of the page.  

Commonwealth Support (CSP) Students
If you have been offered a Commonwealth supported place, your fees are set by the Australian Government for each course. At ANU 1 EFTSL is 48 units (normally 8 x 6-unit courses). More information about your student contribution amount for each course at Fees

Student Contribution Band:
Unit value:
6 units

If you are a domestic graduate coursework student with a Domestic Tuition Fee (DTF) place or international student you will be required to pay course tuition fees (see below). Course tuition fees are indexed annually. Further information for domestic and international students about tuition and other fees can be found at Fees.

Where there is a unit range displayed for this course, not all unit options below may be available.

6.00 0.12500
Domestic fee paying students
Year Fee
2021 $2940
International fee paying students
Year Fee
2021 $4890
Note: Please note that fee information is for current year only.

Offerings, Dates and Class Summary Links

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The list of offerings for future years is indicative only.
Class summaries, if available, can be accessed by clicking on the View link for the relevant class number.

First Semester

Class number Class start date Last day to enrol Census date Class end date Mode Of Delivery Class Summary
On Campus
4188 21 Feb 2022 28 Feb 2022 31 Mar 2022 27 May 2022 In Person View
4189 21 Feb 2022 28 Feb 2022 31 Mar 2022 27 May 2022 Online View

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