NEO-INSTITUTIONAL CONTRIBUTIONS TO UNDERDEVELOPMENT ANALYSIS: THE ISLAMIC MIDDLE EAST

Abstract

Recent literature on economic development has shifted its focus towards understanding the intricate interplay between social norms, cultural values, and economic performance. This paper delves into the neo-institutional narratives surrounding the "Paradox of the West," proposing that the remarkable growth and historic transformation experienced in Western Europe between the tenth and eighteenth centuries were primarily attributable to the institutional framework in place. It argues that over time, Western societies developed sophisticated institutional structures, both legal and organizational, that played a pivotal role in fostering economic growth by curbing government power, reducing uncertainty in social interactions, minimizing transaction costs, and safeguarding property rights.

One of the central assertions of this narrative is that the unique amalgamation of individual rights and constitutional parliamentary government, as exemplified by the Glorious Revolution of 1688 in England, laid the essential groundwork for its extraordinary economic performance. Additionally, this paper underscores the significance of private institutions such as guilds, fairs, and coalitions that emerged in Europe. These private institutions effectively supplanted public authorities in shaping compliance with institutional norms for economic activities. Furthermore, the paper explores the pivotal role played by the commercial revolution spanning from 1000 to 1800 in Europe, especially the transatlantic commerce that commenced around 1500, in explaining the trajectory of economic progress