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North D.C., Wallis J.J., Webb S.B., Weingast B.R. (2011) Limited Access Orders: Rethinking the Problems of Development and Violence, Stanford University


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Summary:

Since the mid-2000s, North and associates have adopted a new framework for interpret problems of development. This paper is one of a succession of works outlining this revised approach.

The framework emphasizes that all societies must solve the problem of violence and distinguishes between two ways in which societies solve this problem. Limited access orders, covering most developing countries today, solve the problem of violence by granting political elites privileged control over parts of the economy, each getting some share of the rents. Since outbreaks of violence reduce the rents, elite factions have incentives to refrain from violence most of the time. Stability of the rents and thus of the social order requires limiting access and competition. In contrast, open access orders, which dominate the modern developed world, control the problem of violence through open access and competition.

North and associates argue that the framework has new implications for understanding development. It shows that transplanting institutions from open access orders into limited access orders – such as markets, elections, and corporate law – often do not have their intended effect because the institutions work differently under limited access than open access. When development policy advice threatens the logic of stability in limited access orders, these societies often resist or sabotage the recommended measures.