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North D.C., Wallis J.J., Webb S.B., Weingast B.R. (2007) Limited Access Orders in the Developing World: A New Approach to the Problems of Development, Policy Research working paper, WPS 4359, World Bank, Washington, D.C.


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Summary:

This paper distinguishes between two basic types of political and economic systems:

  • Limited access orders. These are most common type of social order and the norm in the developing world. A common feature of limited access orders is that political elites divide up control of the economy, each getting some share of the rents. Since outbreaks of violence reduce the rents, the elite factions have incentives to be peaceable most of the time.
  • Open access orders. These exist in countries with competitive market economies and democratic political systems. Peace within such societies is maintained through state monopoly on violence and the rule of law. These systems are restricted to a limited set of countries in the developed world.

Economic and political development requires a long-term shift towards open access orders. However, there are risks inherent in this transition where political and economic reforms can disrupt the processes of rent-creation and sharing that are instrumental to peace and social stability.