In this landmark work, a Nobel Prize-winning economist develops a new way of understanding the process by which economies change. Douglass North inspired a revolution in economic history a generation ago by demonstrating that economic performance is determined largely by the kind and quality of...

Adopting a critical stance towards North's recent theory of institutional change and economic performance, the paper proposes a concept of global efficiency which encompasses not only standard allocative efficiency, but also the efficiency of political institutions in competition among groups. A...