American Economic Association

Institutions, Social Norms, and Economic Development: Fundamentals of Development

Economics, Volume 1 by Jean-Philippe Platteau
Review by: Jeffrey B. Nugent
Journal of Economic Literature, Vol. 39, No. 4 (Dec., 2001), pp. 1273-1275
Published by: American Economic Association
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Book Reviews 1273
changes in the readings selected as well as in
the extensive comments which provide an
overview of each chapter and build concep-
tual bridges between the selections. There
are, in addition, some explanatory notes that
are extremely helpful, including a lucid defi-
nition of various types of rents (Note lxB.1),
and a guide to reading a table of regression
results (in the appendix).
It should also be noted that the overall
technical level of the volume has been raised
substantially, rendering at least some of the
selections more appropriate for the interme-
diate rather than the beginning student of
development economics. Some contributions,
e.g., Kiminori Matsuyama on Agricultural
Productivity, Comparative Advantage and
Economic Growth and Sherman Robinson on
the Kuznets inverse U-shaped hypothesis,
are unnecessarily esoteric and mathematical
in treatment. On the other hand, the contin-
ued heavy reliance on excerpts from Arthur
Lewis and Lloyd Reynolds helps right the
balance.
But the volume also has some outright
weaknesses. For example, chapter 1, the in-
troductory chapter, is extremely choppy and
not well organized. It begs for more back-
ground on the history of thought, from the
Classical School to modern times; and it
confronts the unsuspecting reader with page
upon page on the complexities of the Human
Development Index-while the basic con-
cept of human development and its relation
to growth, distribution, and poverty is not
addressed anywhere.
Chapter 4 addresses the hoary chestnut of
markets versus government intervention. Un-
fortunately, the authors choose to feature
Balassa versus Rodrik, representing rather ex-
treme positions. To reduce reader confusion,
a more moderate or Solomonic selection
might have been added or substituted to
reader advantage.
I also was not happy with the selections
surrounding the intersectoral Lewis vs. Harris-
Todaro discussion in chapter 6. Such critical
issues as the intersectoral commodity market
and the intersectoral terms of trade are
neglected. And the Tidrick selection on wage
spillover, unemployment and wage gaps in
the -same chapter is off the main track, overly
technical and likely to be confusing to all but
the most sophisticated.
Small-scale supervised credit to the rural
poor has deservedly received policy-makers'
attention of late. Nevertheless, recent second
thoughts on the Grameen Bank should have
been reflected in the notes accompanying the
rather uncritical selection.
Another area which the next edition could
well improve upon is the new institutional
economics which is given short shrift, as is
the recently emerging issue of technology
transfer and intellectual property rights.
Finally, chapter 8 on Sustainable Develop-
ment is exceedingly heavy on deforesta-
tion, while air, water pollution, and global
warming, among the most important global
public goods, are either neglected or seen as
concerns only for the industrial countries.
It should not be surprising that a new co-
author appearing on the scene is accompa-
nied by some problems of transition. But
these problems in no way detract from the
basic assessment that Leading Issues in Eco-
nomic Development continues to be one of
the leading texts in the field. Moreover, I am
convinced that the next edition will address
some of the inevitable imperfections and
present an even better blend of the old
and the new.
GUSTAV RANIS
Yale University
Institutions, Social Norms, and Economic Devel-
opment: Fundanentals of Development Eco-
nomics, Volufme 1. By Jean-Philippe Platteau.
Reading, UK: Harwood Academic, 2000.
Pp. xxiv, 384. $60.00. ISBN 90-5823-058-9.
JEL 2001-0792
This is a development economist's develop-
ment economics book. Professor Platteau
knows the developing countries not just by
their statistical offices, finance ministries,
and lecture halls but through extensive
field experience and acquaintance with
both theoretical and applied literatures on
development in a number of different
disciplines.
The book goes deeply into its subject mat-
ter though, as its title suggests, it focuses
rather sharply on institutions and social
norms. In fact, the institutions it deals with
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1274 Journal of Economic Literature, Vol. XXXIX (December 2001)
are largely confined to property rights in land
and the social norms treated are those per-
taining to egalitarian attitudes, cooperation,
and trust. Platteau is concerned with the
evolution and stability characteristics of
these norms. As he admits, the book is
heavily, though not exclusively, focused on
Sub-Saharan Africa (SSA).
There are eight chapters. The first two are
introductory literature surveys, chapter 1 pro-
viding an overview of competing approaches
to the subject matter, and chapter 2 an ana-
lytic description of the environmental condi-
tions affecting the economies of SSA. Chap-
ters 3 and 4 deal with property rights in land.
The remaining chapters deal with norms,
chapter 5 with egalitarian norms and their
determinants and consequences, chapters 6
and 7 with the emergence of markets and
norms supporting them, first at the village
level and then at the societal level. Chapter 8
is concerned with the evolution of norms and
resulting path dependence. It also provides
a brief conclusion. The references are ex-
tremely rich and numerous, filling 32 pages
of small type.
Although each chapter provides a compre-
hensive treatment of the literature relevant to
its subject matter, the book also, stakes out
some interesting and perhaps controversial
positions. Several themes run through the
various chapters.
The overarching theme is that develop-
ment is not easy; none of the various funda-
mentalist positions that has been staked out
in the standard development literature is
valid. The need for institutional reforms is
not enough to bring them about. The prob-
lems of developing countries in general and
SSA in particular, moreover, are not simply
attributable to the presence of bad, dishonest
policy makers who get the prices and policies
wrong, -or who fail to establish private prop-
erty rights. This is not to deny an important
role, for well-defined property rights and
well-functioning markets in the development
process, but rather to argue that these institu-
tions neither emerge automatically nor can
they simply be- transferred from rich to poor
countries by external agents. Instead, people
and conditions have to be prepared so that
the appropriate and efficient technologies
and institutions can be accepted. This is not
easy anywhere, especially in SSA.
According to Platteau, the difficulties in
SSA arise from its low population density.
This impedes inter-group communication and
the development of trust extending beyond
the confines of the family and small group
toward institutions favorable to the develop-
ment of markets and the production of public
goods. Another interesting hypothesis is that
it is the absence, not the presence, of sup-
posedly norm-eroding markets that impedes
the development of cooperation-supporting
social norms.
To its credit, the book is non-technical and
accessible to a wide range of readers but is by
no means analytically weak. Indeed, it makes
quite extensive use of elementary game the-
ory, briefly and simply describes the gist of some
relatively sophisticated theoretical arguments,
and identifies subtle methodological pitfalls
of relevant empirical studies.
After extolling a few of the book's many
virtues, it is only fair to identify some short-
comings, most of which are acknowledged by
the author and stem from his deliberate deci-
sions about what to focus on. For example,
the SSA focus rules out more extensive use of
material from other regions that may or may
not fit with the author's conclusions. The
focus on property rights in land largely rules
out related property rights such as in man
and intellectual property. The focus on the
aforementioned social norms unfortunately
seems to rule out treatment of norms pertain-
ing to the intrahousehold division of labor,
decision-making, gender biases in resource
allocation, and intergenerational equity. Even
if some of these omissions are under-
standable in the interest of focus, because
of their interrelationships with the issues
treated they are also costly. Second, despite
the fact that the author (like others in this
field) makes a big deal of path dependence,
his demonstration of it makes less use of solid
economic histories of SSA itself (as opposed
to Italy) than might have been expected.
Third, in blaming SSA's poor record of insti-
tutional and economic development on low
population density, Professor Platteau gives
insufficient attention to the following: (1)
how and why such problems were overcome
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Book Reviews 1275
historically in the Americas and parts of
Europe but not in SSA; (2) how and why
some countries of SSA have been more suc-
cessful; and (3) how and why some countries
outside of SSA but with similar conditions
have managed to succeed in making public
goods (like health and family planning facili-
ties) more available to the rural poor. Fourth,
the author's attempt to link the low popula-
tion density and high weather and other risks
of SSA (that result in shifting agriculture,
transhumance and nomadism), with isolation,
the dearth of institutional or technological
changes, insufficient links to other communi-
ties, strict adherence to social convention and
over-dependence on collective institutions
for satisfying basic necessities, seems to over-
look that these same conditions also fre-
quently breed a greater sense of indepen-
dence and
mobility,
increased communication
and exchange with other societies, flexibility,
and the ability to adjust to, and be adopted
by, other cultures when needed (thereby al-
lowing differential skills in farming and herd-
ing to play a large role). Fifth, the book gives
insufficient attention to other more political
determinants of the lack of state legitimacy.
Finally, in places at least, the text is not
devoid -of tortured phrasing, long sentences,
unnecessary repetition, and verbosity.
JEFFREY B. NUGENT
University of Southern California
P Economic Systems
Confronting Fiji Futures. Edited by A Haroon
Akram-Lodhi. Canberra: Asia Pacific Press at
the Australian National University, 2000. Pp.
xv, 321. $A 30.00. ISBN 0-7315-3642-8.
JEL 2001-0359
The title of this collection of essays em-
phasizes the future. However, the great bulk
of the book is about the recent past, al-
though most chapters end with a few general
comments about the future.
The book begins with two pages entitled
"Stop Press. Confronting the Present: The
Coup of 2000." As the book went to press
Fiji's third coup occurred on May 19, 2000.
The fact of the coup calls into question some
of the assumptions and assertions in the book.
The book is in two parts. Part 1 is entitled
"Politics, Economics and Social Inequality,"
although the chapters probably contain more
about ethnicity than about any other topic.
After an introductory chapter by Martin
Doornbos and the editor, Yash Ghai outlines
the 1997 constitution. Then Satendra Prasad
describes the "outcomes and prospects" of
the first election under it, that in 1999. Eco-
nomic chapters include an overview, by A.
Sepehri and the editor, and one on the effect
of ethnic-based institutional rigiUities on eco-
nomic performance by Biman Prasad and
Sunil Kumar. Social policies are discussed by
John Cameron, labor market deregulation by
Ganesh Chand, and the situation of urban
women (most of them in low-paid work with
poor conditions), since the 1987 coups, by
Jacqueline Leckie.
Part 2 is entitled "The 'Fijian' Question,"
an unexpected title for a section on the
nation's majority population. William Suther-
land begins it with a chapter on "The Prob-
lems of Reform and the 'Fijian' Question."
This is followed by Steven Ratuva on affir-
mative action through business promotion for
indigenous Fijians, which shows that the main
beneficiaries were the already advantaged-a
not uncommon feature of affirmative action
anywhere.
Ecotourism involves mainly indigenous
Fijians but, as Hoger Korth's chapter shows,
it accounts for a very small fragment of
Fiji tourism. The final chapter, by Robbie
Robertson, is about ethnic identities since
the
41987
coups.
The book contains much valuable and in-
teresting information and opinion, but much
that is presented as objective fact would be
regarded by many among the indigenous
Fijian majority as highly contested opinion.
Also, the similarities of viewpoints in the dif-
ferent chapters comes about not necessarily
because everyone in Fiji agrees about what
was or should be, but because this is a book
by people of a particular persuasion. Theirs is
an important perspective, but it is a pity that
no other perspectives are presented.
The book does not disclose that almost all
the authors were active supporters (in some
cases writing policies and campaigning for)
the government which was overthrown by the
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