Good institutions matter for development. Institutions enable societies to address challenges – from managing irrigation and schools systems, to raising and spending revenues. In the terms of Nobel Prize laureate Elinor Ostrom, the right institutions enable effective collective action, while poor or missing institutions hinder problem-solving.
The term ‘political economy’ has become an increasingly popular part of the vernacular at the World Bank and other development agencies. In parallel, interest in the political economy aspects of development has also seen a resurgence in academia, within both economics and political science departments, and even in leading business programs.