Economic reforms and institutions: policy implications for India
Abstract
In the absence of necessary institutional conditions, market reforms in developing economies cause rent seeking
and inequitable distribution of income. This, in turn, could stun economic growth and also thwart the emergence
of the right institutions. It is important for government policy not only to minimise the short run costs of institutional
failures but also to set the right initial conditions for the evolution of institutions in the right direction. This
paper illustrates some of the costs of institutional failures and the policy implications in the present Indian context.
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