Towards a Conceptually Precise and Logically Consistent Synthesis of Evolutionary and Institutional Economics for Safe Policy Applications

Institutional factors and evolutionary processes ar e now widely recognized to play key roles in the working and development of economies. Growing numbers of specialists in the study of the one or the other have been obtaining valuable knowledge about each. But an essential part of this knowledge is turning out to concern their interconnections, which are still far from well understood, as the specialists in one have rarely been interested in the other. This paper helps to clarify these interconnections with the help of the recently proposed conceptual model of evolutionary-developmental economics. The model interrelates institutional rules (in the sense of North's defini tion of "institutions") with economic evolution, defined as producing them, and with the dynamics of economic development (in the sense of Schumpeter, Nelson and Winter), which they shape and constrain. This splits the analysis of economic change into two interrelated, but clearly separable parts: (I) Comparative Institutional Statics with Developmental Dynamics; and (II) Institutional Dynamics, or the Evolutionary Analysis proper. The paper summarizes the so far obtained results of Analysis (I), outlines the conduct of Analysis (II), and ind icates what policy implications could be obtained from both.