Microfinance and Institutions

Steve Daley and Brian Hooks, my former colleagues at the Mercatus Global Prosperity Initiative, have put out a nice op-ed explaining why microfinance doesn’t get you far in the absence of a well-integrated set of political, legal, and economic institutions.

Personal bias aside, I don’t think anyone is making the case for the importance of institutions for development and growth with more force and clarity than GPI. Blather about institutions is ubiquituous in development circles, but the Mercatus guys actually know what they’re talking about. Speaking of which, check out Frederic Sautet’s new policy primer on “The Role of Institutions in Entrepreneurship“(pdf) for a good overview of the Mercatus position. And take a look at Steve Daley’s new policy comment on “Microfinance in Action: The Philippine Experience” for further detail on the problem of getting microfinance over the hump into the extended order.

Author: Will Wilkinson

Vice President for Research at the Niskanen Center