Institutions include formal(laws, constitutions) and informal(conventions, traditions). This paper shows relationship between economic development and institutional development, because in economic history, institutions are given.
In this paper, institutions made to make monopolistic situation first, because there is no authority and someone who has more skill and information get more power and for them, monopoly is the best way to keep profit. However, this monopolistic situation makes a gap between players. This emerge competition, evolution, incremental development. Less profitable player tries to get more profit to create better institution, and monopolistic situation will become weak because it is weakness of whole country in terms of national competition.
However, “good” institution depends on environment. If one institution is good in U.S., it does not mean it will work in Latin America.
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