ABSTRACT
This chapter argues that institutional capital has always been critical to development, and its importance is being increasingly recognized as countries with it have progressed while those without it have stagnated or regressed. World Bank managing director Gautam Kaji notes that the building of social infrastructure has increasingly eclipsed the building of physical infrastructure and investments in human capital as the central challenge of development. The building of "social infrastructure" has increasingly eclipsed the building of physical infrastructure and investments in human capital as the central challenge of development. A critical question in gauging whether it is amenable to a sustainable solution is whether the gainers can compensate the losers. The chapter suggests that remarks are structured around three themes: country challenges, research challenges, and operational challenges. From an operational perspective, the critical research question is how to reverse the vicious circle so that it becomes a virtuous one.
