ABSTRACT
There may not be many points of consensus over what best promotes economic development, but here is one that has formed over the past decade: the institutional context matters a lot. This represents the single greatest shift in economic thinking about development since World War II, for there once was an almost equally clear consensus that institutions do not matter, since capital was supposed to be able to find its way through and around them, whatever they were like, to the magnet of highest returns. I know of no significant group of economists who believe that anymore. To this extent, development theory is not just the cacophony of rival opinions it might appear to be when the grain of analysis is drawn more finely.
