Introduction

This introduction presents an overview of the key concepts covered in the subsequent chapters of this book. The book discusses traditional theories of growth. It examines dependency theory and neoclassical growth theory, two important possibilities for explaining the economic performance. The book then discusses the concept of transaction costs and provides the theoretical link to institutions. It also explains the impact of institutions on economies in both a static and a dynamic sense. The book examines various political systems that produce the formal institutions. It then elaborates on specific theoretical issues that transition economies face, and applies the theory of institutions to Poland and Russia. The book also applies the theory of institutions to the developing economies of Mexico and South Korea. It focuses on a case study of China and the recent reversion of Hong Kong from a British colony to a Chinese republic.