News
Do Institutions and Organisations Matter? The Nobel Prize Committee Says Yes!
This year’s Nobel Prize in economics has been jointly awarded to Elinor Ostrom of Indiana University and Oliver Williamson of University of California, Berkeley.
IDPM would like to congratulate Ostrom and Williamson on their award, which reinforces the importance of two key areas of IDPM’s research, pursued through the Institute’s Institutions for Pro-Poor Growth Programme and the Centre for Organisations in Development.
Elinor Ostrom’s nomination recognises her pioneering work on the governance and decentralised management of common pool resources. For poor people and others living in natural resource based development contexts, such resources are vital and may include pastures, forests, fish stocks etc. Prior to Ostrom’s research, privatization or state ownership were regarded as the main governance options to address what has been described as the Tragedy of the Commons. Drawing on extensive and meticulous evidence, Ostrom highlighted and documented the success and often superiority of a third policy avenue where local users had formulated and implemented rules and enforcement systems that ensured sustainable outcomes. Ostrom’s ideas have influenced the IPPG’s research on the Forest Rights Act in India.
Oliver Williamson's work builds on the work of Ronald Coase (Nobel Prize in Economics, 1991). It explains why individuals band together to form organizations in order to reduce the 'transaction costs' of dealing directly with each other via contracts. Relating to other individuals through an internal organizational hierarchy is often more efficient than relating to them through contracts in a marketplace. Williamson’s work also suggests reasons for the way in which organizations are structured. Work organizations therefore become an important and distinctive element of modern societies. That is increasingly the case in developing countries as they modernize and industrialise. The recognition of Williamson's work by the Nobel Prize committee serves to highlight the importance of developing a better understanding of organisations in developing countries – which is the mission of IDPM’s Centre for Organisations in Development.
Follow this link for more information on the Nobel awards.
21 October 2009