WHAT DO INSTITUTIONS DO? Transaction costs Costs associated with economic transactions or, the costs of doing business Opportunism Act of seeking self-interest with guile ? What are some transaction costs involved in starting a home-based business?
POLITICAL SYSTEMS Political system Rules of the game on how a country is governed politically Political risk Risk associated with political changes that may negatively impact domestic and foreign firms
PRIVATE OWNERSHIP VS STATE OWNERSHIP Washington Consensus View centered on unquestioned belief in the superiority of private ownership over state ownership in economic policy making spearheaded by the International Monetary Fund and the World Bank Moral hazard Recklessness when people and organizations (including firms and governments) do not have to face the full consequences of their actions