Question

What are Institutions and Why are They Useful (Incorporate a supporting article written between 2013-2018 into your discussion. Document your source(s).		64

Answer 1

The term institution mean informal institutions like customs in a society and formal institutions made by the government and public services.Institutions are a set of rules which govern the behaviour of organisations and also the individuals living in a society.Constitutions,laws ,rules and regulations are formal institutions and customs and traditions are informal institutions.Here we discuss the usefulness of institutions from an article published in Jan 16 2017.

Institutions promote growth in a society and also in an economy.Institutions play an important role in promoting growth in sectors like finance,education ,public administration ,justice etc . If a rule is not followed ,it leads to organisational and institutional failure.As for eg, Dhaka has huge traffic congestion . This mobility problem , takes a toll on the nation's potential income. So the country is losing 1% growth each year due to infrastructural and institutional problem.The street laws in Dhaka are not properly enforced.The traffic jam of Dhaka can vanish if the street laws are properly enforced. Again Bangladesh is poor in doing business.It is the institutional problems which are restricting the foreigners from investing in Bangladesh.An economy cannot achieve growth without institutions as is apparent from the example here.If a person with injuries in his leg goes to two different doctors for treatment and the first doctor prescribes antibiotics and pain killers while the second gives less antibiotics and pain killers as is the rule. The second doctor has given less medicines keeping the persons welfare in mind in the long term.So institutions give long term and sustained growth of the economy.Institutions are laws in action and not just which are not put in action.

Source Why institutions are important.( Written in Jan 16 2017)