UNIVERSITY OF NAIROBI

DEPARTMENT OF ECONOMICS AND DEVELOPMENT STUDIES

Course Title: Institutional Economics

Course Code: XET 402

Course Instructor: Socrates Kraido Majune, GW Room 313-3, skmajune@uonbi.ac.ke

+254712400386

Course Description
This course is offered to fourth year undergraduate students and it is designed to last a
single semester. Students taking Institutional Economics are expected to have a firm grasp
of Microeconomics 1 & 2 and Macroeconomics 1 & 2. Familiarity with the language of
game theory, economic history and history of economic thought will be helpful.

Course Objective
To provide an overview of recent developments in the sub-field of Institutional Economics
by exposing students of economics to relevant basic concepts, show how institutions shape
the direction of economic incentives and help the students appreciate the importance of the
institutional environment in the overall performance of an organization economy.

Method of teaching
One three-hour lecture weekly supported by twice this number of hours on self-study.
Students are also required to review journal papers after every class (bi-weekly).

Examination
One written term paper assignment – 15%
Presentation – 5%
One continuous assessment test – 10%
Final examination – 70%
There is a prize for the best group (student) in the term paper assignment and
presentation at the end of the semester.

Core Reading Materials for the Course

Voigt, S. (2019). Institutional economics: An introduction. Cambridge University Press.
North, D (1990). Institutions, Institutional Change and Economic Performance.
Cambridge University Press.
Menard Claude and Mary. M. Shirley. (2008). Handbook of New Institutional Economics;
Springer-Verlag Berlin Heidelberg.

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Eric Brousseau and Jean-Michel Glachant. (2008). New Institutional Economics A
Guidebook. Cambridge University Press.
John Groenewegen, Antoon Spithoven and Annette van den Berg. (2010). Institutional
Economics: An Introduction. Palgrave Macmillan, ISBN: 978-0-230-55074-2
Extra readings:
• McCormick D, P.Alila and M Omosa. (2007). Business in Kenya: Institutions and
Interaction. Nairobi, University of Nairobi Press
• Kimuyu, P. (2000). Institutions relevant to commerce and industry: moral norms, social
capital, the state and the law. Institute of Policy Analysis and Research.
• Kirsten, J. (Ed.). (2009). Institutional economics perspectives on African agricultural
development. Intl Food Policy Res Inst.

Course Content

1. Introduction to Institutional Economics

From Neoclassical Economics to New Institutional Economics. The institutional
landscape; formal and informal institutions.
Key readings (Apart from the aforementioned books):
• Dequech, D. (2017). Some institutions (social norms and conventions) of contemporary
mainstream economics, macroeconomics and financial economics. Cambridge journal
of economics, 41(6), 1627-1652.
• Filho, H. A. D. A. (2020). Critical Realism and Institutionalism in Economics: A New
Perspective on an Old Debate. Journal of Economic Issues, 54(4), 1139-1160.
• Hodgson, G. M. (1998). The approach of institutional economics. Journal of economic
literature, 36(1), 166-192.
• Hodgson, G. M. (2014). On fuzzy frontiers and fragmented foundations: some
reflections on the original and new institutional economics. Journal of Institutional
Economics, 10(4), 591-611.
• Kingston, C., & Caballero, G. (2009). Comparing theories of institutional change.
Journal of Institutional Economics, 5(2), 151-180.
• Klein, P. G. (1998). New institutional economics. Available at SSRN 115811.
• Ménard, C. (2001). Methodological issues in new institutional economics. Journal of
economic methodology, 8(1), 85-92.
• Ménard, C. (2018). Research frontiers of new institutional economics. RAUSP
Management Journal, 53, 3-10.
• Ménard, C., & Shirley, M. M. (2014). The future of new institutional economics: from
early intuitions to a new paradigm? Journal of Institutional Economics, 10(4), 541-565.
• O’hara, P. (2019). History of institutional economics. In A. Sinha, & A. Thomas,
Pluralistic Economics and Its History (pp. 171-190). New York: Routledge.
• Parada, Jairo. (2001). Original Institutional Economics: A Theory for the 21st Century?
Oeconomicus, 5(3), 46-60.
• Platteau, J. P. (1994). Behind the market stage where real societies exist‐part I: The
role of public and private order institutions. The Journal of Development Studies, 30(3),
533-577.
• Rutherford, M. (2001). Institutional economics: then and now. Journal of economic
perspectives, 15(3), 173-194.

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• Schneider, G., & Nega, B. (2016). Limits of the new institutional economics approach
to African development. Journal of Economic Issues, 50(2), 435-443.
• Spithoven, A. (2019). Similarities and dissimilarities between original institutional
economics and new institutional economics. Journal of Economic Issues, 53(2), 440-
447.

2. Institutional theories of the firm and transaction costs

Definition of the firm in the institutional setup. Coase vs. Williamson’s perspective of the
firm. Coase theorem. The concept of transactions. Transaction costs as frictions to an
economy; minimization of transaction costs; reputation as a contract enforcement device.
Key readings (Apart from the aforementioned books):
• Bylund, P. L. (2021). The Firm versus the Market: Dehomogenizing the Transaction
Cost Theories of Coase and Williamson. Strategic Management Review, 2(1), 79-118.
• Coase, R. H. (1937). The nature of the firm. Economica, 4(16), 386-405.
• Hardt, L. (2009). The history of transaction cost economics and its recent
developments. Erasmus Journal for Economics and Philosophy, 2(1), 29-51.
• Hart, O. (1989). Economist’s Perspective on the Theory of the Firm. An. Colum. L.
Rev., 89, 1757.
• Machaj, M. (2021). A market process theory of the firm: An alternative to the
neoclassical model. Routledge.
• Martins, R., Serra, F., Leite, A., Ferreira, M. P., & Li, D. (2010). Transactions Cost
Theory influence in strategy research: A review through a bibliometric study in leading
journals.
• Peng, G. Z. (2021). Toward Behavioral Transaction Cost Economics: Theoretical
Extensions and an Application to the Study of MNC Subsidiary Ownership. Springer
Nature.
• Williamson, O. E. (1981). The economics of organization: The transaction cost
approach. American journal of sociology, 87(3), 548-577.
• Williamson, O. E. (2002). The theory of the firm as governance structure: from choice
to contract. Journal of economic perspectives, 16(3), 171-195.

3. Contracts
Definitions, notions of complete and incomplete contracts; the agency problem;
asymmetric information and opportunistic behavior; adverse selection and moral hazard-
signaling and screening.
Key readings (Apart from the aforementioned books):
• Akerlof, G. A. (1978). The market for “lemons”: Quality uncertainty and the market
mechanism. In Uncertainty in economics (pp. 235-251). Academic Press.
• Bag, S. (2018). Economic Analysis of Contract Law: Incomplete Contracts and
Asymmetric Information. Springer.
• Corgnet, B., Gómez-Miñambres, J., & Hernán-Gonzalez, R. (2018). Goal setting in the
principal–agent model: Weak incentives for strong performance. Games and Economic
Behavior, 109, 311-326.
• Delerue, H., & Ouedraogo, A. (2020). Inter-organizational Contracts in Sub-Saharan
Africa an Exploration of Managers’ Perceptions. Journal of African Business, 1-18.

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• Hart, O. (2017). Incomplete contracts and control. American Economic Review, 107(7),
1731-52.
• Hart, O. D. (1988). Incomplete Contracts and the Theory of the Firm. Journal of Law,
Economics, & Organization, 4(1), 119-139.
• Hart, O., & Moore, J. (1999). Foundations of incomplete contracts. The Review of
Economic Studies, 66(1), 115-138.
• Neugebauer, T. (2020). Can intermediaries assure contracts? Experimental
evidence. Games and Economic Behavior, 124, 354-368.
• Nunn, N. (2007). Relationship-specificity, incomplete contracts, and the pattern of
trade. The Quarterly Journal of Economics, 122(2), 569-600.
• Nunn, N., & Trefler, D. (2013). Incomplete contracts and the boundaries of the
multinational firm. Journal of Economic Behavior & Organization, 94, 330-344.
• Schmitz, P. W. (2020). Moral hazard and the property rights approach to the theory of
the firm. Economics Letters, 186, 108514.
• Spence, M. (1978). Job market signaling. In Uncertainty in economics (pp. 281-306).
Academic Press.
• Stiglitz, J. E., & Weiss, A. (1981). Credit rationing in markets with imperfect
information. The American economic review, 71(3), 393-410.
• Tirole, J. (1999). Incomplete contracts: Where do we stand? Econometrica, 67(4), 741-
781.
• Tups, G., & Dannenberg, P. (2023). Supplying lead firms, intangible assets and power
in global value chains: Explaining governance in the fertilizer chain. Global Networks.

4. Property Rights
Specification of rights over property; assigning of property rights: internalization of
externalities. Coarse Theorem and its critics; bundling and unbundling (partitioning) of
property rights; patents and intellectual property rights; and the Tragedy of the Commons
Key readings (Apart from the aforementioned books):
• Allen, D. W. (2015). The Coase theorem: coherent, logical, and not disproved. Journal
of Institutional Economics, 11(2), 379-390.
• Bertrand, E. (2010). The three roles of the ‘Coase theorem’in Coase’s works. The
European Journal of the History of Economic Thought, 17(4), 975-1000.
• Bertrand, E. (2019). Much ado about nothing? The controversy over the validity of the
Coase theorem. The European Journal of the History of Economic Thought, 26(3),
502-536.
• Cebeci, A. F., Ince, H., & Mercan, M. A. (2020). The intrinsic fallacy of market
mechanism and private property rights in alleviating the tragedy of the
commons. Applied Economics, 1-8.
• Coase, R. H. (1960). The problem of social cost. In Classic papers in natural resource
economics (pp. 87-137). Palgrave Macmillan, London.
• Cole, D. H., & Grossman, P. Z. (2002). The meaning of property rights: law versus
economics? Land Economics, 78(3), 317-330.
• Dell’Angelo, J., D’Odorico, P., Rulli, M. C., & Marchand, P. (2017). The tragedy of
the grabbed commons: coercion and dispossession in the global land rush. World
Development, 92, 1-12.

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• Frischmann, B. M., Marciano, A., & Ramello, G. B. (2019). Retrospectives: Tragedy
of the Commons after 50 Years. Journal of Economic Perspectives, 33(4), 211-28.
• Furubotn, E. G., & Richter, R. (2010). Institutions and economic theory: The
contribution of the new institutional economics. University of Michigan Press.
• Grossman, S. J., & Hart, O. D. (1986). The costs and benefits of ownership: A theory
of vertical and lateral integration. Journal of political economy, 94(4), 691-719.
• Hahnel, R., & Sheeran, K. A. (2009). Misinterpreting the Coase theorem. Journal of
Economic Issues, 43(1), 215-238.
• Hall, J. C., & Harper, S. (Eds.). (2019). Economic and Political Institutions and
Development. Springer.
• Hart, O. (1995). Firms, contracts, and financial structure. Clarendon press.
• Hart, O., & Moore, J. (1990). Property Rights and the Nature of the Firm. Journal of
political economy, 98(6), 1119-1158.
• Mwangi, E., & Ostrom, E. (2009). A century of institutions and ecology in East
Africa’s rangelands: Linking institutional robustness with the ecological resilience of
Kenya’s Maasailand. In Institutions and sustainability (pp. 195-222). Springer,
Dordrecht.
• Obeng-Odoom, F. (2016). Marketising the commons in Africa: The case of
Ghana. Review of Social Economy, 74(4), 390-419.
• Ouattara, B., & Standaert, S. (2020). Property rights revisited. European Journal of
Political Economy, 64, 101895.
• Sarker, A., & Blomquist, W. (2019). Addressing misperceptions of Governing the
Commons. Journal of Institutional Economics, 15(2), 281-301.
• Schmitz, P. W. (2017). Asymmetric information and the property rights approach to
the theory of the firm. Economics Letters, 159, 96-99.
• Schmitz, P. W. (2020). Moral hazard and the property rights approach to the theory of
the firm. Economics Letters, 186, 108514.
• Varian, H. R. (2014). Intermediate Microeconomics: A Modern Approach: Ninth
International Student Edition. WW Norton & Company.
• Ventura, A., Cafiero, C., & Montibeller, M. (2016). Pareto efficiency, the Coase
theorem, and externalities: A critical view. Journal of Economic Issues, 50(3), 872-
895.
• Wang, Y., Chen, S., & Araral, E. (2021). The mediated effects of urban proximity on
collective action in the commons: Theory and evidence from China. World
Development, 142, 105444.

5. Theory of Harm, Two-Sided Markets and Big Data

Definitions of Theory of Harm, Two-Sided Markets and Big Data and their dangers in
economies. Also, the role of Competition Authorities in Economies.
Key readings (Apart from the aforementioned books):
• Esposito, F. (2021). Towards a General Theory of Harm for Consumer Law. Journal
of Consumer Policy.
• Iacobucci, E., & Ducci, F. (2019). The Google search case in Europe: Tying and the
single monopoly profit theorem in two-sided markets. European Journal of Law and
Economics, 47(1), 15-42.

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• Jin, G. Z., & Wagman, L. (2021). Big data at the crossroads of antitrust and consumer
protection. Information Economics and Policy, 54, 100865.
• Kao, K. F., & Mukunoki, H. (2021). The effects of parallel trade in two-sided
markets. Economics Letters, 199, 109721.
• Ong, T. C., Yong, M. G. O., Manap, N. A., Abdullah, F., & San Ong, T. (2020). Market
structure of E-commerce consumer sale of goods: competition law perspective. Journal
of Critical Reviews, 7(18), 1336-1344.
• Ritter, C. (2019). Antitrust in two-sided markets: looking at the US Supreme Court’s
Amex case from an EU perspective. Journal of European Competition Law & Practice.
• Rysman, M. (2009). The economics of two-sided markets. Journal of economic
perspectives, 23(3), 125-43.
• Sokol, D. D., & Comerford, R. (2015). Antitrust and regulating big data. Geo. Mason
L. Rev., 23, 1129.
• Weyl, E. G. (2010). The price theory of two-sided markets. American Economic
Review, 100(4), 1642-72.

6. Norms, Values, Trust

Habits and the formation of norms; the propensity to cooperate, meaning of trust and trust
drivers; autonomy versus embeddedness, hierarchy versus egalitarianism, and mastery
versus harmony value types.
Key readings (Apart from the aforementioned books):
• Aghion, P., Algan, Y., Cahuc, P., & Shleifer, A. (2010). Regulation and distrust. The
Quarterly Journal of Economics, 125(3), 1015-1049.
• Bachmann, R., & Zaheer, A. (Eds.). (2006). Handbook of trust research. Edward Elgar
Publishing.
• Bjørnskov, C. (2010). How does social trust lead to better governance? An attempt to
separate electoral and bureaucratic mechanisms. Public Choice, 144(1-2), 323-346.
• Boonmanunt, S., Kajackaite, A., & Meier, S. (2020). Does poverty negate the impact
of social norms on cheating?. Games and Economic Behavior, 124, 569-578.
• Bromiley, P., & Harris, J. (2006). Trust, transaction cost economics, and mechanisms.
Handbook of trust research, 124-143.
• Cline, B. N., & Williamson, C. R. (2020). Trust, regulation, and contracting
institutions. European Financial Management, 26(4), 859-895.
• Cumming, D., Ge, Y., & Lai, H. (2020). Trust and quality uncertainty in global value
chains. Journal of Multinational Financial Management, 100662.
• Fungáčová, Z., Kerola, E., & Weill, L. (2019). Does experience of banking crises affect
trust in banks?
• Homanen, M. (2018). Depositors disciplining banks: The impact of scandals. Chicago
Booth Research Paper, (28).
• Hoxhaj, R., & Miti, F. (2020). Do Foreign Firms Transfer Gender Norms in the Labour
Market? Evidence from Sub‐Saharan Africa. South African Journal of
Economics, 88(3), 227-241.
• Knack, S. (2003). Groups, growth and trust: Cross-country evidence on the Olson and
Putnam hypotheses. Public Choice, 117(3-4), 341-355.

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• Koumpias, A. M., Leonardo, G., & Martinez-Vazquez, J. (2020). Trust in Government
Institutions and Tax Morale (No. paper2001). International Center for Public Policy,
Andrew Young School of Policy Studies, Georgia State University.
• Lyon, F., Mšllering, G., & Saunders, M. N. (Eds.). (2015). Handbook of research
methods on trust. Edward Elgar Publishing.
• Lyon, F., Mšllering, G., & Saunders, M. N. (Eds.). (2015). Handbook of research
methods on trust. Edward Elgar Publishing.
• Matthaei, E., Chan, H. F., Schmidt, C., & Torgler, B. (2022). Relative trust and tax
morale. Economic and Political Studies, 1-19.
• Mohanty, A., & Ang, J. B. (2023). COVID-19 and culture. Oxford Economic Papers,
gpad001.
• Nurkholis, N., Dularif, M., & Rustiarini, N. W. (2020). Tax evasion and service-trust
paradigm: A meta-analysis. Cogent Business & Management, 7(1), 1827699.
• Ojong, N. (2018). Trust, cultural norms and financial institutions in rural communities:
the case of Cameroon. Review of Social Economy, 76(1), 19-42.
• Okoye, D. (2021). Things fall apart? missions, institutions, and interpersonal
trust. Journal of Development Economics, 148, 102568.
• Platteau, J. P. (1994). Behind the market stage where real societies exist‐part II: The
role of moral norms. The Journal of Development Studies, 30(4), 753-817.
• Pollitt, M. (2002). The economics of trust, norms and networks. Business Ethics: A
European Review, 11(2), 119-128.
• Shi, X. (2018). The Role of Social Norms in Old-age Support: Evidence from China.
• Stiller, Y., Dür, A., & Huber, R. A. (2022). Education and trade attitudes: Revisiting
the role of economic interest. World Trade Review, 21(4), 497-511.
• Zhao, S. (2022). Culture and trade: Chinese practices and perspectives. International
Journal of Cultural Policy, 1-17.

7. Social Capital
Definition of social capital; social forces and preferences; time inconsistency; habits and
social capital; and Corporate Social Responsibility in Economics.
Key readings (Apart from the aforementioned books):
• Ahn, D. S., Iijima, R., Le Yaouanq, Y., & Sarver, T. (2019). Behavioural
Characterizations of Naivete for Time-Inconsistent Preferences. The Review of
Economic Studies, 86(6), 2319-2355.
• Ajwang, F. (2020). Relational Contracts and Smallholder Farmers’ Entry, Stay and
Exit, in Kenyan Fresh Fruits and Vegetables Export Value Chain. The Journal of
Development Studies, 56(4), 782-797.
• Bjørnskov, C. (2006). The multiple facets of social capital. European journal of
political economy, 22(1), 22-40.
• Boix, C., & Posner, D. N. (1998). Social capital: Explaining its origins and effects on
government performance. British journal of political science, 28(4), 686-693.
• Coleman, J. S. (1988). Social capital in the creation of human capital. American journal
of sociology, 94, S95-S120.
• Dai, R., Liang, H., & Ng, L. (2020). Socially responsible corporate customers. Journal
of Financial Economics.

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• Dasgupta, P. (2005). Economics of social capital. Economic Record, 81, S2-S21.
• Freeman, D. (2016). Revealing Naïveté and Sophistication from Procrastination and
Preproperation (No. dp16-11).
• Fuchs, A., Rose, A. K., & Schmidt, S. S. (2020, February). Is Davos More Than a
Boondoggle?. In Paper presented at the 13th Annual Conference on The Political
Economy of International Organization Vancouver, Canada.
• Gil-Pareja, S., Llorca-Vivero, R., & Martínez-Serrano, J. A. (2019). Reciprocal vs
nonreciprocal trade agreements: Which have been best to promote exports?. PloS
one, 14(2).
• Häuberer, J. (2011). The Founding Concepts of Social Capital-Bourdieu’s Theory of
Capital and Coleman’s Rational-Choice Approach to Social Capital. In Social Capital
Theory (pp. 35-51). VS Verlag für Sozialwissenschaften.
• Hornuf, L., Rieger, M. O., & Hartmann, S. A. (2023). Can television reduce
xenophobia? The case of East Germany. Kyklos, 76(1), 77-100.
• Kiboro, C. N. (2017). Influence of social capital on livelihood outcomes for the
internally displaced persons in Kenya: a social capital approach. Eur. Sci. J, 13, 266-
280.
• Kitzmueller, M., & Shimshack, J. (2012). Economic perspectives on corporate social
responsibility. Journal of Economic Literature, 50(1), 51-84.
• Kohl, T. (2017). The WTO’s effect on trade: What you give is what you get.
In Globalization (pp. 459-493). Springer, Berlin, Heidelberg.
• Krüger, P. (2015). Corporate goodness and shareholder wealth. Journal of financial
economics, 115(2), 304-329.
• Lavallée, E., & Lochard, J. (2022). International trade and face-to-face
diplomacy. Review of World Economics, 158(4), 987-1010.
• Li, J., Liu, H., & Xie, Q. (2023). Bilateral relations and exports: Evidence from Google
big data. China & World Economy, 31(1), 182-210.
• Liang, H., & Renneboog, L. (2017). On the foundations of corporate social
responsibility. The Journal of Finance, 72(2), 853-910.
• Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm
performance: The value of corporate social responsibility during the financial
crisis. The Journal of Finance, 72(4), 1785-1824.
• López, J. A. P., & Santos, J. M. S. (2014). Does corruption have social roots? The role
of culture and social capital. Journal of Business Ethics, 122(4), 697-708.
• Macchiavello, R., & Morjaria, A. (2015). The value of relationships: evidence from a
supply shock to Kenyan rose exports. American Economic Review, 105(9), 2911-45.
• Martin-Flores, J. M. (2018). Social Capital and Bank Misconduct. Available at SSRN
3249049.
• Morris, S., & Shadmehr, M. (2018). Inspiring Regime Change. Available at SSRN
3248697.
• Moyi, E. D. (2003). Networks, information and small enterprises: New technologies
and the ambiguity of empowerment. Information Technology for Development, 10(4),
221-232.
• Nitsch, V. (2007). State visits and international trade. World Economy, 30(12), 1797-
1816.

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• Olson, M. (2008). The rise and decline of nations: Economic growth, stagflation, and
social rigidities. Yale University Press.
• Pollitt, M. (2002). The economics of trust, norms and networks. Business Ethics: A
European Review, 11(2), 119-128.
• Putnam, R. D. (2000). Bowling alone: America’s declining social capital. In Culture
and politics (pp. 223-234). Palgrave Macmillan, New York.
• Putnam, R. D., Leonardi, R., & Nanetti, R. Y. (1994). Making democracy work: Civic
traditions in modern Italy. Princeton university press.
• Siisiainen, M. (2003). Two concepts of social capital: Bourdieu vs. Putnam.
International Journal of Contemporary Sociology, 40(2), 183-204.
• Subramanian, A., & Wei, S. J. (2007). The WTO promotes trade, strongly but
unevenly. Journal of international Economics, 72(1), 151-175.

8. Institutions and governance

Governance under Neo-classical economics and Institutional Economics. Dynamics,
complexity of institutions. Implementing institutional reform. Role of institutions on
structural transformation. Why Nations Fail?
Key readings (Apart from the aforementioned books):
• Acemoglu, D. (2015). Why Nations Fail? The Pakistan Development Review, 54(4),
301-312.
• Bjørnskov, C., & Rode, M. (2019). Regime types and regime change: A new dataset
on democracy, coups, and political institutions. The Review of International
Organizations, 1-21.
• Chang, C. C. (2023). The impact of quality of institutions on firm performance: A
global analysis. International Review of Economics & Finance, 83, 694-716.
• Dupas, P., & Robinson, J. (2010). Coping with political instability: micro evidence
from Kenya’s 2007 election crisis. American Economic Review, 100(2), 120-24.
• Dupas, P., & Robinson, J. (2012). The (hidden) costs of political instability: Evidence
from Kenya’s 2007 election crisis. Journal of Development Economics, 99(2), 314-
329.
• Hjort, J. (2014). Ethnic divisions and production in firms. The Quarterly Journal of
Economics, 129(4), 1899-1946.
• Krieger, T. (2019). Democracy and institutional quality: Theory and evidence.
• Ksoll, C., Macchiavello, R., & Morjaria, A. (2022). Electoral violence and supply chain
disruptions in Kenya's floriculture industry. Review of economics and statistics, 1-45.
• Muhammad, A., D’Souza, A., & Amponsah, W. (2013). Violence, instability, and
trade: evidence from Kenya’s cut flower sector. World Development, 51, 20-31.
• Nega, B., & Schneider, G. (2016, October). Africa rising? Short-term growth vs. deep
institutional concerns. In Forum for Social Economics (Vol. 45, No. 4, pp. 283-308).
Routledge.
• Park, S. M. (2022). Domestic formal and informal institutions: their substitutability and
comparative advantage. Review of World Economics, 1-34.
• Robinson, J. A., & Acemoglu, D. (2012). Why nations fail: The origins of power,
prosperity and poverty. London: Profile.

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• Totouom, A., Kaffo, H. F., & Sundjo, F. (2019). Structural transformation of Sub-
Saharan Africa: Does the quality of institutions matter in its industrialization process?
Region et Development, 50, 119-136.

9. Special topics: Corruption, Capital Flights, illicit financial flows and underground
(shadow) economy
Definition, forms, determinants and consequences of corruption. State of corruption in
Kenya. Definition and consequences of capital flights with application. Definition and
consequences of shadow economy with application. Definition and consequences of illicit
financial flows with application.
Key readings (Apart from the aforementioned books):
• Ampah, I. K., & Kiss, G. D. (2019). Economic Policy Implications of External Debt
and Capital Flight in Sub-Saharan Africa’s Heavily Indebted Poor Countries. Society
and Economy, 41(4), 523-542.
• Barasa, L., Knoben, J., Vermeulen, P., Kimuyu, P., & Kinyanjui, B. (2017).
Institutions, resources and innovation in East Africa: A firm level approach. Research
Policy, 46(1), 280-291.
• Boyce, J. K., & Ndikumana, L. (2001). Is Africa a net creditor? New estimates of
capital flight from severely indebted sub-Saharan African countries, 1970-96. Journal
of Development Studies, 38(2), 27-56.
• Boyce, J. K., & Ndikumana, L. (2017). Debt and capital flight. In Handbook of
Globalisation and Development. Edward Elgar Publishing.
• Collin, M. (2020). Illicit Financial Flows: Concepts, Measurement, and Evidence. The
World Bank Research Observer, 35(1), 44-86.
• Fleming, M. H., Roman, J., & Farrell, G. (2000). The shadow economy. Journal of
International Affairs, 387-409.
• Gokmenoglu, K. K., & Amir, A. (2023). Investigating the Determinants of the Shadow
Economy: The Baltic Region. Eastern European Economics, 1-18.
• Hope, Sr, K. R. (2020). Channels of corruption in Africa: analytical review of trends in
financial crimes. Journal of Financial Crime, 27(1), 294-306.
• Jain, A. K. (2001). Corruption: A review. Journal of economic surveys, 15(1), 71-121.
• Kar, D., & Spanjers, J. (2014). Illicit financial flows from developing countries: 2003-
2012 (Vol. 20). Washington, DC: Global Financial Integrity.
• Kimuyu, P. (2007). Corruption, firm growth and export propensity in
Kenya. International Journal of social economics.
• Kirchgässner, G. (2017). On estimating the size of the shadow economy. German
Economic Review, 18(1), 99-111.
• Mauro, P. (1995). Corruption and growth. The quarterly journal of economics, 110(3),
681-712.
• Muchai, D. N., & Muchai, J. (2016). Fiscal policy and capital flight in Kenya. African
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