Economic Pathology and Comparative Economics: Why Economies Fail to Succeed1

Understanding why economies do not succeed is at least as important as understanding success. The study of failure is focused on the stability of institutions that inhibit good performance, the Northian Conundrum. Policies that seem perverse may fit into a larger institutional environment. This explains the persistence of dysfunctional institutions. The key to effective reform is to understand the underlying logic of the system. I use the phenomenon of Russian viability insurance as an example. Comparative Economic Studies (2005) 47, 503–519. doi:10.1057/palgrave.ces.8100123