What is the Institutionalism Theory in Economics?

It asserts dissatisfaction with the macro-structural transition theories and their deterministic spatial implications has forged a recent change in focus towards the specific and particular attribute of localities and regions and how these relate to their development over time.  The institutionalist approach interprets particular forms of institutional organization as the root causes and explanations of the conditions that promote or inhibit the growth and development of localities and regions.   Evolution Theory is central to institutional and socio-economic approaches to local and regional development.  Furthermore, local and regional development trajectories can be nonlinear.  It asserts dissatisfaction with the external or exogenous treatment of factors of production-populations growth, savings rates, human capital and technological change- in traditional neoclassical growth theory discussed above has been addressed by a growing body of work on endogenous growth models.  Both models struggle to convince on their central agreement that returns may be constant and increasing rather than diminishing.

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