Unlike most existing studies on the endogenous institutions, literature on theoretical growth has traditionally considered institutions as exogenous. In this paper, a learn-by-doing-based growth model is adopted and integrated with endogenous institutions to study how economic agents’ incentives engage in institutional improvements or exploit institutional imperfections. From maximization of identical agent utility, the economic growth model includes capital, labor, technology, and institutions. The study is to analyze the effect of institutions on the stability of equilibrium, balanced economic growth path, and convergence rate in the process of economic growth. It is concluded that, firstly, improving institutions is a decisive factor for China’s high economic growth rate for the past years; secondly, improving institutions can increase the capital stock per unit of effective labor in steady state; thirdly, imperfect institutions can explain income difference among countries; and finally, technology plays a key role only under the conditions adapting to institutions.

This paper focuses on the roles of formal rules (laws) in institutional emergence, sustenance, crisis, and transition based on an examination of the Meiji Restoration and the Xinhai Revolution. It describes how formal rules in the polities of Qing China and Tokugawa Japan were enforced, supplemented, or modified by the strategic interactions among the ruler, the intermediate organizations, and the peasantry. It then discusses how the strategic complementarities between the ruler and the intermediate organizations were transformed into strategic rivalries in response to changes in the economic and foreign environments, resulting in the demise of dynastic rule in each country. The post-transition constitutional design was affected by the ways in which the strategic reconfigurations had led to the demise of the dynastic rulers. This historical narrative suggests that formal rules per se do not necessarily create institutions in the sense of an integral pattern and process of social behaviour and ideas. A formal rule can function as a substantive form of an institutional process if, and only if, it mediates between a recursive state of strategic interactions among agents and individual belief formation in order to sustain the social order.

The European Union (EU) has been through many institutional transformations since the start of the integration project in the 1950s. While much of the literature has focussed on the more dramatic changes, less attention has been paid to instances of more limited institutional change. This article maps out and then accounts for the limitedness of the EU's departure from its original ‘federal blindness’ vis-à-vis regional actors. Theories of institutional change would lead one to expect that, as integration and regionalization heightened, endogenous pressures for change would trigger greater reform than that observed. Using a novel formula to estimate the EU's aggregate regionalization levels over time, the article demonstrates that it peaked between 1986 and 2003 but has since dropped to a level below that of the 1950s. Such a finding not only corrects a widespread assumption about regionalization levels in the European polity, but also provides an explanation for the pace and scope of the observed change as well as predictions about its future sources.