4.10.5—Institutional change
- Syllabus
- First assessment 2022
- Objective
- 4.10.5
- Level
- SL
Institutional change changes the rules that shape incentives
Institutional change changes the rules that shape incentives.
Property rights, accountability, legal access and administrative capacity can lower transaction costs and broaden participation in markets.
Example
Secure land titles may let small farmers invest or borrow, but only if courts and records make the rights enforceable.
Name the rule, the affected incentive and the mechanism to productivity or equity.
Formal reform on paper may have little effect without enforcement and legitimacy.
Institutional change includes wider access to formal banking, microfinance and mobile banking, which can lower transaction costs and extend saving, payment and credit services—while interest, consumer protection and over-borrowing still matter. Women's empowerment expands education, work, asset and decision rights; reducing corruption improves trust and resource allocation; enforceable property and land rights can support investment and collateral. Formal rights, accounts or apps are inputs, not outcomes: check affordability, enforcement, digital access and who controls assets.