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Mr. Marc G Quintyn and Sophia Gollwitzer
This paper tests the theoretical framework developed by North, Wallis and Weingast (2009) on the transition from closed to open access societies. They posit that societies need to go through three doorsteps: (i) the establishment of rule of law among elites; (ii) the adoption of perpetually existing organizations; and (iii) the political control of the military. We identify indicators reflecting these doorsteps and graphically test the correlation between them and a set of political and economic variables. Finally, through Identification through Heteroskedasticity we test these relationships econometrically. The paper broadly confirms the logic behind the doorsteps as necessary steps in the transition to open access societies. The doorsteps influence economic and political processes, as well as each other, with varying intensity. We also identify income inequality as a potentially important force leading to social change.
Mr. Marc G Quintyn and Sophia Gollwitzer

orders dominate our world. At one end of the spectrum, we find the closed society (or natural state) in which the dominant elites create rents from limiting entry to the economic and political system. At the other end, economic and political competition governs access to resources in so-called open access societies . Based on this synthesis, NWW lay out a unifying framework for the transition from closed to open access societies. Drawing on a wealth of historical examples, the authors posit that closed societies need to go through three doorsteps before transition

Mr. Marc G Quintyn and Sophia Gollwitzer
This paper analyzes the institutional conditions affecting the establishment and effectiveness of independent central banks and of budgetary institutions. It draws on the recent theory developed by North, Wallis and Weingast on the transition from a closed and fragile state to an open economic and political environment. The paper presents a composite indicator allowing for the identification of a country’s position along this transition path. The findings suggest that (i) while the establishment of autonomous central banks seems to be relatively independent from the broader institutional framework, sound budgetary institutions tend to be established in countries with higher levels of rule of law for the elites, and (ii) while central bank independence is effective in reducing inflation irrespective of a country’s position along the transition path, budget institutions seem to be most effective as a disciplining device in weak institutional environments.
Mr. Richard I Allen
The paper notes that the development of sound budgetary institutions in countries such as France, the U.K. and the U.S. has taken a very long time?200 years or more?and is still evolving. It discusses Douglass North's prediction?which is supported by available data?that institutional reform is also likely to be very slow in developing countries since the budget is especially prone to rent-seeking influences. Finally, the paper discusses the currently fashionable emphasis on complex, multiannual PFM reform strategies, which have been strongly promoted by the donor community; and advocates a simpler approach grounded on Schick's important principle of "getting the basics right." The paper identifies several areas where further research would be fruitful.
Mr. Marc G Quintyn and Sophia Gollwitzer

orders in the world today: an open access order and a limited access order. Both orders are able to solve the problem of containing violence but in very different ways. Most countries are characterized by limited access, which is why NWW call this social order the natural state . While the natural state has been in existence during the last 10,000 years, open access societies have only emerged in the last 300 years. Box 1 explains in more detail the differences between, and dynamics of, these two types of social order. One of the main contributions of NWW

Mr. Richard I Allen

(NWW) conclude on the basis of extensive historical analysis that natural states tend to perpetuate for very long periods of time, and that the transition from natural states to open-access societies is problematic and depends on the adaptation of their institutions, organizations, and behavior (“doorstep conditions”). Natural states exist on a continuum ranging from fragile states, characterized by political instability and violence at one extreme, to mature natural states—such as emerging markets—that are close to satisfying the doorstep conditions. Even today, few

Mr. Richard I Allen

access orders”) dominated by elites with primary access to power and resources, but vulnerable to violence and political conflict; and “open-access orders” characterized by competition in political and economic arenas. 2 They provide evidence that the transition to becoming an open-access society can take a long time, depending on the pace of adaptation of institutions, organizations, and behavior. Other writers on public choice and rent seeking, although not embracing the full implications of North, Wallis, and Weingast’s analysis, have nevertheless accepted the