Informal Economic Institutions

3 Credits · Level: Graduate

Blat’, Guanxi, Wasta and Jeito are informal exchange practices found in Russia, China, the Arab world and Brazil respectively. They are sometimes criticized as corrupt, but are recognized by many economists as providing crucial “grease” that makes the economic system work. People who live in these countries often say these terms describe “how to get things done.” At the same time, all societies develop informal economic institutions alongside the formal economy. The relationship between the institutions and practices is an important and little-studies aspect of political economy. The informal economic systems are perceived as unique by those living in each of the cultural settings where they prevail, yet all societies have patterns of informal relationships that help systems to function (what Merton called “functional dysfunctions”). The course will explore similarities and differences in these relationships across a range of societies.