The role of institutions in development is to incentivize of positive and inclusive economic growth, rather than extraction led growth. As Acemoglu and Robinson state, “it is politics and political institutions that determine what economic institutions a country has” (p. 43), therefore positive and inclusive political institutions must be developed for positive and inclusive economic growth. Secure property rights are critical to the conception of development Acemoglu and Robinson profess, as this is one of the only ways to incentivize economic activity. The security of property from seizer by either the government or other individuals in society allows for individuals to invest and gain from whatever they may have.
This conception of institutions, and the role they play in creating inclusive development through the creation of incentives fits with the idea “development is a process of structural societal change” (Sumner et al p. 12). Clearly existing extractive institutions of many undeveloped or underdeveloped countries must be transformed into inclusive intuitions through some kind of political transformation, as economic institutions are subordinate to political ones. It would then follow that development actors, from states to NGOs to individuals, should be concentrating political rather than economic development. The transformation of institutions from extractive to inclusive would also fall into Sen’s conception of development, as more inclusive economic institutions would allow greater numbers of people, with a greater diversity of abilities and backgrounds to participate in the economy. The elimination of elite run, extractive institutions would allow individuals to exercise their right to participate in markets and economic transitions.
Institutions then, after being freed from elite control and extractive mandates, must be made to work toward getting as many people as possible to be active in the markets. This can be through the securing of property rights as Acemoglu and Robinson profess, but it can also occur through the enforcement of policies allowing access to markets by those with disability. This transformation of institutions appears to fall inline with development theories that predominated in the 1950s and 1960s in particular (Sumner et al p. 12).