Path Dependency Theory

Background

The question of path dependency arises very frequently in socio-scientific discourses especially on institutional evolution.This concept of path dependency establishes a dynamic relationship between power,actors and institutions which compels any research to study institutions and their corresponding developments from critical theory perspective to understand mechanics behind such institutional metamorphosis and its impact on human environment and subsequent responses to such changes.Such theories also make bold attempts to explain institutional stagnancy; why actors may intentionally or unintentionally fail to respond to changes in the environment even when such responses would yield better results directly countering those economic

Palaeoinstitutionalism showed very little interest in cumulative theory building (Shepsle, 1989; Easton, 1971; Eckstein, 1979) and development of critical theory was missing.This school basically believed that political behavior was moulded and shaped by the formal rules of institutional arrangement (Hirsch, 1997) neglecting equivalent power dynamics. It was rules-to-power relationship which believed that actors manning the institutions derived power from the rules governing the institutional setup.Since the power flow is from rules to institutions and then to actors; the politics,economics and society answered to the prevailing institutional establishment leading to institutional domination.The politics,economics and the society was dictated by institutional norms; formal norms which had the power to create and also contain power.Power was born in the institution and also died in the institution creating a situation of institutional

Secondly,the regained importance of Marxism and the institution of the ‘State’ (Krasner, 1984; Skocpol, 1985; Bell, 1997).Third,institutional studies have provided credible explanations of why countries pursued and responded so differently to common economic challenges and changes of the 1970s and 1980s (Oil shock and hyperinflations) (Thelen and Steinmo, 1992).Fourthly,development of public policy in the direction of institutional restructuring especially for explaining the concept of Staatraison and public sector reform.

The crucial difference between Behaviorism and Neoinstitutionalism is that the plain atomistic individual focus in the former is replaced by a focus on institutionally situated actors in the latter.We must understand that the political universe is not atomistic and isolated.Institutions provide actors with opportunities as well as constraints.Institutions are crucial in providing actors with sets of behavioral incentives and disincentives,with sets of normative and ideational codes which shape not only their behavior but also preferences, resources and power