Development economics, the New Institutional Economics and NGOs

Developmental NGOs are increasingly engaging with the language of economics. Economic thinking has a direct impact on NGOs through their involvement in micro-level income generation and micro finance, to macro-level advocacy and in their critiques of structural adjustment strategies. This paper provides an economic language and framework that is empathetic with wider NGO aspirations for poverty eradication and social justice. It does so by drawing on the 50 years of modern development economics and on the past decade's engagement with the New Institutional Economics. The concepts of transition costs, transaction costs and uncertainty are used to show how a future NGO role can be understood in terms of redistributing risk and uncertainty in society in favour of the poor and disadvantaged.