Empirical methods Prescriptive and policy The credibility thesis is a proposed heterodox theoretical framework for understanding how societal institutions or social rules come about and evolve.
The Credibility Thesis has put forward “that what ultimately determines the performance of institutions is not their form in terms of formality, privatization, or security, but their spatially and temporally defined function.
Apart from studying credibility in real-life situations, the particular premises of the theory – endogeneity, dis-equilibrium, and functional adaptation – make it also suitable for simulation in agent-based models.
[1] A concern for the credibility of policy emerged in the latter half of the 20th century in response to frequently observed failures of neoliberal structural adjustments in the developing world associated with the Washington Consensus.
[41][42] In this context, there is a growing body of research suggesting one should focus on the circular cumulative causation aspects of function or quality of institutional performance rather than their form.
[43][44][45] As noted by Ha-Joon Chang: “a big problem that dogs the current orthodox literature on development is its inability to clearly distinguish between the forms and functions of institutions.”[46] The term credibility thesis was put forth by Peter Ho in 2014.
"[47] Benjamin Davy described it as a “rallying call of function presides over form” which “takes a fresh approach to credibility, land policy, and property theory.
Initially developed with regard to land policy in main-land China, the credibility of property rights is also interesting from the perspective of Western property theory.”[48] George Lin deemed the thesis “inspirational, innovative, and provocative with great potentials to advance theoretical inquiry into the intriguing nature of China's developmental model in a rapidly changing world.”[16] The theoretical and methodological groundwork on the credibility thesis was awarded with the William Kapp Prize by the European Association for Evolutionary Political Economy.
[49] The credibility thesis was developed to explain the apparent contradiction between China’s insecure land tenure and the support it rallied by farmers.
Although the security of the lease is protected by law, the contracted land has been subjected to frequent reallocations by the village collective in response to demographic changes.
[50][51][52][53] In the years after it was mooted, the credibility thesis has been applied to various sectors and resources, including land, [42] [54] slums and informal settlements, [18] affordable and commercial housing, [19] grasslands, [11] [38] forests, [55] mineral resources, [56] water management, [57][37] apartment and strata rights, [58] customary land rights, [59][26] climate and environmental policy, [60] and issues of urbanization and planning.
[42][18][34] 2) Advancing the methodology and measurement of credibility, such as through refinement of the FAT Institutional Framework in relation to socio-ecological systems;[62] development of the Conflict Analysis Model;[63] and calculation of endogenous transaction costs as a measure of credibility;[11] 3) Assessing the functions of institutions, such as for political influence,[18] social welfare,[64] sustainability,[38] the catering for traditional markets,[56] and social cohesion.