Exchange and development

The purpose of this paper is to present a framework explaining why different types of transactions occur in different settings - particularly in developing countries. The approach we propose is based on a new concept which we call "exchange-configuration". The latter consists of three building blocks or elements: the item exchanged; the actors engaged in decisions related to the item being exchanged; and, the environment - physical, social, technological, and legal - within which the actors operate. The characteristics of these elements, in different combinations, shape distinct types of exchange relations and transactions. Each particular combination of elements together with the formation process of the exchange and the resulting transaction is considered an exchange configuration. This new concept can clarify the dynamics of exchange by examining the forces that affect the elements of exchange. Two examples, one within the setting of a developing country and the other relating to the global financial crisis that started in 2007, illustrate the use of exchange configurations.

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