efficient use of skills and resources to engage in activities with higher productivity. as stated by douglass north, known for his work on institutional economics, institutions comprise a set of formal rules that provides the framework for interaction and which shapes the incentives for the functioning of the economy. these include the incentives for people to invest in more efficient technology, to increase their skills and to organise efficient markets. therefore, in strengthening the effectiveness of institutions, it is about putting such institutions in an environment in which they are able to rise to the demands for performance and discipline. this therefore places emphasis on following a certain order, rules and regulations that would bring value to society. while mature and developed economies have benefitted from effective institutions, the changing global and national landscape that is becoming increasingly more interconnected now demands for new institutional arrangements for the way in which engagements or interface takes place. equally important are the arrangements for the management of the new emerging challenges. experience has shown us that this can be highly challenging when it involves changes in relationships when the structures of institutions have not changed. such institution building is particularly important for public policy decision making. this is particularly bis central bankers ’ speeches relevant when coordination arrangements for inputs from the different parts of the public sector become necessary. for the economies in the emerging world that are at a different phase of development, the creation of strong and effective institutions is even more pressing. not only do existing institutions need to be strengthened but new institutions need to be built to facilitate the effective functioning of the economy. we have heard this morning in the tribute to dr. puey, his tremendous role in institution building in thailand and his role in the asian region. there are numerous examples in his legacy, in being resolute in pursuing his convictions and about his effective management of the interface with the political process, given that politics is an important part of the ecosystem of institution building. he achieved this without compromise, sustaining always the integrity of the institutions he was associated with. institutional building therefore needs to be viewed from the broader perspective to include strengthening the institutional arrangements of how economies and financial systems can more effectively function, adding value for greater economic wellbeing. just as we have seen that with the advances in technology, we need to change the hardware and software. so is the case for institutional building to support economic development. it will also involve changing the institutional “ hardware ” and the “ software ” increasingly, emerging economies are in transition towards greater market orientation in which the market has become an important mechanism in generating economic

the land of opportunity? the geography of intergenerational mobility in the united states. ” quarterly journal of economics, vol. 129, no. 4, 2014. 5 / 5 bis central bankers'speeches