American Political Science Review Vol.94,No.2 June 2000 Increasing Returns,Path Dependence,and the Study of Politics PAUL PIERSON Harard University t is increasingly common for social scientists to describe political processes as "path dependent.The concept,however,is often employed without careful elaboration.This article conceptualizes path dependence as a social process grounded in a dynamic of "increasing returns."Reviewing recent literature in economics and suggesting extensions to the world of politics,the article demonstrates that increasing returs processes are likely to be prevalent,and that good analytical foundations exist for exploring their causes and consequences.The investigation of increasing returns can provide a more rigorous framework for developing some of the key claims of recent scholarship in historical institutionalism:Specific patterns of timing and sequence matter;a wide range of social outcomes may be possible;large consequences may result from relatively small or contingent events;particular courses of action,once introduced,can be almost impossible to reverse;and consequently,political development is punctuated by critical moments or junctures that shape the basic contours of social life. t is increasingly common for social scientists to that confront them.If path dependence arguments are describe political processes as "path dependent." indeed appropriate in substantial areas of political life, Claims of path dependence have figured in both they will shake many subfields of political inquiry.This classic works of comparative politics,such as Lipset essay argues that they are. and Rokkan's (1967)analysis of European party sys- The analysis begins with a general discussion of path tems,and more recent analyses on topics such as labor dependence that seeks to clarify some important am- incorporation in Latin America (Collier and Collier biguities surrounding the concept.I then outline and 1991),the outcome of state-building processes in Eu- investigate the distinctive characteristics of social pro- rope(Ertman 1996),and the comparative development cesses subject to what economists call "increasing of health care systems (Hacker 1998).The notion of returns,"which could also be described as self-reinforc- path dependence is generally used to support a few key ing or positive feedback processes.For some theorists, claims:Specific patterns of timing and sequence mat- increasing returns are the source of path dependence; ter;starting from similar conditions,a wide range of for others,they typify only one form of path depen- social outcomes may be possible;large consequences dence.The focus here is on increasing returns pro- may result from relatively "small"or contingent events; cesses,both because they are of great social signifi- particular courses of action,once introduced,can be cance and because (in contrast to broader conceptions virtually impossible to reverse;and consequently,po- of path dependence)social scientists are beginning to litical development is often punctuated by critical develop rigorous arguments about the causes and moments or junctures that shape the basic contours of consequences of increasing returns.Increasing returns social life (Collier and Collier 1991;Ikenberry 1994; dynamics capture two key elements central to most Krasner 1989).All these features stand in sharp con- analysts'intuitive sense of path dependence.First,they trast to prominent modes of argument and explanation pinpoint how the costs of switching from one alterna- in political science,which attribute "large"outcomes to tive to another will,in certain social contexts,increase "large"causes and emphasize the prevalence of markedly over time.Second,and related,they draw unique,predictable political outcomes,the irrelevance attention to issues of timing and sequence,distinguish- of timing and sequence,and the capacity of rational ing formative moments or conjunctures from the peri- actors to design and implement optimal solutions ods that reinforce divergent paths.In an increasing (given their resources and constraints)to the problems returns process,it is not only a question of what happens but also of when it happens.Issues of tempo- Paul Pierson is Professor of Government,Harvard University,Cam- rality are at the heart of the analysis bridge,MA 02138. The following section reviews the development of An carlier version of this article was presented as the Jean Monnet Visiting Professor Lecture,European University Institute (EUI), increasing returns arguments in the social science April 1997.I am very grateful to Andy Rudalevige and Jeremy discipline in which they have received the greatest Weinstein for research assistance on this project and to the German attention:economics.This review suggests the wide Marshall Foundation,Simon R.Guggenheim Poundation,and the sweep of potential applications,even in a field that Weatherhead Center for International Affairs for financial support.I might be expected to be hostile to the idea.More have received helpful comments on earlier drafts from many people including several thoughtful reviewers for the APSR.I owe particular important,these economic applications provide the thanks to Frank Baumgartner,David Collier,Pepper Culpepper, most analytically developed discussions of increasing Jeffry Frieden,Daniel Goldhagen,Jacob Hacker,Peter Hall,Alan returns.Economists not only have clarified the princi- Jacobs,Margaret Levi,Robert Mickey,Andrew Moravcsik,Gerardo pal implications of path dependence but also have Munck,Alec Stone,and Kathleen Thelen.I also benefited from discussions at the Harvard Center for European Studies,Columbia identified many of the specific aspects of a particular University,the EUL,the Centro de Investigacion y Docencia Eco- social environment that generate such processes. nomicas (CIDE),the University of California at Berkeley,the The discussion of economics prepares the way for an University of Washington,and Yale University. exploration of the distinctive characteristics of politics. 251