The Role of Institutions in Growth and Development
In this paper authors argue that the main determinants of differences in prosperity across countries are differences in economic institutions. To solve the problem of development will entail reforming these institutions. Unfortunately, this is diff...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/232971468326415075/The-role-of-institutions-in-growth-and-development http://hdl.handle.net/10986/28045 |
| Summary: | In this paper authors argue that the
main determinants of differences in prosperity across
countries are differences in economic institutions. To solve
the problem of development will entail reforming these
institutions. Unfortunately, this is difficult because
economic institutions are collective choices that are the
outcome of a political process. The economic institutions of
a society depend on the nature of political institutions and
the distribution of political power in society. As yet,
authors only have a highly preliminary understanding of the
factors that lead a society into a political equilibrium
which supports good economic institutions. However, it is
clear that it is the political nature of an institutional
equilibrium that makes it very difficult to reform economic
institutions. The authors illustrate this with a series of
pitfalls of institutional reforms. The author's
analysis reveals challenges for those who would wish to
solve the problem of development and poverty. That such
challenges exist is hardly surprising and believe that the
main reason for such challenges is the forces authors have
outlined in this paper. Better development policy will only
come when authors recognize this and understand these forces
better. Nevertheless, some countries do undergo political
transitions, reform their institutions, and move onto more
successful paths of economic development. |
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