The Role of Institutions in Growth and Development

By Daron Acemoglu, James A. Robinson. 2010

837 citations recorded by the source corpus.

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.

Subfields: Development, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/8c59b221140fbb379b454a2d81c9195b0d984134

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Citations in the corpus

FIRM PRODUCTIVITY AND INSTITUTIONAL QUALITY: EVIDENCE FROM ITALIAN INDUSTRY (2015, background): “…are highly correlated with income per capita; and that institutions can explain up to 30-fold per capita income differences between developed and developing countries (Knack and Keefer, 1997; Hall and Jones, 1999; Acemoglu et al., 2001; Easterly and Levine, 2003; Acemoglu and Robinson, 2008).”
Explaining the welfare state: power resources vs. the Quality of Government (2011, background): “This discussion is connected to the more recent focus in development studies and institutional economics on the importance of ‘good governance’ (Acemoglu and Robinson, 2008).”
Anti-corruption: the indirect ‘big bang’ approach (2011, positive): “This is peculiar since there is by now quite compelling empirical support for claiming that the quality of a country’s political institutions determines its economic and social development (Acemoglu and Robinson, 2008; Holmberg et al., 2009; Klitgaard, 1997; Rose-Ackerman, 2004).”
The Impact of Institutional Quality on Economic Growth: Panel Evidence (2014, background): “Acemoglu and Robinson (2010) however, state that: “[The] differences in human capital, physical capital, and technology are only proximate causes in the sense that they pose the next question of why some countries have less human capital, physical capital, and technology and make worse use of their…”
Reforming fossil fuel subsidies: drivers, barriers and the state of progress (2017, background): “These challenges also highlight the crucial role played by political and administrative institutions, which must possess the authority to initiate and oversee reforms, but also the diligence to consider and mitigate potential adverse reform effects (Acemoglu & Robinson, 2010).”