Institutional Traps and Economic Growth
Ben-Gurion University of the Negev - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Centre for Economic Policy Research (CEPR); World Bank - Development Research Group (DECRG)
CEPR Discussion Paper No. DP6414
This paper's point of departure is that low-quality institutions, concentration of political power, and underdevelopment are persistent over time. Its analytical model views an equal distribution of political power as a commitment device to enhance institutional quality thereby promoting growth. The politically powerful coalition contemplates relinquishing of its power, weighing this advantageous consequence against the limit on own appropriative ability that it entails. The possibility of two developmental paths is exhibited: with concentration of political and economic power, low-quality institutions, and slow growth; and a more equal distribution of political and economic resources, high-quality institutions, and faster growth.
Number of Pages in PDF File: 38
Keywords: growth, inequality, institutional quality, political bias
JEL Classification: D31, D72, O10, O11working papers series
Date posted: May 29, 2008
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