The Guide to the Book 'Institutional Constraints on Modern Economic Growth'

Abstract

How to import modern Western Institutions to suppress economic growth in underdeveloped countries? Russian experience and some warnings for newcoming reformers The monograph "Institutional Constraints on Modern Economic Growth" deals with the most dangerous obstacles standing in the way of long term economic growth. Some of these obstacles have been studied extensively, while others are well known but have been largely forgotten over time; finally, there are some that for various reasons are normally ignored.

"I believe that the United States today is not an appropriate model for Mexico or other low-income countries…. There have been no summits about how you privatize governmental activities. You have seen summits about how to raise taxes, about spending more of the taxpayers' money, about how to impose more controls on the people. That is the sense in which I say, take as your model the U.S. in its first 150 years. We can afford our nonsense now because we had so long a period during which to build a base. You can't." wrote Milton Friedman in 1994.

The book contains specification of the principal cases of "nonsense". The authors are searching for historic records of "damaged" institutions, for their roots and causes of the damages. The "damages" are tracked to universal suffrage rising and to the earlier, pre-capitalist institutions. The research was conducted in order to develop the policy advice for new democracies how to escape all these traps.

Keywords: private property safeguards, import of institutions; Economic Growth; Government failures; political institutions

JEL Classification: D72, D73, H41, N40, P16, P51