Institutions and long-run growth performance: An analytic literature review of the institutional determinants of economic growth
Richard Bluhm & Adam Szirmai
#2012-033
This paper provides an analytic review of selected contributions to the
study of institutions and economic growth. We review the contributions
to the study of institutional determinants of long-run growth by
Engerman and Sokoloff, and Acemoglu, Johnson and Robinson. We discuss
the work of Rodrik and others who focus on institutions and
institutional reform and take steps towards bridging the gap between the
study of long-run and short-run growth performances. In addition, we
review two new theoretical frameworks by North, Wallis and Weingast and
Khan that relate the structure of institutions to short-run volatility
and long-run growth trends. We survey a wide array of supplementary
econometric evidence and criticisms relating to each of these key
contributions. Special attention is given to identifying the underlying
causal relationships, the empirical methods and the kind of data used to
test theories and hypotheses found in the literature. Further, we
compare the findings in different strands of the literature using a
sources-of-growth framework which distinguishes between ultimate,
intermediate and proximate causes of growth and development.
Keywords: growth, institutions, inequality, development
JEL Classification: O43, O30, O11