In this paper authors argue that themain determinants of differences in prosperity acrosscountries are differences in economic institutions. To solvethe problem of development will entail reforming theseinstitutions. Unfortunately, this is difficult becauseeconomic institutions are collective choices that are theoutcome of a political process. The economic institutions ofa society depend on the nature of political institutions andthe distribution of political power in society. As yet,authors only have a highly preliminary understanding of thefactors that lead a society into a political equilibriumwhich supports good economic institutions. However, it isclear that it is the political nature of an institutionalequilibrium that makes it very difficult to reform economicinstitutions. The authors illustrate this with a series ofpitfalls of institutional reforms. The author'sanalysis reveals challenges for those who would wish tosolve the problem of development and poverty. That suchchallenges exist is hardly surprising and believe that themain reason for such challenges is the forces authors haveoutlined in this paper. Better development policy will onlycome when authors recognize this and understand these forcesbetter. Nevertheless, some countries do undergo politicaltransitions, reform their institutions, and move onto moresuccessful paths of economic development.
PDF
download
878987797
028-85220240
