Institutional Traps and Economic Growth

Mark Gradstein

No 6414, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: 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.

Keywords: Growth; Inequality; Institutional quality; Political bias (search for similar items in EconPapers)
JEL-codes: D31 D72 O10 O11 (search for similar items in EconPapers)
Date: 2007-08
New Economics Papers: this item is included in nep-dev and nep-pol
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