The Political Economy of Growth and Governance

Paul G. Hare

No 702, CERT Discussion Papers from Centre for Economic Reform and Transformation, Heriot Watt University

Abstract: There are diverse ideas about governance around the world, and this paper studies them through the following questions: (a) what does the available evidence tell us about the political and institutional requirements for sustained economic growth? (b) What do we need from the state to secure growth? (c) How do a country's internal characteristics support or impede its growth? (d) How does the external environment of a country influence its economic growth prospects? These elements are then put together into a model of growth, from which we derive conclusions about governance arrangements. Thus the paper outlines a simple framework within which to think about the political economy of growth that can be summed up in five points: good government, with secure political conditions; credible macroeconomic stability; savings and investment high enough to sustain adequate growth; openness to the world economy; and the discipline of external engagement. It then argues that the growth model needs to be underpinned by suitable governance arrangements, and suggests that good governance has two main elements, each quite complex in practice, namely: protection of property rights, and accountability of government.

Keywords: political economy; global economy; economic growth; governance; macroeconomic stability; property rights (search for similar items in EconPapers)
JEL-codes: H11 O43 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-dev, nep-hpe, nep-pbe and nep-pol
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Citations: View citations in EconPapers (1)

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Working Paper: The Political Economy of Growth and Governance (2007)
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