EconPapers    
Economics at your fingertips  
 

Institution vs. strategy: the determinant of development success or failure

Justin Yifu Lin, Zitong Zhang and Yuxuan Liu

China Economic Journal, 2025, vol. 18, issue 2, 157-185

Abstract: The pursuit of dynamic and inclusive economic development is a common goal for countries worldwide. The 2024 Nobel laureates in Economics, Acemoglu, Johnson, and Robinson, posited that institutions are endogenous and are the fundamental determinant of development success or failure. However, we argue that their hypothesis does not align with cross-sectional and historical evidence. From the perspective of New Structural Economics, this paper contends that a comparative-advantage-following development strategy is the key to an economy’s dynamic growth and equitable income distribution. Institutions, including aspects such as corruption, openness, and expropriation risks, are themselves endogenous to the choice of development strategies. Our proposition is supported by cross-country empirical evidence. Finally, the paper points out that for a developing country’s government, adopting a comparative-advantage-following development strategy is more conducive to guiding the country’s economic development than adopting an inclusive institution as proposed by Acemoglu, Johnson, and Robinson. This is because an exogenously imposed institution is unlikely to be effective.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/17538963.2025.2489877 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:rcejxx:v:18:y:2025:i:2:p:157-185

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rcej20

DOI: 10.1080/17538963.2025.2489877

Access Statistics for this article

China Economic Journal is currently edited by Tiechang Gao and Yiping Huang

More articles in China Economic Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2025-07-02
Handle: RePEc:taf:rcejxx:v:18:y:2025:i:2:p:157-185