 Culture, institutions, and long‐run performancePacific Economic Review, 2021, vol. 26, issue 3, 372-391 Abstract: If institutions are essential for long‐run performance, why don't developing countries adopt institutions in developed countries to become rich? In this dynamic model, culture affects a ruler's institutional choice, while culture itself evolves endogenously. Multiple stable steady states are possible, and even similar initial conditions can lead to dramatically different steady states. The state of Qin's unification of China in 221 bc is used to illustrate the model. In one steady state, consistent with what happened in the state of Qin, individuals value material incentives. Qin did not strictly practice the patriarchal clan system advocated by Confucianism. Qin adopted Legalist institutions under which government officials were chosen by merit, and Qin culture was further shaped by Legalism. In another steady state, consistent with what happened in states other than Qin, individuals value loyalty and family values. Those states chose not to adopt Legalist institutions comprehensively, fearing that inconsistencies between culture and institutions could lead to internal rebellions even though institutional reforms would increase their military power. Other cases of how the interdependence between culture and institutions affects performance are also discussed. Date: 2021 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:pacecr:v:26:y:2021:i:3:p:372-391 Ordering information: This journal article can be ordered from Access Statistics for this article Pacific Economic Review is currently edited by Kenneth S. Chan and Yin-wong Cheung More articles in Pacific Economic Review from Wiley Blackwell |
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