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Institutions as the fundamental cause of long-run growth

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  • Institutions as the fundamental cause of long-run growth
  • Acemoglu, Daron; Johnson, Simon; Robinson, James
  • National Bureau of Economic Research


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Title Institutions as the fundamental cause of long-run growth
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Material Type Reports
Author(English)

Acemoglu, Daron; Johnson, Simon; Robinson, James

Publisher

Cambridge:National Bureau of Economic Research

Date 2004-05
Series Title; No NBER Working Paper Series / 10481
Pages 111
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Original Format pdf
Subject Economy < Economic Administration
Holding National Bureau of Economic Research

Abstract

This paper develops the empirical and theoretical case that differences in economic institutions are the fundamental cause of differences in economic development. We first document the empirical importance of institutions by focusing on two 'quasi-natural experiments' in history, the division of Korea into two parts with very different economic institutions and the colonization of much of the world by European powers starting in the fifteenth century. We then develop the basic outline of a framework for thinking about why economic institutions differ across countries. Economic institutions determine the incentives of and the constraints on economic actors, and shape economic outcomes. As such, they are social decisions, chosen for their consequences. Because different groups and individuals typically benefit from different economic institutions, there is generally a conflict over these social choices, ultimately resolved in favor of groups with greater political power. (The rest omitted)