Skip to main content
Log in

Institutions for high-quality growth: What they are and how to acquire them

  • Articles
  • Published:
Studies in Comparative International Development Aims and scope Submit manuscript

Sakenn pe prie dan sa fason (Everyone can pray as he likes.) —Mauritian folk wisdom

Abstract

This article opens with a discussion of the types of institutions that allow markets to perform adequately. While we can identify in broad terms what these are, there is no unique mapping between markets and the non-market institutions that underpin them. The paper emphasizes the importance of “local knowledge”, and argues that a strategy of institution building must not over-emphasize best-practice “blueprints” at the expense of experimentation. Participatory political systems are the most effective ones for processing and aggregating local knowledge. Democracy is a meta-institution for building good institutions. A range of evidence indicates that participatory democracies enable higher-quality growth.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

References

  • Alesina, Alberto and Allan Drazen. 1991. “Why Are Stabilizations Delayed”?American Economic Review, 81(5): 1170–1188.

    Google Scholar 

  • Amsden, Alice H.. 1989.Asia’s Next Giant: South Korea and Late Industrialization. New York: Oxford University Press.

    Google Scholar 

  • Barro, Robert. 1996. “Determinants of Economic Growth: A Cross-Country Empirical Study”. NBER Working Paper no. 5698, August.

  • Bordo, Michael D., Claudia Goldin, and Eugene N. White, Eds. 1998.The Defining Moment: The Great Depression and the American Economy in the Twentieth Century. Chicago: University of Chicago Press.

    Google Scholar 

  • Chandra, Siddharth. 1998. “On Pillars of Democracy and Economic Growth”. Graduate School of Public and International Affairs, University of Pittsburgh, February.

  • Chowhurie-Aziz, Monali. 1997. “Political Openness and Economic Performance”. Unpublished paper, University of Minnesota, January.

  • Evans, Peter. 1995.Embedded Autonomy: States and Industrial Transformation. Princeton, NJ: Princeton University Press.

    Google Scholar 

  • Hall, Robert E. and Charles I. Jones. 1999. “Why Do Some Countries Produce Much More Output per Worker than Others”?Quarterly Journal of Economics, 114(1): 83–116.

    Article  Google Scholar 

  • Hausmann, Ricardo and Michael Gavin. 1996.Securing Stability and Growth in a Shock Prone Region: The Policy Challenge for Latin America. Inter-American Development Bank, Washington, D.C.

    Google Scholar 

  • Helliwell, John. 1994. Empirical Linkages Between Democracy and Economic Growth.British Journal of Political Science 24: 225–248.

    Article  Google Scholar 

  • Hoff, Karla and Joseph E. Stiglitz. 1999. Modern Economic Theory and Development. World Bank, October.

  • Isham, Jonathan, Daniel Kaufmann and Lant Pritchett. 1997. Civil Liberties, Democracy, and the Performance of Government Projects.The World Bank Economic Review, May: 219–42.

    Google Scholar 

  • Jacoby, Sanford M. 1998. Risk and the Labor Market: Societal Past as Economic Prologue. Institute of Industrial Relations, UCLA.

  • Jaggers, K. and T.R. Gurr. 1995. “Tracking Democracy’s Third Wave with Polity III Data”.Journal of Peace Research 32: 469–482.

    Article  Google Scholar 

  • Johnson, Simon and Andrei Shleifer. 1999.Coase v. the Coasians: The Regulation and Development of Securities Markets in Poland and the Czech Republic. MIT and Harvard.

  • Kaufmann, Daniel, Aart Kraay and Pablo Zoido-Lobation. 1999. “Governance Matters” Unpublished paper, The World Bank.

  • Knack, Stephen and Philip Keefer. 1995. “Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures”Economics & Politics (November): 207–228.

    Article  Google Scholar 

  • Knack, Stephen and Philip Keefer. 1996. “Does Social Capital Have an Economic Payoff? A Cross-Country Investigation”. Unpublished manuscript.

  • Lau, Lawrence J., Yingyi Qian and Gerard Roland. 1997.Reform Without Losers: An Interpretation of China’s Dual-Track Approach to Transition.

  • Lin, Justin Yifu and Jeffrey B. Nugent. 1995. “Institutions and Economic Development” in J. Behrman and T.N. Srinivasan eds..Handbook of Economic Development, vol. 3A, North-Holland, Amsterdam.

    Google Scholar 

  • Meade, J.E., et al. 1961. The Economics and Social Structure of Mauritius—Report, to the Government of Mauritius. London: Methuen and Co.

    Google Scholar 

  • Miles, William F.S. 1999. “The Mauritius Enigma”.Journal of Democracy, 10(2): 91–104.

    Article  Google Scholar 

  • North, Douglass C. and R. Thomas 1973.The Rise of the Western World: A New Economic History. Cambridge University Press, Cambridge.

    Google Scholar 

  • North, Douglass C. and Barry Weingast. 1989. “Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth Century England”.Journal of Economic History, XLIX: 803–832.

    Article  Google Scholar 

  • Pritchett, Lant. 1997. “Economic Growth: Hills, Plains, Mountains, Plateaus and Cliffs”. Unpublished paper, World Bank.

  • Przeworski, Adam and Fernando Limongi. 1993. “Political Regimes and Economic Growth.”The Journal of Economic Perspectives, Summer: 51–69.

    Google Scholar 

  • Qian, Yingyi, Gerard Roland and Chenggang Xu. 1999. “Coordinating Changes in M-Form and U-Form Organizations”. Paper for the Nobel Symposium.

  • Quinn, Dennis P. and John T. Woolley. 1998.Democracy and National Economic Performance: The Search for Stability. School of Business, Georgetown University.

  • Rodrik, Dani. 1995. “Getting Interventions Right: How South Korea and Taiwan Grew Rich”.Economic Policy 20.

  • Rodrik, Dani. 1996. “Understanding Economic Policy Reform”.Journal of Economic Literature, March: 9–41.

    Google Scholar 

  • Rodrik, Dani. 1997. “Democracy and Economic Performance” Unpublished paper, December.

  • Rodrik, Dani. 1998. “Why Do More Open Economies Have Bigger Governments?”Journal of Political Economy, 106(5): 997–1032.

    Article  Google Scholar 

  • Rodrik, Dani. 1999a.,The New Global Economy and Developing Countries: Making Openness Work. Overseas Development Council, Washington, D.C.

    Google Scholar 

  • Rodrik, Dani. 1999b. “Democracies, Pay Higher Wages.”Quarterly Journal of Economics, August.

  • Rodrik, Dani. 1999c. “Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses”Journal of Economic Growth, 4(4).

  • Rodrik, Dani. 1999d. “Why Is There So Much Economic Insecurity in Latin America?” Unpublished paper.

  • Sachs, Jeffrey D. and Wing Thye Woo. Forthcoming. “Understanding China’s Economic Performance”.Journal of Policy Reform.

  • Sah, Raaj K.. 1991 “Fallibility in Human Organizations and Political Systems”.Journal of Economic Perspectives, 5(2): 67–88.

    Google Scholar 

  • Tavares, Jose and Romain Wacziarg. 1996.How Democracy Fosters Growth. Harvard University.

  • Temple, Jonathan and Paul Johnson. 1998. “Social Capability and Economic Growth”.Quarterly Journal of Economics. 113(3): 965–90.

    Article  Google Scholar 

  • Tornell, Aaron and Philip R. Lane. 1999. “The Voracity Effect”.American Economic Review, 89(1): 22–46.

    Article  Google Scholar 

  • Unger, Roberto Mangabeira. 1998.Democracy Realized: The Progressive Alternative. London and New York: Verso.

    Google Scholar 

  • Wellisz, Stanislaw and Philippe Lam Shin Saw. 1993. “Mauritius” In Ronald Findlay and Stanislaw Wellisz eds.,The Political Economy of Poverty, Equity, and Growth: Five Open Economies. New York: Oxford University Press.

    Google Scholar 

  • Williamson, John Ed. 1994.The Political Economy of Policy Reform, Washington, D.C., Institute for International Economics.

    Google Scholar 

Download references

Authors

Additional information

This paper was originally prepared for the International Monetary Fund’s Conference on Second-Generation Reforms, Washington, DC, November 8–9, 1999. I thank Ruth Collier, Steve Fish, Mohsin Khan, Saleh Nsouli, conference participants, and an anonymous referee for helpful comments.

Dani Rodrik is professor of international political economy at the John F. Kennedy School of Government, Harvard University. He is also the research coordinator for the Group of 24 (G-24), a research associate of the National Bureau of Economic Research, and a research fellow of the Centre for Economic Policy Research (London). He serves as an advisory committee member of the Institute for International Economics, senior advisor of the Overseas Development Council, and advisory committee member of the Economic Research Forum for the Arab Countries, Iran and Turkey. Professor Rodrik’s recent research is concerned with the consequences of international economic integration, the role of conflict-management institutions in determining economic performance, and the political economy of policy reform.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Rodrik, D. Institutions for high-quality growth: What they are and how to acquire them. St Comp Int Dev 35, 3–31 (2000). https://doi.org/10.1007/BF02699764

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF02699764

Keywords

Navigation