DP2370 Institutions For High-Quality Growth: What They Are And How To Acquire Them

Author(s): Dani Rodrik
Publication Date: February 2000
Keyword(s): Economic Growth, Institutions
JEL(s): O10
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=2370

This paper 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.