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The relationship between institutions and economic development

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  • Samarasinghe, Tharanga

Abstract

Development is a continuous process which increase choices available for human beings. However, there is a huge disparity throughout the world in relation to economic development. Differences in the institutions show a direct relationship with difference in the economic development. Established political and economic institutions affects the level of investments for human capital, physical capital and technology formation which decide the capacity of good and service production in a particular country. Through that, established institutions of a country influences directly on the level of development in a particular country. This article discusses the institutions, evolution and types of institutions, relationship between institutions and markets, and functions of institutions for economic development. Further this article discusses the way that trust and anti-corruption affects the economic development and link between political power and institutions. Finally, some evidences to show the impacts of institutions on economic development are discussed.

Suggested Citation

  • Samarasinghe, Tharanga, 2019. "The relationship between institutions and economic development," MPRA Paper 97755, University Library of Munich, Germany, revised 29 Dec 2019.
    • Handle: RePEc:pra:mprapa:97755
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    File URL: https://mpra.ub.uni-muenchen.de/97755/1/MPRA_paper_97755.pdf
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    References listed on IDEAS

    as
    1. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    2. World Bank Group, 2016. "Doing Business 2016," World Bank Publications - Books, The World Bank Group, number 22771.
    3. Munir Quddus & Michael Goldsby & Mahmud Farooque, 2000. "Trust: The Social Virtues and the Creation of Prosperity--A Review Article," Eastern Economic Journal, Eastern Economic Association, vol. 26(1), pages 87-98, Winter.
    4. Daron Acemoglu & Simon Johnson, 2005. "Unbundling Institutions," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 949-995, October.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Alanda Venter & Roula Inglesi-Lotz, 2023. "Examining the Interlinkage between CO2 Emissions and Inclusive Human Development: Unveiling the Significance of Effective Institutions," Working Papers 202334, University of Pretoria, Department of Economics.

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    More about this item

    Keywords

    development; institutions; political institutions; economic institutions; inclusive institutions; extractive institutions;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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