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Lecture 2 - The Emergence of Modern Economic Growth A...

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The Emergence of Modern Economic Growth: A Comparative and Historical Analysis Lecture 2 James A. Robinson Harvard September 9, 2009 James A. Robinson (Harvard) The Emergence of Modern Economic Growth: A Comparative and Historical Analysis September 9, 2009 1 / 24
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What are Institutions #1 Institutions: the rules of the game in economic, political and social interactions. Institutions determine °social organization± North (1990, p. 3): °Institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction.± Key point: institutions are humanly devised set constraints shape incentives James A. Robinson (Harvard) The Emergence of Modern Economic Growth: A Comparative and Historical Analysis September 9, 2009 2 / 24
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What are Institutions #2 A broad cluster including many sub levels: economic institutions: e.g., property rights, contract enforcement, etc. shape economic incentives, contracting possibilities, distribution. political institutions: e.g., form of government, constraints on politicians and elites, separation of powers, etc. Shape political incentives and distribution of political power. James A. Robinson (Harvard) The Emergence of Modern Economic Growth: A Comparative and Historical Analysis September 9, 2009 3 / 24
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Why Study Institutions? Institutions are important because they in²uence the way people behave, the costs and bene³ts of di/erent actions and their incentives. Hence they in²uence resource allocation, saving, investment, growth..prosperity. (Institutions are also important because they are of intrinsic value - democracy.) There are strong correlations in the data between institutions of various sorts and important socioeconomic outcomes. James A. Robinson (Harvard) The Emergence of Modern Economic Growth: A Comparative and Historical Analysis September 9, 2009 4 / 24
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Economic institutions and economic performance . Log GDP per capita, PPP, in 1995 Avg. Protection Against Risk of Expropriation, 1985-95 4 6 8 10 6 8 10 AGO ARE ARG AUS AUT BEL BFA BGD BGR BHR BHS BOL BRA BWA CAN CHE CHL CHN CIV CMR COG COL CRI CZE DNK DOM DZA ECU EGY ESP ETH FIN FRA GAB GBR GHA GIN GMB GRC GTM GUY HKG HND HTI HUN IDN IND IRL IRN ISL ISR ITA JAM JOR JPN KEN KOR KWT LKA LUX MAR MDG MEX MLI MLT MNG MOZ MWI MYS NER NGA NIC NLD NOR NZL OMN PAK PAN PER PHL POL PRT PRY QAT ROM RUS SAU SDN SEN SGP SLE SLV SUR SWE SYR TGO THA TTO TUN TUR TZA UGA URY USA VEN VNM YEM ZAF ZAR ZMB ZWE
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Political institutions and economic performance . Log GDP per capita, PPP, in 1995 Constraint on Executive in 1990s 0 2 4 6 8 6 8 10 AGO ARG AUS AUT BDI BEL BEN BFA BGD BOL BRA BWA CAF CAN CHE CHL CHN CIV CMR COG COL COM CRI DEU DNK DOM DZA ECU EGY ESP ETH FIN FJI FRA GAB GBR GHA GIN GMB GRC GTM GUY HND HTI HUN IDN IND IRL ISL ISR ITA JAM JOR JPN KEN KOR LKA LSO LUX MAR MDG MEX MLI MOZ MRT MUS MWI MYS NER NGA NIC NLD NOR NPL NZL PAK PAN PER PHL POL PRT PRY RWA SDN SEN SGP SLE SLV SWE SWZ SYR TCD TGO THA TTO TUN TUR TZA UGA URY USA VEN YEM ZAF ZAR ZMB ZWE
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Causal Inference
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