A Nation 's Gdp Growth Rate Essay

849 Words Dec 8th, 2016 4 Pages
Barro found that a nation’s GDP growth rate is correlated with improved rule of law and granting of political rights. These were only correlated when prevalence was initially low, but it demonstrated that certain political structures may be better for growth. This is because economic rights and political rights facilitate and encourage one another to develop. The key causal mechanism here is limitation in government power due to the increase of individual political rights (Barro 1998). While accounting for the idea that corruption and instability drain economic capacity, Acemoglu and Robinson’s theory makes the forward motion of describing important political institutions that boost growth. The importance of political institutions is thoroughly explained and refined in Why Nations Fail, connecting individual actions and abilities to aggregate results (2012).
It has been thoroughly demonstrated that corruption lowers economic growth, and that certain economic institutions are important for growth. These include property rights, banks, and a stable currency, among others. These are described as inclusive economic institutions because they operate on the idea that more individuals will engage in the economy when they believe they can capitalize on their investment. Acemoglu and Robinson posit that inclusive, rather than extractive, institutions in the political sphere drive the creation of these necessary economic steps. Pluralist political structures, or those that are more…

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