Economic Growth And Development Essay
First of all, it would be appropriate to start this literature review with the definition of institutes as it is given by the American economist D. North. “Institutions are a set of rules, compliance procedures, and moral and ethical behavioral norms designed to constrain the behavior of individuals in the interests of maximizing the wealth or utility of principles. In consequence they structure incentives in human exchange, whether political, social, or economic.” (North 1981)
One major fact of the last century that concerns economic development and economy in general even nowadays, is the existence of not only rich but poor countries, many of them extremely poor, and the huge gap between poor and welfare states. The disability of these poor countries to reach other rich, industrialized nations is of concern. Institutions play a major role, on the development and the long term prosperity of each country. There are a lot of …show more content…
Political institutions include institutions appropriating de jure political power among social groups. They are in correlation with government’s characteristics and the way country’s constitution is being designed.
For economic growth, the types of institutions that are of great importance are those that protect the private property rights and those that implement agreements. However, we must emphasize that growth and development don’t tie automatically. Growth has more to do with the raise of society’s income and development has to do with the prosperity of the society. Many economists share the opinion that we don’t need only growth in order to overtackle poverty and inequalities among countries. They believe that that pro-equity programs and approaches can help achieve economic