Institutions Do Not Rule: Reassessing the Driving Forces of Economic Development

Wen, Yi; Luo, Jinfeng

doi:10.2139/ssrn.2646140

Cited by 2 publications

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“…236 See, e.g., https://www.youtube.com/watch?v=doMXl89Lur8. 237 Based on cross country data and instrument variables widely used in the existing literature, Luo and Wen (2015) in a recent working paper, "Institutions Do Not Rule: Reassessing the Driving Forces of Economic Development,"…”

Section: Conclusion: a New Stage Theory Of Economic Developmentmentioning

confidence: 99%

The Making of an Economic Superpower―Unlocking China’s Secret of Rapid Industrialization

Wen¹

2015

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The rise of China is no doubt one of the most important events in world economic history since the Industrial Revolution. Mainstream economics, especially the institutional theory of economic development based on a dichotomy of extractive vs. inclusive political institutions, is highly inadequate in explaining China's rise. This article argues that only a radical reinterpretation of the history of the Industrial Revolution and the rise of the West (as incorrectly portrayed by the institutional theory) can fully explain China's growth miracle and why the determined rise of China is unstoppable despite its current "backward" financial system and political institutions. Conversely, China's spectacular and rapid transformation from an impoverished agrarian society to a formidable industrial superpower sheds considerable light on the fundamental shortcomings of the institutional theory as well as mainstream "blackboard" economic models, and provides more-accurate reevaluations of historical episodes such as Africa's enduring poverty trap despite radical political and economic reforms, Latin America's lost decades and frequent debt crises, 19th century Europe's great escape from the Malthusian trap, and the Industrial Revolution itself.

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Section: Conclusion: a New Stage Theory Of Economic Developmentmentioning

confidence: 99%

The Making of an Economic Superpower―Unlocking China’s Secret of Rapid Industrialization

Wen¹

2015

Self Cite

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“…However, the development of such institutions depends on the level of country's economic development. Interestingly, Luo and Wen (2015) contend that institutions are a consequence of economic development and will only develop after a country embarks on the process of industrialization.…”

Section: What Is the Verdict?mentioning

confidence: 99%

Government Intervention and Financial Sector Development

Arora

2017

Development Finance

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The scarcity of capital in Russia was such that no banking system could conceivably succeed in attracting funds.. .. Supply of capital for the needs of industrialization required the compulsory machinery of the government (Gerschenkron 1962) pp 19-22). …whatever its original objectives, state ownership tends to stunt financial sector development, thereby contributing to slower growth (World Bank 2001.p.123)

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Institutions Do Not Rule: Reassessing the Driving Forces of Economic Development

Cited by 2 publications

References 0 publications

The Making of an Economic Superpower―Unlocking China’s Secret of Rapid Industrialization

The Making of an Economic Superpower―Unlocking China’s Secret of Rapid Industrialization

Government Intervention and Financial Sector Development

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