The Political Economy of Growth and Governance

38 Pages Posted: 23 Jul 2009

See all articles by Paul G. Hare

Paul G. Hare

Heriot-Watt University; CASE, Warsaw

Date Written: February 2007

Abstract

There are diverse ideas about governance around the world, and this paper studies them through the following questions: (a) what does the available evidence tell us about the political and institutional requirements for sustained economic growth? (b) What do we need from the state to secure growth? (c) How do a country’s internal characteristics support or impede its growth? (d) How does the external environment of a country influence its economic growth prospects? These elements are then put together into a model of growth, from which we derive conclusions about governance arrangements. Thus the paper outlines a simple framework within which to think about the political economy of growth that can be summed up in five points: good government, with secure political conditions; credible macroeconomic stability; savings and investment high enough to sustain adequate growth; openness to the world economy; and the discipline of external engagement. It then argues that the growth model needs to be underpinned by suitable governance arrangements, and suggests that good governance has two main elements, each quite complex in practice, namely: protection of property rights, and accountability of government.

Keywords: political economy, global economy, economic growth, governance, macroeconomic stability, property rights.

Suggested Citation

Hare, Paul, The Political Economy of Growth and Governance (February 2007). CASE Network Studies and Analyses No. 337, Available at SSRN: https://ssrn.com/abstract=1436921 or http://dx.doi.org/10.2139/ssrn.1436921

Paul Hare (Contact Author)

Heriot-Watt University ( email )

Riccarton
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United Kingdom
0131 451 3483 (Phone)
0131 451 3498 (Fax)

CASE, Warsaw ( email )

Al. Jana Pawła II 61/212
Warsaw, 01-031
Poland

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