The Role of the State in Economic Development
30 Pages Posted: 19 Jul 2004
Date Written: August 2004
This paper discusses the recent literature on the role of the state in economic development. It concludes that government incentives to enact sound policies are key to economic success. It also discusses the evidence on what happens after episodes of economic and political liberalizations, asking whether political liberalizations strengthen government incentives to enact sound economic policies. The answer is mixed. Most episodes of economic liberalizations are indeed preceded by political liberalizations. But the countries that have done better are those that have managed to open up the economy first, and only later have liberalized their political system.
Keywords: Growth, Institutions, Democracy
JEL Classification: O1, O11
Suggested Citation: Suggested Citation