3. Jun, 2004

To grow or not to grow: Why institutions must make a difference

This may not surprise you, but when I was a student of economics in the first half of the 1970s, we were taught that economic growth over long periods was always and everywhere a technological phenomenon. The theory of economic growth at the time taught that the rate of growth of national economic output per person in the long run must be equal to the rate of technological progress, which was taken to be outside the purview of economics. So, economic growth was “exogenous” – that is, it was not supposed to react to economic forces.