The Grand Pattern of Development and the Transition of Institutions

Challenges traditional views on development to show the direction of causality is from income to institutions.

Martin Paldam (Author)

9781316515501, Cambridge University Press

Hardback, published 19 August 2021

286 pages
23.5 x 15.8 x 1.9 cm, 0.52 kg

'Martin Paldam investigates the grand pattern of development. No small puzzles for him. His answers are most sensible, and they can differ from the pronouncements heralded from the towers of privileged domains. He does not equivocate to avoid what some people prefer he not say. He is a careful thinker and cautious empiricist who weighs his conclusions carefully. In this book he addresses the societal transitions that are so important for economic development.' Arye Hillman, Bar-Ilan University

The culmination of a long-lasting and impressive research program, this book summarizes the relationship between economic development with income on the one hand and the evolution of institutions on the other; the transition of countries from one economic and social system to another. The author considers the transitions of two types of institutions: The first is external; it is legal-administrative systems with staff and buildings. The political system and the economic system are considered. The second consists of traditions and beliefs. Here corruption and religiosity are considered. Contrary to the claim that institutions are causal to development, this book demonstrates that the main direction of causality is from income to institutions. As countries get wealthy, they become secular democracies with low corruption and a mixed economic system. In this impressive coda, Paldam shows that the evolution of institutions is not causal to the economic growth process but rather follows it.

Foreword
Part I. Main Ideas: 1. Introduction
2. Some technical points
3. The largest historical event: the end of Soviet socialism
Part II. The Transitions of Institutions: Part IIA. The Democratic Transition: 4. Literature, data, transition path and causality
5. The jumps model for the short run, 1960–2016
6. Events are practically random
7. Three pillars model for the long run, 1800–2016
Part IIB. The Transition of the Economic System: 8. Ownership preferences: the B-index
9. Economic freedom: the F-index
Part IIC. The Transitions in Traditions and Beliefs: 10. The transition of corruption
11. The religious transition
Part III. The Grand Transition: 12. The hump-shaped transition path for the growth rate
13. Do improvements of institutions harm development?
14. Conclusions.

Subject Areas: Economic growth [KCG], Monetary economics [KCBM], Macroeconomics [KCB], Economics, finance, business & management [K]