The Interdependence of Economic Growth, Human Development and Political Institutions

The causal links between growth, human development and institutionsare central to understanding the long-run development process.The turn of the millennium has seen influential research in developmenteconomics attempting to uncover some of these links, but afocus on root-causes of growth has limited its insights in both scopeand method. This paper provides a fresh analysis of the interdependenceof growth, human development and institutions using a generalequilibrium framework. The framework is tested using 4 differentcross-sectional and panel-data specifications including datafrom 1820>. Findings implicate that both growth and human development,but also human development and institutional progressstrongly depend on each other in the long run. The results implythe existence of significant general-equilibrium effects shaping thelong-run trajectories of countries. These mechanisms defy overlydeterministic views of development, and invite careful further study