Munich Personal RePEc Archive

The relationship between institutions and economic development

Samarasinghe, Tharanga (2019): The relationship between institutions and economic development.


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Development is a continuous process which increase choices available for human beings. However, there is a huge disparity throughout the world in relation to economic development. Differences in the institutions show a direct relationship with difference in the economic development. Established political and economic institutions affects the level of investments for human capital, physical capital and technology formation which decide the capacity of good and service production in a particular country. Through that, established institutions of a country influences directly on the level of development in a particular country. This article discusses the institutions, evolution and types of institutions, relationship between institutions and markets, and functions of institutions for economic development. Further this article discusses the way that trust and anti-corruption affects the economic development and link between political power and institutions. Finally, some evidences to show the impacts of institutions on economic development are discussed.

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