Political and Social Dimensions of Economic Growth

Abstract

The definition of what precisely we mean by poverty is controversial. Yet empirical evidence establishes firmly that both the gap between the richest and the poorest countries in the world has been widening (as measured in terms of per capita GDP) since 1960, and that since independence a number of the very poorest countries in the world have experienced negative growth in per capita GDP. Regardless of whether one is concerned with relative or absolute conceptions of poverty, therefore, it is difficult to argue that poverty has not become a problem of greater urgency. Redistributive policies are one response. But for significant areas of the world any long term redress of poverty will also have to allow the size of the pie to be shared to increase, and has thus to encompass economic growth as a necessary though not a sufficient condition.1 The development of growth theory and its revival in the 1980s and 1990s has added much to both our theoretical and empirical understanding of economic growth. The consequence is that some necessary preconditions for economic growth appear to be well established. On the other hand our understanding as yet falls short of the ideal of being able to specify sufficient conditions for the realisation of economic growth. The discussion in the present paper will point to some limitations which attach to 'simple' or core models of growth, and briefly outline, as non-technically as possible, the directions in which the newer growth theory has led. The increasingly wide-ranging search for additional determinants of growth has led to an increased preoccupation with the wider institutional contexts - political and social - within which growth occurs, and it is this which will form the central focus of the present paper. While the institutional determinants of growth appear with increasing frequency in the empirical literature on economic growth, there does not yet appear to exist a synthetic and comparative assessment of the various contributions which have thus far been made. The purpose of the present discussion will be to place the contributions which have thus far appeared in a coherent context, to