D URING the last ten years, it has become the fashion among econDJ) omists to emphasize the decreasing importance of natural resources in economic growth. This applies especially to the renewable resources used by agriculture [21, 23]. Use of these resources is strongly influenced by economic institutions, both in developed and undeveloped economies. It is not surprising, therefore, that there has been, in recent literature, a de-emphasis of the role of institutions paralleling that of natural resources. In the current mathematical models of economic growth, the role of institutions is not explicitly considered [11, 14, 10]. In a wellknown book on transforming traditional agriculture [24], the author devotes the only two pages on the influence of economic institutions to land tenancy.' Emphasis has shifted from natural resources and economic institutions to technological change or, in production function terminology, to new or modern factors of production. If institutions are considered at all, they are treated as factors furnishing services like other factors of production. Changes in the kind and quantity of institutional services are regarded as determined by an economic demand-supply scheme [22]. In accordance with my assignment, I should like to focus on this doctrine of the decreasing importance of natural resources and the relatively insignificant and passive role of institutions in economic growth. I should like to analyze its validity, inquire into its relevancy, and show its implications for policy in developing countries.