The Advocates
Roland Benabou, Social Interactions Identity and Well-Being and Institutions Organizations and Growth, Fellow
Tim Besley, Institutions Organizations and Growth, Fellow
Jim Fearon, Institutions Organizations and Growth, Fellow
The Pitch
Governing for peace and prosperity presents colossal policy challenges: More than one third of our world’s citizens currently live in poverty. About 26 countries currently have civil wars ongoing, with many more suffering from nearly constant low-level political violence.
To rise to these challenges and foster peaceful and prosperous populations, nations must create institutions that allow all social groups to participate in and benefit from the economy. They must ensure that political leaders are accountable for policy outcomes, both beneficial and detrimental.
Political and economic institutions– the formal and informal “rules of the game” for political and economic decision making in a society – have a large impact on a country’s ability to innovate, meet new challenges, and generate wealth. By allocating power and resources, they shape incentives not only through their formal and legal provisions, but also through norms, habits and expectations. Formal provisions also require enforcement, which may or may not occur depending in part on the nature of a society’s informal institutions.
Though the link between political institutions and prosperity is clear, the relationship is complex: Institutions that foster prosperity in one culture, geographical location, or historical period may be detrimental in another. Moreover, we have little understanding of how to promote the development of better institutions in states that don’t have them.
We know that countries that started out on similar footing often followed different developmental paths. We also know that the vestigial effects of slavery and colonial institutions can strongly influence a nation’s successes and failures many generations later. We know many of the correlates of economic growth and civil war, but not as much about he causes and how these can be shaped or determined by political and economic institutions.
Sometimes the answers lie to this question lie deep in the past. Often the answers are far from straightforward. But the more we learn about the ways that political institutions, peace and prosperity influence one another, the closer we become to ensuring a higher standard of living for all of the world’s citizens.
Bottom Line
“How can political institutions best promote peace and prosperity?” is the Next Big Question because conflict and poverty will persist until we can answer it.