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How institution can be defines in many way but it’s always revolve around the government decision

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Good institutions are important for economic growth.

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The way how some economists make connections of the economic outcome or development of England in around 1500 along with the establishment of institutions was very fascinating. Comparison of two countries (North Korea and South Korea) regarding the political system and institutions was unique.

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Institutions (government systems) influence economic growth. If society operates in a system with strict ruler(s), then business confidence decreases due to fear of making mistakes. If the system is unstable, the business confidence and consumer, as well as property rights and transaction costs are impacted: business confidence and consumer confidence decreases since people do not want to invest, and property rights and transaction costs decrease due to lack of confidence/uncertainty. Some people live in fear that their property can be taken away any time, so they don't bother investing. In all, both AD and SRAS shift leftwards, while LRAS remain the same.

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Pubudumuni Visal Wijesinghe Nadeesha De Zoysa Jr. 

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Pubudumuni Visal Wijesinghe Nadeesha De Zoysa Jr. 

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"Unfortunately, in many parts of the world, unaccountable political leaders continue to maintain 'bad' institutions and pursue destructive economic policies."

"Almost all of the countries that have enjoyed good economic performance across generations are countries that have stable democratic governments"

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“gives a clear example of how, despite the very similar economic conditions, political leaders often chose very different policies with very different outcomes”.  (90)

North Korea and South Korea are a great example of how different economic choices (institutions) can lead to drastically different outcomes in a country's development.

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A deterrent for the development of poorer countries is the greater risk associated with investing in them due to factors such as economic instability. The political elites in these poorer countries may block the adoption of superior institutions which may take away from their political power.

What are some ways to facilitate the adoption of better institutions within poorer countries?

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The split between North and South Korea was like a natural experiment to determine the effect of the type of government to the country's economic development. It is clear that communist values are a bigger barrier to economic development as shown from the two countries in the present-day. This is because of the fact that democracy allows more property rights, so people are incentivized to produce more than just their survival, as they are able to claim their rights over such good and services.

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Different types of governments can essentially dictate economic growth; in a democracy, there are more property rights allocated to producers, which in turn gives them more confidence in the ability to retain and sell their products, which incentivizes production.

Judging this claim, is there a specific government system, providing different institutions at different levels, that statistically leads to the most economic growth?

Thank you and kind regards.

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One way to measure the influence of institutions is to try identify examples of natural experiments in history. For example, colonisation in Europe led to the transformation of institudes in the colonies.

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Countries that have developed greater political constraints on their politicians, such as the US, have had greater success in economic growth. Essentially, different forms of governments and polices may influence a countries growth.

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Are there any current day examples that could help economists evaluate the effects institutions have on the economy rather than looking at the past?

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- the effect of institutions on the economy, culture and people of a domain
- shapes economic behaviour
- "According to the World Bank (2002), ... [there is a link between] the quality of institutional development to economic growth and
efficiency across both time and space."