Emergence and Diffusion of Institutions and their Effect on Economic Growth

Abstract

The question ‘Why are some so rich and others so poor?’ has always concerned social scientists. Among economists, consensus has been reached that the focus should be on the fundamental causes, not the proximate factors that cause differences in economic growth. This thesis sheds light on some of the proposed hypotheses regarding these fundamental causes, by focusing on the interactions between geography, demography and institutions. The first study uses a theoretical model to show how a demand for institutions can arise endogenously in society as a byproduct of the transition from a hunter-gatherer lifestyle to a sedentary agricultural lifestyle. The process of institutional emergence and the obstacles that a society faces in sustaining investment in these institutions is modeled in a flowchart and connected to anecdotal historical evidence. The second study then investigates how a specific institution, the right for all women to vote, can spread from one country to many others as a possible consequence of contact between those countries. The final study shows one channel through which differences in the institutional environment may influence welfare today, through its moderating effect on the relationship between entrepreneurship and economic growth.