Economic growth and institutional change

Economists have recently emphasized the role which institutional change plays in the process of economic growth and development. Focusing on the behavior of the state, effective constraints on the ruling elite are seen as a necessary precursor to successful economic growth. However, it is argued in this paper that causality runs the other way. Rapid growth (even with dictatorial regimes) leads to political development and institutional structures which provide a foundation for successful long‐term growth. It will be further argued that the greatest potential for stimulating political development comes as the result of rapid agricultural growth. The institutional constraints arising out of political development create an environment within which the ruling elite become developmental rather than predatory. The cases of English and Japanese industrialization will be used to illustrate these ideas. The relevance of the analyses for today's developing countries is discussed and illustrated with reference to the African experience.