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GLOBAL RESEARCH AGENDA: RULE OF LAW, GOVERNANCE, INSTITUTIONS AND DEVELOPMENT
Research Themes

Background


Urbanization and Development


Development Finance


Agriculture, Development and Natural Resources


Inequality, Poverty, Social Protection and Social Policy


Rule of Law, Governance, Institutions and Development


Human Capital Formation, Education and Development


Labor Markets, Employment and International Migration

Rule of Law, Governance, Institutions and Development

[Dr. Isher J. Ahluwalia, Vice Chairperson, GDN Board of Directors and Chairperson, ICRIER, (far right) giving a Special Address at the GDN Regional Policy Seminar on Effective Public Service Delivery, held in New Delhi, 12 October, 2011.]

We have substantial evidence which seems to suggest that weak institutions have various undesirable effects and hamper economic growth (Mauro, 1995; Bardhan, 1997; Leite and Weidmann, 1999). Furthermore, looking across countries, the rather voluminous empirical literature on the subject suggests that improvements in the quality of contracting institutions, better law enforcement, increased protection of private property rights, improvements in central government bureaucracy, improved operation of formal sector financial markets, increased levels of democracy, and higher levels of trust are all correlated with higher economic growth (see Acemoglu et al. 2001, Hall and Jones 1999 and Pande and Udry 2006 among others).Yet, there is also need to move the frontier of the rule of law and delve deeper into the channels through which the rule of law and institutions affect the entire development process. This also covers the overall relationship between the rule of law, governance, institutions and the fiscal capacity of the state, as well as the link between rule of law and labor market regulations.

More research is also needed regarding the political economy of the institutions-growth nexus. An area of great relevance to this is related to the overall relationship between institutions, growth and natural resource endowments. In this regard, it has been argued that, resource riches raise the value of being in power and induce politicians to expand public sectors, bribe voters by offering them well paid, but unproductive jobs and inefficient subsidies and tax handouts, especially if accountability and state competence are lacking (Robinson et al., 2006).

Key research questions include: (non-exhaustive list)

  • What are the central issues in the link between foreign aid, governance and development?
  • Do institutions matter for the management of natural resources?
  • How can we make further progress on the measurement of ‘institutions’ in empirical research?
  • What are the mechanisms through which institutions can affect the delivery of public services in key sectors in developing countries?
 
Related GDN Activities

GDN's recently completed Global Research on Varieties of Governance: Effective Public Service Delivery contributed to the understanding of the interplay of political and sectoral institutions and incentives, formal and informal institutions in the context of effective public service delivery. GDN's five-year initiative on Strengthening Institutions to Improve Public Expenditure Accountability, now concluded, aimed to improve evidence-based resource allocation.