Pete Boettke chimes in,

However advantageous a culture may be, it cannot overcome bad institutions. And however disadvantageous a culture may be, it will improve when people get to live under institutions of political and economic freedom. Culture can act as a constraint, but it is also a malleable constraint. The important causal variable is the set of rules that govern the way we interact with one another and with the resources at our disposal. Those rules must enable our ability to realize the gains from specialization and exchange, and reap the benefits of innovation.

If you think that culture matters but institutions do not, look at North and South Korea. If you think that culture does not matter at all, look at differences among different ethnic groups within countries.

Boettke is responding to Lawrence E. Harrison, in an essay that Bryan and I both linked.