Stuck in the Natural State?
By Arnold Kling
China has sustained high growth rates in recent years despite its poor institutions because institutional quality is relatively less important in developing economies. However, we find that as their incomes increase, such countries need good institutions in order to reach the income levels of advanced economies.
Thanks to Nick Schulz for the pointer. I could not help but think of the distinction that North, Wallis, and Weingast make between a limited-access order (or natural state) and an open-access order. Only when people outside the Communist Party enjoy political rights, property rights, and the freedom to form organizations will China be an open-access order.
Meanwhile, we’ll see what happens in our own country. So far, since last summer a week has not gone by without significant new powers being transferred to Washington.