The World Development Report {1997} proposes a strong institutional framework as the foundation for inclusive and sustainable economic development.

It suggests that the primary responsibility of leaders is to develop institutions that have the ability to enforce rule of law and that are inclusive, accountable and transparent.  

Individuals are never indispensable no matter how powerful, astute and credible they may be.

They are prone to many internal weaknesses [psychological and physical] and external influences that make them redundant at some point in time and even dangerous.

Institutions, on the other hand, have relatively longer life and are considered more credible, predictable and effective in confronting big challenges. They too have certain problems, such as structural inertia and path dependency, but they are in general far better in addressing complex problems than individuals.

In the developing world, unfortunately, the world has strong individuals and weak institutions that have led to the situation we are in today.

Let me quote and draw on some of the best minds in Economics to make my case.

KJ Arrow, Nobel Laureate in Economics [1972], says, ''the openness of a society, its willingness to permit creative destruction, and the rule of law appear to be decisive for economic development.''

According to GS Becker, Nobel Laureate in Economics [1992], ''an open pluralistic political system with competition for political office and the right economic institutions lie at the heart of economic progress and stability.''

Peter Diamond, Nobel Laureate in Economics [2010], suggests that inclusive political institutions with economic orientation lead to sustained prosperity.

Niall Ferguson, author of The Ascent of Money, makes even a stronger case in support of manmade institutions [political and economic]. He contends that it is manmade institutions, and not the natural endowments, geography or the faith of the people, that determine whether a country is rich or poor.

Many countries have made tremendous progress with the rule of law, openness and development of human capital.

No one perhaps could have perhaps better reflected on the developing world conundrum than Professor Simon Johnson, [MIT Sloan] when he says, ''countries rise when they put in place the right pro-growth political institutions and they fail - often spectacularly - when those institutions ossify or fail to adapt.

Powerful people always and everywhere seek to grab complete control over the government, undermining broader social progress for their own greed. Keep those people in check with effective democracy or watch your nation fail.''

The use of arbitrary power, in the absence of check and balance, creates conditions for rent seeking and elite capture.

The Publishing continues. The World Students Society thanks author Dr. M Zeb Khan.


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