Institutions, Inequality and Growth

This paper provides a detailed review of selected contributions to the study of the interrelationships between institutions, inequality and economic growth. We focus on the works of Engerman and Sokoloff, and Acemoglu, Johnson and Robinson for the study of long-run growth, as well as Rodrik for bridging the gap from long-run to short-term growth. In addition, we review a wide array of supplementary econometric evidence and criticisms. The emphasis of this review is on identifying differences and commonalities in the underlying theories of economic development, proposed causal mechanisms and econometric specifications. We contrast the findings by using a sources-of-growth framework which distinguishes between ultimate, intermediate and proximate causes of growth, as well as socioeconomic outcomes.