Growth and Institutions: A History

One of the most dramatic events in world history is the beginning of modern economic growth in England and the Netherlands around 1800. Other nations followed, and the percentage of the world living in absolute poverty, on less than $1.90 per day, has fallen from 90% to 8%. There has been much discussion and research on the cause of sustained growth. This lecture discusses the theories of causation, focusing on ideology, institutions, and institutional change. Rule of law, well-defined and enforced property rights, freedom of contract, and limited government provide the best explanation for the economic takeoff.