Alternative conceptions of the link between social and political institutions and economic growth are explored theoretically and empirically. A number of plausible hypotheses found in the literature are found to have distinct implications for social steady state, including the possibility of low income steady state institutional traps. Empirical evidence suggests considerable heterogeneity between countries in the nature of the link between institutions and economic activity, throwing doubt on the validity of standard cross-sectional growth equations. The application of cointegration techniques of analysis indentifies a number of countries that may prove fruitful as the object of more detailed clinical analysis.
Financial support from the South Africa Network of Economic Research is gratefully acknowledged. An earlier version of this paper was presented at the 1997 Economics Society of South Africa Conference. Hugh Hutcheson and Maciej Szymanski assisted in data collection and analysis. Raphael de Kadt and John Luiz provided useful comments and suggestions. Responsibility for the paper remains mine alone.