THE ESSENTIAL POLITICAL FRAMEWORK FOR ECONOMIC GROWTH

• Main Author: MADĂLINA MIHAELA RADU
• Format: Article
• Language: English
• Published: Nicolae Titulescu University 2015-12-01
• Series: Global Economic Observer
• Subjects: economic growth; institutions; political system; reproducible capital.
• Online Access: http://www.globeco.ro/wp-content/uploads/vol/split/vol_3_no_2/geo_2015_vol3_no2_art_015.pdf

The question referring to the reasons for which the differentiate growth rates across countries occurs is one of the most debated subjects within the economic literature. A common feature of the majority of these papers is the importance and the heaviness of the political institutions in the growth path of a country. In this study we will discuss three main characteristics of political institutions by endeavouring their contribution and effects on economic growth. The essential political conditions for growth will be determined using a model that integrates political factors into an endogenous growth model and derives the effects of political repression, political stability and policy certainty on economic growth. Next, we will asses in what extent the political context influences an individual’s economic and rational choice. To highlight the impact of the three political dimensions: political freedom, political stability and policy certainty we will discuss the specificity of economic trajectories in CEE countries. This fact will enhance our ability of distinguishing the specific role that each of these variables is playing and also, the existing interdependence between them. Keywords: economic growth, institutions, political system, reproducible capital.