Introduction
Why do some societies grow wealthy while others remain mired in stagnation? This article challenges traditional theories, questioning the primacy of capital and technology alone. The key lies in institutions—not as neutral rules, but as coordination practices deeply rooted in politics and culture. Readers will discover how local heresies and the protection of broad social rights determine economic success in the face of new challenges like AI and the climate crisis.
The Solow Model and the Hierarchy of Growth Determinants
The classic Solow model is insufficient because it only describes the mechanics of growth while remaining silent on the causes of its renewal. Growth theory divides factors into proximate determinants (physical capital, human capital, TFP) and deep determinants (geography, integration, institutions). It is the latter that define the rules of the game in a society.
This relationship is described by a specific logic: sustainable growth (W) requires the existence of institutions (I) or integration (T). In the case of unfavorable geography (G), success requires the simultaneous presence of I and T. Resources alone do not guarantee development, as evidenced by Pakistan—where GDP growth is "socially barren" because elites deliberately block mass education to protect their own feudal influence.
Property, Extraction, and Institutional Heresies
The foundation of development lies in property institutions that protect broad social groups, as opposed to extractive institutions used for exploitation by elites. The case of India challenges simple liberal narratives: the colonial legal framework did not bring growth until the state changed its attitude toward the private sector.
Effective reforms often require institutional heresy and adaptation to the local context. China succeeded thanks to a pragmatic dual-track system rather than copying Western models. Conversely, Bolivia, despite textbook reforms, succumbed to a patronage system (cuoteo político). Pro-growth institutions must meet three conditions: broad property protection, peaceful conflict resolution, and the alignment of private incentives with social benefits.
European Models, AI Challenges, and the Recognition Package
Different development paths are illustrated by European models: the Scandinavian model, based on trust and flexicurity, and the German model, founded on ordoliberalism and stability. Today, both face the test of artificial intelligence and the climate crisis, which are redefining sovereignty over data and resources.
The response to global inequalities should be a minimal package of recognition: the right to education, social protection, independent courts, and participation. According to Jürgen Habermas, the legitimacy of institutions flows from procedures—when the law is impartial, capital commits for the long term. In this view, Poland achieved success by anchoring its reforms in credible EU structures, which permanently boosted productivity.
Summary
In a world of digital revolution, will old definitions of property and power remain relevant? Perhaps it is time to redefine institutions not just as guardians of rights, but as creators of opportunity for everyone. Otherwise, economic growth may prove to be a mere illusion, masking deep cracks in the foundations of social justice.
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