Economic growth and economic development 213

Introduction to Modern Economic Growth
Just British Colonies
CAN
AUS

10

USA
SGP
HKG

Log GDP per capita, PPP, 1995

NZL

BHS
BRB

9

BWA

MYS
KNA
TTO

ZAF

LCA
GRD
BLZ

DMA
VCT

NAM

JAM

SWZ

8

EGY

GUY
LKA

ZWE
GHA
GMB

LSO
KEN

7

ZMB

IND
SDN PAK
UGA

NGA

NPL BGD

MWI
SLE

6
-5

0
Log Population Density in 1500

5

Figure 4.13. The Reversal of Fortune among British Colonies: population density in 1500 versus GDP per capita in 1995 among former
British colonies.
4.5. What Types of Institutions?
As already noted above the notion of institutions used in this chapter and in
much of the literature is rather broad. It encompasses different types of social
arrangements, laws, regulations, enforcement of property rights and so on. One
may, perhaps rightly, complain that we are learning relatively little by emphasizing
the importance of such a broad cluster of institutions. It is therefore important
to try to understand what types of institutions are more important. This will not
only be useful in our empirical analysis of fundamental causes, but can provide us a
better sense of what types of models to develop in order to link fundamental causes
to growth mechanics and to ultimate economic outcomes.
There is relatively little work on “unbundling” the broad cluster of institutions
in order to understand what specific types of institutions might be more important

for economic outcomes. Much of this type of work remains to be done in the future.
Here we can mention some existing work attempting to distinguish the impact of
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