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Beating the OddsJump-Starting Developing Countries$
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Justin Yifu Lin and Célestin Monga

Print publication date: 2019

Print ISBN-13: 9780691192338

Published to Princeton Scholarship Online: May 2020

DOI: 10.23943/princeton/9780691192338.001.0001

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Unpleasant Truths about Institutional and Financial Development

Unpleasant Truths about Institutional and Financial Development

(p.44) 2 Unpleasant Truths about Institutional and Financial Development
Beating the Odds

Justin Yifu Lin

Célestin Monga

Princeton University Press

This chapter refutes the linear and almost teleological approach in vogue in development economics on political and financial institutions. It briefly discusses the theoretical issues at hand and suggests that policies take into account the requirements of both time and place, which emphasizes the importance of the development level. The chapter acknowledges that institutional development problems are indeed major impediments to economic growth. But contrary to conventional wisdom, it argues that they are often correlated with the level of economic development. Seen from that perspective, the well-known weaknesses in the governance and financial sectors of many poor countries today often reflect their low level of development and the results of failed state interventions and distortions originating from erroneous economic development strategies.

Keywords:   teleological approach, institutional development, economic growth, economic development, poor countries, state intervention, development economics

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