Institutions and economics

Alexander Donges, Jean-Marie Meier, Rui Silva, 20 May 2022

A large part of the world operates under oligarchic and authoritarian regimes, where access to economic opportunities is not offered to all citizens. This column discusses the impact of such ‘extractive institutions’ in stifling innovation and future economic growth. Using novel hand-collected data, it documents that ‘inclusive institutions’, which promote equal access to economic opportunities, are a first-order determinant of innovation. Geographical regions with more inclusive institutions are able to produce more than twice as much innovation (proxied with patents per capita) as regions with worse institutions.

Andrés Barrios-Fernández, Jorge García-Hombrados, 09 April 2022

Between 30% and 50% of individuals sentenced to prison are reincarcerated in the two years after their release. Neighbourhood institutions that former inmates encounter after prison may play a role in encouraging crime desistance. This column examines the link between Evangelical church openings in Chile and reincarceration rates in the surrounding neighbourhoods. The opening of an Evangelical church in the neighbourhood significantly reduces 12-month reincarceration rates among recently released young inmates, suggesting that local institutions can provide a support network that helps former inmates cope and find work.

Cédric Chambru, Emeric Henry, Benjamin Marx, 11 February 2022

One of the most remarkable achievements of the French Revolution for ordinary people was the reorganisation of local government. Cédric Chambru, Emeric Henry and Benjamin Marx tell Tim Phillips how local state capitals emerged as a result, and what this tells us about how state capacity develops.

Read the VoxColumn about this research: Chambru, C, Henry, E and Marx, B. (2022), Building a state one step at a time: Evidence from France,, 03 February.

Download the free DP: Chambru, C, Henry, E and Marx, B. 2021. 'The Dynamic Consequences of State-Building: Evidence from the French Revolution'. CEPR

Joseph Stiglitz, Kevin P. Gallagher, 07 February 2022

The IMF has imposed significant surcharges on countries that have had to undertake large borrowings and are unable to pay their debts back quickly. This column argues that these surcharges are pro-cyclical financial penalties imposed on countries precisely at a time when they can least afford them. They worsen potential outcomes for both the borrowing country and its investors, with gains accruing to the IMF at the expense of both. This transfer of resources to the IMF affects not just the level of poverty, health, education, and overall wellbeing in the country in crisis, but also its potential growth.

Cédric Chambru, Emeric Henry, Benjamin Marx, 03 February 2022

Effective states can raise taxes and armies, enforce laws, and produce public goods, but how these functions are built over time is not well understood. This column studies the administrative reform initiated by the French Revolution, one of history’s most ambitious state-building experiments, to shed light on the sequence of steps needed to build effective states. Cities chosen as local administrative centres initially invested in the state’s capacity to extract resources from citizens. These cities may not have grown in the short run, but the investments eventually delivered payoffs in terms of public goods, which stimulated long-run growth. 

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