Politics and Growth

Theories of growth have made progress in understanding the mechanisms of growth in economic terms. However, there is less understanding of the political processes that enable or obstruct these mechanisms. This article provides a four-stage framework to clarify and analyse the connections between politics and growth: (i) discussing the basic conditions essential for growth; (ii) suggesting that whether or not these conditions emerge depends on specific forms of public-private interaction; (iii) linking these relationships to the incentives facing those in political power and investors; and (iv) considering the factors at country level that may help to push incentives in a pro-growth direction.