historical evidence to show that now-developed countries also had poor insti-
tutions during their initial transitions to rapid growth (Chang, 2002). The UK
in 1820 had a broadly similar per capita income to India today but lacked many
of the institutions and organizations found today in India, including universal
suffrage, a central bank, income tax, generalized limited liability, a modern
bankruptcy law, a professional bureaucracy and securities legislation (Chang
2003).
The policy conclusion implied by the primacy-of-institutions argument is
that improving institutions is a prerequisite for sustaining rapid economic
growth. But the possibility of rapid institutional change is contradicted by the
historical experience of today’s developed countries. Now-developed coun-
tries experienced, according to Chang (2003), a ‘long and winding road’ of
institutional development which took ‘decades’. For example from full male to
universal suffrage took France from 1846 to 1946 and Switzerland from 1879
to 1971 to achieve. The need for a modern professional bureaucracy in Britain
was first discussed in the eighteenth century but only became a reality early in
the nineteenth. Such slow change was often because of prejudice, the high
costs of many changes (labour laws and social security) or because of the
resistance from those who stood to lose out (democracy, income tax), the lack
of supporting changes (the tax revenue needed to pay for professional bureau-
cracies) or prejudice (female suffrage) (Chang, 2003).
218 Patterns and Determinants of Economic Growth
Box 10.3 The evolution of legal rights in BritainThe emergence of well-protected private property rights in Britain can be traced
back to the fiscal crisis of the British monarchy in the seventeenth century. The
then Stuart monarchy responded by demanding forced loans (expropriation)
from the wealthy and selling monopoly rights to various royal favourites
(restricting property rights). This led to a struggle with existing business and
commercial groups. The English Civil War in the 1640s and later Glorious
Revolution of 1688 saw a decisive victory for those opposed to the monarchy.
Subsequently the exercise of arbitrary and confiscatory power by the monarchy
was curtailed through judicial independence, and ultimately the supremacy of
Parliament. The ‘major consequence’, in this view, was the increased security of
property rights and subsequently the onset of the Industrial Revolution (North
and Thomas, 1973). France and Spain had absolutist monarchies that took
longer to create a legal system and property rights existing independently of the
monarchy. The real historical failures, those who never experienced modern
economic growth, were the Ottoman and Mughal Empires where property was
held at the discretion and whim of the monarch and Sub-Saharan Africa where
property was held communally. Quite why well-established private property
rights in fifteenth-century China failed to generate similar patterns of growth as
in Western Europe is a great puzzle in comparative economic growth (see
Chapter 7).