- Good institutions reduce the transaction costs associated with economic
exchange. - Property rights impact on the efficiency of economic exchange and also on
economic growth through investment and productivity. - There are three broad strands of evidence supporting the importance of
institutions as a deeper determinant of economic growth: econometric stud-
ies, case studies, and analysis of the results of attempts to create or
strengthen property rights. - There is a longstanding debate about whether the tightening of intellectual
property rights (IPRs) by the WTO and others is good or bad for develop-
ing countries. - The policy implications associated with institutions are: the conventional
view that emphasizes the strengthening of property rights; the importance
of legal reform; institutional change; and an alternative view that empha-
sizes the need to ensure ease of transfer of property rights (accumulation by
dispossession).
230 Patterns and Determinants of Economic Growth