Institutions, institutions, institutions. These are some references of a yet unsettled debate... But I don't know which to include in my political economy course!
Do Institutions Cause Growth?
Edward L. Glaeser, Rafael La Porta, Florencio Lopez-de-Silane, Andrei Shleifer
NBER Working Paper No. 10568 (Issued in June 2004)
---- Abstract -----
We revisit the debate over whether political institutions cause economic growth, or whether, alternatively, growth and human capital accumulation lead to institutional improvement. We find that most indicators of institutional quality used to establish the proposition that institutions cause growth are constructed to be conceptually unsuitable for that purpose. We also find that some of the instrumental variable techniques used in the literature are flawed. Basic OLS results, as well as a variety of additional evidence, suggest that a) human capital is a more basic source of growth than are the institutions, b) poor countries get out of poverty through good policies, often pursued by dictators, and c) subsequently improve their political institutions.
Income and Democracy
Daron Acemoglu, Simon Johnson, James A. Robinson and Pierre Yared
Institutions as the Fundamental Cause of Long-Run Growth
Daron Acemoglu, Simon Johnson and James A. Robinson - April 2004
Forms of Democracy, Policy and Economic Development