What is an explanation behind the Great Wall of Institutions

What is an explanation behind the “Great Wall of Institutions?”

Solution

Ans

Growth can proceed fast in early stages without change in institutions but after a time growth can happen only if institutions change. This is called Great wall of institutions. Here correlation between income per capita and institutions is quite strong when we approach great wall of institutions. Infact we can find hardly any rich country with weak institutions. Weak institution reduce growth by killing competition, private initiative, by reducing security and law and order which are essential for growth, by reducing private initiative because of corruption and nepotism and so on.