Inkluzivne i ekstraktivne institucije kao faktori ekonomskog rasta
Inclusive and Extractive Institutions as Factors of Economic Growth

Author(s): Ivana Ostojić
Subject(s): Economy, National Economy, Socio-Economic Research
Published by: Институт друштвених наука
Keywords: inclusive institutions; extractive institutions; economic growth; rule of law; corruption
Summary/Abstract: Stable and high-quality institutions are very important drivers of economic growth. For the economies that have low rates of economic growth, high rates of unemployment, high corruption, where there is no rule of law, while their residents live in poverty, building stable, inclusive institutions can encourage higher-yielding activities. Specifically, geographic location, climatic conditions, cultural characteristics and work ethic of countries were explored, and attempts made to find out why certain societies are poor and do not succeed in achieving economic success. However, institutions are the reason that countries with significant natural resources remain poor and economically underdeveloped, despite the resources that can help them in making progress. Economic institutions create incentives, such as education, savings, investment, innovation, for achieving the economic progress. Political institutions, on the other hand, allow citizens to control politicians and influence their behavior by determining whether government representatives will be citizens’ representatives and represent their interests, or will abuse their position through usurpation of power. The paper analyzes inclusive and extractive institutions and their impact on economic growth and sustainable development. The aim of the paper is to show that institutions and institutional mechanisms as drivers of economic growth are a key factor in explaining differences in economic growth rates between developed and less developed countries. The analysis includes World Governance Indicators (WGI) (with special reference to indicators related to the rule of law and control of corruption), International Property Rights Index (IPRI), Corruption Perceptions Index (CPI) and Social Progress Index (SPI), to explore the quality of the institutions surrounding us and make comparison with other countries in the region, but also the developed countries of the world. Based on this analysis, recommendations will be made for further development and progress of the society.

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