Social Cohesion and Its Relationship to Endogenous Institutional Formation and Economic Growth

Institutional quality is a known predictor of a country's ability to attain increased living standards. Unfortunately, a lack of institutional maturity remains among many countries in the developing world. One possibility for this shortfall is that policymakers within these countries face serious barriers to implementing necessary reforms. This paper argues that the social dynamics existing within a country are at least a partial determinant of institutional development. Using a panel dataset of 111 countries over 8 years, the paper estimates a model in which measures of social cohesion are shown to significantly affect institutional development, subsequently impacting growth.