Abstract and Keywords
Wealth and inequality are among the key macro-level outcomes studied by social scientists. They are of considerable interest not only to researchers, but also to citizens and policymakers. This article reviews and assesses theories and empirical findings on the impact of institutions on national wealth and inequality. It focuses on macro-comparative research on affluent countries. National wealth is typically measured as gross domestic product per capita. Prior to the 1970s, thinking about the determinants of national wealth was dominated by the approach used by mainstream economists. That approach focuses on capital, labour, and technology, and it assumes that poorer countries catch up with richer ones via factor equalization. In the 1950s and 1960s, patterns among the world's richest countries seemed to more or less conform to this expectation. But in the 1970s, a number of these countries experienced sharp economic downturns.
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