Institutions & Development

Some countries build benign, efficient institutions that foster economic growth;
others build predatory ones that retard it.

How to fix failed states, January 12, 2017 at 02:53AM

Part 2: Institutions vs. ‘The great leader’

I’ve long been a strong believer that the reason for slow, shaky progress that countries like India make is not a lack of leadership, but a lack of institutions.

And that’s a big reason I don’t like Indira Gandhi, and completely loathe Narendra Modi: they are bent on weakening whatever institutions India has, instead of building strong, efficient (and benign) new ones.

They both are great politicians before anything.
They understand that strong, independent, efficient institutions don’t leave sufficient need – in action, and (most importantly) in public minds – for a strong leader. To create, and sustain, the need for a strong leader requires weak institutions. Institutions which aren’t functioning. So, the great leader can promise to swoop in and make them work by the force of his will.

I’m not doubting that this doesn’t work. Indira did get a lot of things going, including winning wars. But Indira left a hole – no secondary leaders and no strong institutions that could continue running the country after her. It took many years, a financial crisis, and a succession of weak leaders for independent institutions to start gaining strength again – from RBI to EC.

Modi will also get some things done, maybe even make life better. However, Modi’s actions have already shaken trust in one of the most respected, independent institutions in India – the central bank, RBI. Wonder how many will he weaken before he finally goes, many many years from now. Wonder how long the country will take to recover from his actions.

Note: I also worry for the US now. It’s been the torch bearer for building national institutions. And now, it has a president who doesn’t believe in the word ‘institution’, or even independence. And a Congress that is ruled by a party that has gerrymandered it’s way into destroying the basic principle of the institution of Congress. Hope the damage of next 4x years is not irreversible 😥

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