Economist Daron Acemoglu of the Massachusetts Institute of Technology has written extensively about the role of political institutions and economic growth. Acemoglu distinguishes broadly between two types of political institutions: authoritarian institutions, such as monarchies, dictatorships, or tightly controlled oligarchies, and participatory institutions, such as constitutionally limited monarchies and democracies. History has witnessed growth under both types of regimes. At various points in time, China, Spain, Turkey and ancient Greece and Rome all exhibited technological innovation and economic growth.
But transformative economic growth, such as the world witnessed with the Industrial Revolution that began in Western Europe in the late 1700s, typically requires more participatory institutions. The key reason is that sustained technological progress is disruptive and authoritarian regimes have difficulty coping with all the subsequent changes. Acemoglu highlights the fall in the old, authoritarian regimes in Europe and the rise of constitutional or limited monarchies that set the preconditions for the birth of the Industrial Revolution.
Acemoglu s theory does raise important questions for today. Can China, with its authoritarian political culture, continue to grow without eventual political transformation? If that does eventually come, can it be absorbed peacefully within the society?