In today’s world prosperity coexists with abject poverty. Why have some societies managed to grow rapidly for several decades, while others have been unable to generate economic growth and a decent living standard for their citizens? And how can we avoid crises to ensure continued growth in today’s successful societies?  While these questions have been central to social sciences for several centuries, our answers are still incomplete.

This talk will argue that it is time to reconsider the factors that are important for differences in economic growth and economic success across nations. Institutional differences are the fundamental determinants of the wealth of nations. Once we recognize  the importance of institutions, the next challenging question relates to the political economy of institutions: why do societies choose or end up with institutions that stifle growth?

Recognizing the role of institutions and the political economy obstacles to developing growth-enhancing institutions are not only necessary to understand how much of the world is still poor and fails to generate economic growth, but also to develop a better perspective for dealing with events such as the current crisis and investing in the institutions that will ensure the continued growth of our society.

Introduction by Fausto Panunzi, FEEM and Bocconi University