Institutions, Transparency, and Economic Growth

The influence of institutions in economic growth has been widely discussed in economic literature. But, the success of these institutions is largely determined by the degree of accountability and of corruption. Institutional failure is less likely if clear responsibilities and accountabilities are shouldered by those who have accepted the responsibility to carry out governance functions, at whatever level in the institution. Many authors argue that one possible solution to these problems, and others like them, lies in improving institutional transparency. Institutional transparency is the basis of good economic governance and the first step in improving accountability and fighting corruption. In this light, the present article considers the role of institutions in economic growth. The article also discusses how the lack of transparency hampers economic growth and how better institutional transparency leads to undermine economic growth. Finally, the article highlights action steps for improving transparency in the functioning of institutions. The present work reveals that improved institutional transparency is certainly needed, but policymakers also need to be clear and careful about the sort of information about an issue, its treatment, and costs to those stakeholders who can least afford it.