Why Institutions Endure: Norms, Leadership, and the Difficulty of Reform

How do institutions evolve? Why are they so persistent? And why are successful institutional transformations so rare, limited to outlier cases like Singapore, Turkiye, South Korea, Botswana, and China? This paper presents a new framework linking long-term institutional outcomes related to corruption and extractive practices to the dynamic interaction between population norms and leadership traits. The Population-Leadership Symmetry Principle posits that leadership traits reflect prevailing societal norms, as leaders emerge from within the population. Yet, meaningful institutional transformation requires a second mechanism: the Leadership Hysteresis Effect, where sustained, reformist leadership reshapes societal norms, embedding institutional change that persists beyond the leader's tenure. In both mechanisms, societal norms play a central role. For the Hysteresis Effect in particular, institutional reform depends on stability over time to gradually shift these underlying norms. In this framework, only long-duration and intensive leadership episodes generate durable improvements in governance; the model also explains why these reform episodes are rare. The model is calibrated to notable cases of institutional transformation. Empirically, I test the model using panel data and event studies, showing that societal corruption norms are strongly associated with leadership integrity over time. However, the absence of a valid external instrument limits causal inference; accordingly, the results are best interpreted as evidence of association rather than causation. Even so, the findings are robust across specifications and consistent with the model's predictions. Together, the findings offer a unified explanation for both institutional persistence and the conditions under which rare but lasting reform is possible.