Is the Democracy Good for the Economy of the Country Essay

Is the Democracy Good for the Economy of the Country - analyse ExampleInstitutions in a particular country matter and history plays an important role because, in order for an economy to perform well, it should have started off well Sokoloff et al 2000. A country with a history of poverty is belike to remain poor. A worker who is on low subsistence profits is likely to be struggling to gather his basic necessities and to simply survive. Therefore he cannot function as an entrepreneur. He is caught in the vicious cycle of grinding poverty and is unable to accumulate enough money to gift in any business enterprise or even earn engagement from savings. Further, such an respective(prenominal) will not be considered a good risk by credit institutions and he will not be able to secure loans either, in order to invest in capital and other start-up costs to fund any enterprise Ghatak 2002. Therefore the extensions of credit facilities and loans of money are restricted to prolific entre preneurs, who become a select few who cannot hurry the growth of the per capita income of the majority and thereby also accelerate economic growth.As opposed to this, the United States and Canada, for example, started off working on land that was not lively in crop and was difficult to cultivate. Hence, there was more than scope for individuals to thrive and adopt the role of the entrepreneur as they took up the challenge of land cultivation. This resulted in a more egalitarian society where wage differences were not really so high. Therefore these nations started off with a predominantly higher per capita income, and this improved and advantageous economic situation continues even today. Credit institutions in these nations are strictly monitored by Government and interest rates are controlled. Due to the safety net of Government regulations and control and a historically corruption-free environment, more people are able to qualify to receive and repay loans Piketty 1997 thereby increasing economic occupation by investments and consequently improving economic growth.