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Weingast: The economic role of political institutions

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Weingast. 1995. The economic role of political institutions: Market-Preserving federalism and economic development. Journal of Law, Economics, and Organization 11 (1): 1-31..

In brief: In a thriving market, you need both a well-designed economic system and a political system that "limits the ability of the state to confiscate wealth:" in other words, "limited government, that is, political institutions that credibly commit the state to honor economic and political rights." Federalism was a key element in the economic rise of England and the US. It is also helping China's recent growth.

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