Publication:

Ideas, Leaders, and Institutions in 19th century Chile

Institutions matter for economic growth. Thus, the leaders who help to develop institutions, and their ideas and beliefs, must play a central role in any narrative that seeks to explain such growth. This leads to the appearance of institutional entrepreneurs, who act in a given cultural and political environment. We focus on the problem of state- building, where formal institutions designed by leaders must be consistent with a given society’s existing informal institutions. We consider an analytical narrative focusing on the Chilean experience in the 19th century. This serves as an interesting quasi-natural experiment on the role of ideas, leaders and institutions in the problem of economic growth and development. Chile has for several years won the reputation of the model republic of South America. She has been a law-abiding and peace-loving community, allowing her people the enjoyment of all wholesome liberty, and so conducting her administration and ruling her finance as to be able in the most difficult times to fulfill her engagements, to ensure order and prosperity at home and maintain her credit abroad. (The Times of London, April 22, 1880)