ABSTRACT
This chapter discusses the theory of institutional development and its relationship to the various areas in the Economic Freedom of the World index. The diversity of and path dependency from these historic institutions play a role in the current institutions that influence economic freedom and economic growth. Spolaore and Wacziarg give an overview of the major studies examining the historical antecedents of growth. Bockstette and colleagues find that earlier state history is related to economic growth. Likewise, we expect that countries that have had more statehood experience will have developed better institutions since they have had more years of experimenting and developing their institutions. The historical antecedents of economic freedom include technological innovation. Comin and colleagues test whether the adoption of technology in the past influences current per capita income and current technology adoption. Economists examining differences in economic growth between countries find that contemporary levels of human capital accumulation, technological innovation, and investment play a major role.
