Effects of a Poor Institution on the Economy

Introduction

Poor institution cannot build a strong economy for a country, as we can see the evidence in most of the developing countries, corruption and institution failure lead to economic downturn (Fig #1) . Corruption affects economic growth, the level of GDP per capita, investment activity, international trade and price stability negatively (Dreher & Herzfeld,2005). Nevertheless, in case of Cote d’Ivoire the institution failure has led the country to onset of civil war which has affected the country’s economic growth in the past decade and half. Civil war is not directly related to economic growth but corruption is as Dreher and Herzfeld explains, also civil war affects the factors of capital which are relevant to economic growth of a country, such as human capital (education). The main engine of growth is the accumulation of human capital and the main reason of differences in standards of life among nations is differences in human capital (Lucas, 1993). Cote d’Ivoire was one of the most stable countries in Sub Saharan Africa after colonization. In 1980s Felix-president of the country, encouraged the influx of the migration from the neighboring countries, as a result of which majority of the North part of the country was populated with immigrants who worked at the cocoa production, while south was populated with the original Ivoirians. The south and North had a huge difference in ethnicity; there was a racial polarization, which created a tension between the regions after the death of Felix. The tension led to civil war. Based on the research and data I am exploring about the economic growth of the country before, during and after the civil war in a macro level. Also, taking the effect of education on the growth of the count...

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...ary level of schooling shows that the number of people entering the college and universities in cote d’Ivoire is only 2% at the current level.

Conclusion

In the conclusion we can say that civil war impact the education sector enormously. It destroys schools, results in death of the children and teachers, and hence lower the human capital of the country in a long run. Human capital is one of the factors of production of the economic growth. The higher number of years of school attainment is related to the higher economic growth of a country at the macro level of a country. In this paper we analyzed the parallel comparison of the rates of the enrollment of schooling at different levels, GDP per capita growth and the public spending on the education sector. The paper shows that the data and graphs do not show the relationship or correlation of the variables.