EMNES Policy Paper 005

This paper explores the problem of institutional failure in the Southern Mediterranean Partner Countries (SMPC). After reviewing the most recent empirical research on the effect that institutions have on economic performance, including research done in the framework of EMNES, the paper identifies two types of institutional failure pervasive in the region. It concludes with the recommendation that while Type I failure could be remedied by piecemeal institutional reforms, the more pernicious Type II failure is not likely to be corrected without a structural transformation of the balance of political power in the affected country.

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