" (Grabel, 2004) Good institutions serve as the basis for economic growth due to right market-based and market-guided incentives being created which include those stated in this study and specifically: (1) rule of law; (2) competitive markets; (3) low taxation (4) noninflationary monetary policies; and (5) free trade. (2002) Good institutions serve to "Foster other cultural patterns of conduct, hard work, savings and industriousness, honesty and trustworthiness, creativity, and self-responsibility. These are the bases of the wealth of nations." (Easterly, 2002; as cited in: Ebeling, 2002) These tools are helpful in avoiding and mitigating economic risks in development.

Bibliography

Easterly, W (2002) the Elusive Quest for Growth: An Economists Adventures and Misadventures in the Tropics (Cambridge, MIT Press) Chapter 2

Krueger, a.O (1998) Why Trade Liberalization Is good for Growth, Economic Journal 108

Demetriades, P. And Hussein, K.A (1996) Does Financial Development Cause Economic Growth? Time-Series Evidence From 16 Countries,...
[ View Full Essay]