ACDE seminar: From symmetry to sustainability: Transforming institutions for long-term growth

While colonization shaped institutions, countries like Singapore, China, South Korea, Botswana, and Türkiye experienced significant institutional shifts independent of colonial rule, raising the question: what drives such transformations? This paper introduces a novel model, demonstrating how the interplay between population norms and leadership traits shapes long-term institutional development. The Population-Leadership Symmetry Principle posits that leadership traits mirror societal norms, as leaders emerge from within the population. However, the model also shows that institutional transformation requires strong and persistent leadership to reshape societal values, generating a leadership hysteresis effect that embeds reforms beyond leadership transitions.

By formalizing the dynamic evolution of institutions, this framework extends North (1990) and Acemoglu et al. (2001) by identifying conditions under which institutional inertia is overcome. The model is calibrated to Singapore’s transformation under Lee Kuan Yew (1959–1990) and tested through historical case studies of Türkiye, Botswana, China, South Korea and British settler colonies of Canada, Australia, the US and New Zealand.

Empirical validation using panel data and event studies supports the model’s predictions, demonstrating a strong association between societal corruption norms and leadership behaviour. The findings highlight that institutional transformation is rare, requiring sustained, high-intensity leadership interventions to break entrenched norms. The model provides a framework for understanding institutional persistence, reform success, and governance’s long-run effects on economic development.

Speaker:

Dr Omer Majeed, Visiting Fellow TTPI and CAMA Associate, ANU