Richer economies need fewer large reforms and choose lower institutional insulation

Evidence

One may also argue that in richer countries the benefit of further “reform,” captured by γ declines, almost by definition of being “rich.” This also leads to a choice towards less insulation. Thus, one can argue that, as an economy grows richer, the need for large reforms becomes smaller and, when necessary, the losers can be compensated at low costs. Both factors lead to choosing lower insulation. Also lower insulation helps protecting property rights against expropriation. — Philippe Aghion, Alberto Alesina, and Francesco Trebbi, Endogenous Political Institutions, 181

Categorization

• XREF: Connects to Acemoglu-Robinson institutional economics and to the welfare-state/electoral-system literature cited just above.