Upheaval and institutional capital

In an article published in the July 2010 issue of Executive, I wrote that although economic reforms that foster an entrepreneurial spirit are important for improving the livelihood of emerging countries, the critical ingredient for sustainable growth and the strengthening of social cohesion is the institutional capital of a country. By that I meant the complex tangle of governance tools, primarily in the legal and judicial areas, which form the foundations of a level playing field for all — not only for those who happen to be in a position of privilege and have access to decision makers. It is interesting to note that the countries being swept by public unrest, or where political opposition is gaining strength, had been quite resilient to the global financial crisis thanks to the effects of structural reforms during the past decade. In a number of cases they had enjoyed a rather successful record