Institutional erosion rarely triggers acute crises. It operates slowly: regulatory capture, politicisation of the civil service, erosion of central bank independence, gradual weakening of contract enforcement. These processes are hard to observe and harder to reverse, but they steadily degrade the foundations on which sustained growth depends.
The relationship between institutions and growth threats is bidirectional. Weak institutions make countries more vulnerable to resource curses and over-borrowing. And resource discoveries can accelerate institutional erosion by shifting political competition toward rent extraction rather than service delivery.
How It Operates
Regulatory Capture
Interest groups use resource wealth to capture regulatory agencies, reducing the state's ability to enforce contracts and manage the resource sector.
Civil Service Politicisation
Patronage hiring reduces the technical capacity of government, compounding governance failures across all sectors.
Judicial Weakness
Erosion of judicial independence undermines contract enforcement and investor confidence, reducing long-term investment.
Policy Implications
- → Build and protect independent regulatory institutions before resource revenues arrive
- → Establish merit-based civil service protections that are resistant to political patronage
- → Strengthen judicial independence through constitutional protections and funding security