Multi-polarity and institutional development: A cross-national analysis

As the effects of poverty, corruption, illegal immigration, terrorism, transnational crime and other costs associated with weak and failed states continue to grow and spill over, the need to understand how nations can be built, and institutional arrangements changed, has become an urgent matter. Substantial amounts of treasure and effort have been spent on building and transforming institutions but success has been elusive so far. While some argue that institutions are exogenous to political, economic and social circumstances and, therefore, willful leaders can change them by design, others argue that institutions will change only gradually as they are endogenous to the underlying and slow changing cultural norms and values of each country. Whereas I acknowledge that there are many factors that influence the process of institutional building and transformation, and that we do not fully understand it yet, I propose that institutional development depends, in part, on the pattern of distribution of power (i.e., Multi-polarity) through its effect on political competition and that Multi-polarity is endogenous to factors that affect the number of players and their relative bargaining strength. I test the relationship, as well as the direction of causality, between Multi-polarity and institutional development using some existing faulty measures for each concept. I find empirical evidence to support my thesis that countries with higher levels of Multi-polarity tend to have higher levels of institutional performance. Since patterns of power distribution tend to change gradually, it is unlikely that institutional arrangements would change overnight. Nevertheless, with more emphasis on rebalancing power asymmetries rather than on getting the policy right changing the direction of the "path dependence" is more likely.