Asian countries differ considerably in the way banks are controlled and directed, and this goes a long way toward explaining the different structures and performance of their economies. In particular, in a few countries, notably Korea, banks have been used to pursue a highly dirigiste economy, and to promote the acquisition of new technology. The attractiveness of the market lies in the discipline it imposes on entrepreneurs. Korea has shown, uniquely, that the state could impose a discipline of equal severity. As the longest lasting unit of social organization, the family is an important agent of economic growth.
Households make decisions that affect production and accumulation of physical and human capital.
However, research on economic growth in the MENA region has largely ignored the role of households and attributed growth outcomes mainly to actions taken by governments. Strong and dominant central governments have ruled the region for centuries. In the 20th century, socialist ideology and availability of oil revenues have helped maintain the image, if not the reality, of the all-powerful state. This paper seeks to examine the role of output as well as factor markets in shaping the pace as well as composition of economic growth in the major South Asian economies. In particular, the authors seek to explain the slow pace of economic growth in these economies since 1950s using Simon Kuznets-Douglass North Institutional approach to economic growth.