Vol. 5 No. 8 (2007): Latin American Journal of Economic Development No. 8

Professor Xavier Sala -i - Martin notes that one of the most important lessons we have learned from the development of the recent theory of economic growth is, without any doubt, that institutions matter. The institutional matrix, beyond a legal system that ensures the rights of individuals and satisfactorily protects property, is made up of a complex of interdependent norms that, together, determine the efficiency of economic performance; among them, financial institutions help to transfer savings to investment, both for long-term ventures and short-term activities that require the availability of liquid resources.