Ultimately, the growth rate of the actively working population and the pace at which technological progress is implemented in the production process are the critical determinants of the growth rate of  2  BIS Review 126/2006  potential output.
Indeed, the strengthening of such institutions often goes hand in hand with higher economic growth: countries with stronger institutions experience stronger economic growth compared to countries with weaker institutions. There are several reasons why this turns out to be the case. Strong institutions provide for the protection of property rights; foster contract enforcement; create a healthy investment climate and help the development of abilities.