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Introduction to Modern Economic Growth States, there should exist some arrangement such that these new technologies can be imported and everybody could be made better off Another challenge to models of multiple steady states concerns the ubiquity of growth miracles such as South Korea and Singapore, which we discussed in Chapter If cross-country income differences are due to multiple steady states, from which escape is impossible, then how can we explain countries that embark upon a very rapid growth process? The example of China may be even more telling here While China stagnated under communism until Mao’s death, the changes in economic institutions and policies that took place thereafter have led to very rapid economic growth If China was in a low-growth steady state before Mao’s death, then we need to explain how it escaped from the steady state after 1978, and why it did not so before? Inevitably this takes us to the role of other fundamental causes, such as institutions, policies and culture A different, and perhaps more promising, argument on the importance of luck can be made by emphasizing the role of leaders Perhaps it was Mao who held back China, and his death and the identity, beliefs and policies of his successor were at the root of its subsequent growth Perhaps the identity of the leader of a country can thus be viewed as a stochastic event, shaping economic performance This point of view probably has a lot of merit Recent empirical work by Jones and Olken (2005) shows that leaders seem to matter for the economic performance of nations Thus luck could play a major role in cross-country income and growth differences by determining whether growth-enhancing or growth-retarding leaders are selected Nevertheless, such an explanation is closer to the institutional approaches than the pure luck category First of all, leaders will often influence the economic performance of their societies by the policies they set and the institutions they develop Thus, the selection and behavior of leaders and the policies that they pursue should be a part of the institutional explanations Second, Jones and Olken’s research points to an important interaction between the effect of leaders and a society’s institutions Leaders seem to matter for economic growth only in countries where institutions are non-democratic or weak (in the sense of not placing constraints on politicians or elites) In democracies and in societies where other institutions appear to place 167