The recognition that institutions matter came to be called neo-institutional economics. Neoinstitutional scholars argued that changes in growth patterns could not be explained without recourse to cultural differences. For example, Ghana and South Korea had very similar economies and per capita GDP in the 1960s. Thirty years later, the South Korean per capita GDP was 15 times that of Ghana.
Culture encompasses such things as the private virtues of fidelity, thrift, and industry; the social norms of promise-keeping and trust; and the practice of religion. One important component is legal culture, or the rule of law. Brookings Institution fellow Daniel Kaufmann reports that rule-of-law variables are associated with significantly better development outcomes:
[A]n improvement in the rule of law (or, say, control of corruption) from relatively poor to merely average performance would result in the long run in an estimated fourfold increase in per capita incomes, a reduction in infant mortality of a similar magnitude, and significant gains in literacy.
The third reason in the article tells it all:
The third reason we can expect the corruption problem to get worse is the absence of monitoring or oversight by the media and watchdog groups. The conservative media reports these things, but the partisan media on the left, which dominates the conversation, is focused on more important issues than economic decline. Sure, that matters, but what’s really important right now is same-sex marriage, the war on women, and justice for illegal aliens. As for ostensibly nonpartisan government ethics groups such as Common Cause, they’re too busy trying to eliminate Republican money in politics.