This text explores the issues of politics, institutions and the economic performance of nations from an in-depth perspective, challenging conventional theory which claims that democracy promotes economic growth. In examining the economic consequence of politics and institutions, the author provides a critical review of 47 empirical studies. This research on the relationship between political and institutional systems and economic policy and growth is analyzed and its conclusions questioned. The author then creates an up-to-date data set on the causality between political and institutional factors and economic variables. In examining the relationship between economic growth, institutional systems and political stability, the author assesses their impact on inflation, fiscal policy, central bank independence, budget deficits, public debt and the investment-income ratio.