Strong institutions are associated with high levels of real income per capita as they shape the framework conditions for investment and growth (IMF 2003). For example, where corruption and the appropriation of private property are common, potential returns on investment are reduced and perhaps eliminated altogether. Political control of resources can also limit the extent to which firms can secure the inputs they need for production. Formal institutions also influence the balance between diversionary (rent-seeking) and productive activities in society (Hall and Jones 1999). Countries with a history of institutions that support productive activities such as capital accumulation, skill acquisition, invention, and technology transfer produce much higher levels of output per capita.