Growth without Governance
AbstractPer capita incomes and the quality of governance are strongly positively correlated across countries. We propose an empirical strategy that allows us to separate this correlation into: i) a strong positive causal effect running from better governance to higher per capita incomes, and ii) a weak and even negative causal effect running in the opposite direction from per capita incomes to governance. The first result confirms existing evidence on the importance of good governance for economic development. The second result is new and suggests the absence of virtuous circles" in which higher incomes lead to further improvements in governance. This motivates our choice of title, "Growth Without Governance". We document this evidence using a newly-updated set of worldwide governance indicators covering 175 countries for the period 2000/01, and use the results to interpret the relationship between incomes and governance in the Latin America and the Caribbean region. Finally, we speculate as to the potential importance of elite influence and state capture in accounting for the surprising negative effects of per capita incomes on governance, present some evidence on such capture in some Latin American countries, and suggest priorities for actions to improve governance when such pernicious elite influence shapes public policy."
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Bibliographic InfoArticle provided by LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION in its journal JOURNAL OF LACEA ECONOMIA.
Volume (Year): (2002)
Issue (Month): ()
Contact details of provider:
quality of governance; incomes; Latin America; Caribbean;
Other versions of this item:
- Kaufmann, Daniel & Kraay, Aart, 2002. "Growth without governance," Policy Research Working Paper Series, The World Bank 2928, The World Bank.
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
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