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Institutions and the quality of governance: an empirical study on interstate differences in economic development in India

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Author Info

  • Bharatee Bhusana Dash

    ()
    (Department of Economics, University of Hyderabad, India)

  • Sami Angara V. Raja

    (Department of Economics, University of Hyderabad, India)

Abstract

Economic performance is closely linked to the existence of good institutions. However, the quality of governance has also been identified as an important factor that affects economic growth and development. This paper empirically examines the significance of these factors in explaining variations in the per capita GDP of the Indian states and the extent of industrialization across them. Towards this end, indices for institutions—such as the protection of property rights, the efficiency of the legal system at the state level and the rule of law—as well as indicators of the extent and quality of State intervention and political stability, have been constructed to bring them into an empirically testable format. Empirical findings suggest that the quality of governance is significant in explaining the variations in state per capita GDP. Institutional factors play a significant role in explaining variations in the extent of industrialization across the Indian states.

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Bibliographic Info

Article provided by United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in its journal Asia-Pacific Development Journal.

Volume (Year): 16 (2009)
Issue (Month): 1 (June)
Pages: 1-26

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Handle: RePEc:unt:jnapdj:v:16:y:2009:i:1:p:1-26

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Related research

Keywords: institutions; growth; development; Indian states;

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References

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  1. Roubini, Nouriel & Swagel, Phillip & Ozler, Sule & Alesina, Alberto, 1996. "Political Instability and Economic Growth," Scholarly Articles 4553024, Harvard University Department of Economics.
  2. Pranab Bardhan, 2004. "Scarcity, Conflicts, and Cooperation: Essays in the Political and Institutional Economics of Development," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524295, December.
  3. Alesina, Alberto, et al, 1996. " Political Instability and Economic Growth," Journal of Economic Growth, Springer, vol. 1(2), pages 189-211, June.
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Cited by:
  1. Majumdar, Sumon & Mukand, Sharun W, 2013. "Institution Building and Political Economy," CAGE Online Working Paper Series 131, Competitive Advantage in the Global Economy (CAGE).
  2. repec:cge:warwcg:130 is not listed on IDEAS

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