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A new way to link development to institutions,policies and geography

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Author Info
Sudip Ranjan Basu () (IUHEI, The Graduate Institute of International Studies, Geneva)

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Abstract

The paper aims to examine the role of institutions relative to economic policy and geography in explaining the differential level of development across countries over time. To that end, it attempts to construct a Development Quality Index (DQI) and an Institutional Quality Index (IQI) by using multivariate statistical method of principal components. It shows that (i) higher level of IQI along with economic policy and geography factors lead to a positive improvement in the level of DQI; and (ii) results remain robust for IQI and relatively robust for economic policy and geography even when it is compared across cross-section and panel data estimation for a set of 102 countries over 1980 to 2004. The results strongly indicate that institutions matter in the context of specific economic policy mixes and geography related factors illustrated by disease burden, etc. It demonstrates that relative influence of institutions varies across stages of development.

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Publisher Info
Paper provided by Economics Section, The Graduate Institute of International Studies in its series HEI Working Papers with number 04-2008.

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Length: 50
Date of creation: 01 Mar 2008
Date of revision: Mar 2008
Handle: RePEc:gii:giihei:heiwp04-2008

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Related research
Keywords: Development; Institutions; Economic policy; Geography; Principal component; Instrumental variables; Panel data;

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Find related papers by JEL classification:
C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes

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