Political versus Economic Institutions in the Growth Process
AbstractAfter a decade of research on the relationship between institutions and growth, scholars in this field seem to be divided. Economic institutions perform well in growth regressions and a body of literature argues that this supports the key importance of institutions for development. Other authors maintain that the type of constraints that the recent theoretical literature describes are the more stable political institutions, and these have been found to play no role in empirical growth analyses. In this paper we re-examine the role that institutions play in the growth process using cross-section and panel data for both developed and developing economies over the period 1970-2000. Our results indicate that the data is best described by an econometric model with two growth regimes. Political institutions are the key determinant of which growth regime an economy belongs to, while economic institutions have a direct impact on growth rates within each regime. These findings support the hierarchy of institutions hypothesis, whereby political institutions set the stage in which economic institutions and policies operate.
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Date of creation: 14 Apr 2011
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growth; institutions; cross-country regressions; mixture regressions;
Other versions of this item:
- Emmanuel Flachaire & Cecilia García-Peòalosa & Maty Konte, 2011. "Political versus Economic Institutions in the Growth Process," CESifo Working Paper Series 3432, CESifo Group Munich.
- O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-23 (All new papers)
- NEP-FDG-2011-04-23 (Financial Development & Growth)
- NEP-POL-2011-04-23 (Positive Political Economics)
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- Maty Konte, 2013.
"A curse or a blessing? Natural resources in a multiple growth regimes analysis,"
Taylor and Francis Journals, vol. 45(26), pages 3760-3769, September.
- Maty Konte, 2012. "A Curse or a Blessing? Natural Resources in a Multiple Growth Regimes Analysis," AMSE Working Papers 1218, Aix-Marseille School of Economics, Marseille, France.
- Tine Søreide, 2012. "Democracy's shortcomings in anti-corruption," CMI Working Papers 10, CMI (Chr. Michelsen Institute), Bergen, Norway.
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