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Institutions, ratings and economic growth: in search of reliable indicators

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Listed:
  • Rinat Menyashev

    (National Research University Higher School of Economics)

  • Timur Natkhov

    (National Research University Higher School of Economics)

  • Konstantin Yanovskiy

    (Gaidar Institute for Economic Policy, Head of Department of Institutional Development)

Abstract

The ratings of political institutions are well-known and widely used in academic literature. These ratings are mostly based on expert evaluations. However, such evaluations can be subjective and occasionally driven by ideological considerations. In this paper we propose two new indicators of institutional quality for 154 countries. These indicators are constructed in a way that minimizes the subjectivity of the evaluations. Only the presence or absence of a particular institutional phenomenon is identified. This puts much less weight on possible bias and makes easy to verify. We show that these indices predict economic growth better than those commonly used, primarily because they include information about institutions that has been accumulated over a period of approximately two centuries

Suggested Citation

  • Rinat Menyashev & Timur Natkhov & Konstantin Yanovskiy, 2013. "Institutions, ratings and economic growth: in search of reliable indicators," HSE Working papers WP BRP 47/EC/2013, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:47/ec/2013
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    References listed on IDEAS

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    More about this item

    Keywords

    Rule of Law; Democracy; Limited Government; Institutions; Indicators; Economic growth;
    All these keywords.

    JEL classification:

    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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