«Institutional profiles»: presentation and analysis of an original database of the institutional characteristics of developing, in transition and developed countries

The disparity between the development paths followed by the economies of a limited number of countries, known as «emerging», and the bulk of the other developing countries has shown the limitations of previous development strategies. As a consequence, at the beginning of the 1990s, the question of institutions has been propelled to the top of the economic agenda. The empirical literature has now solidly documented and validated the general relationship between institutions and development. With this as a starting point, attention is now being concentrated on the actual nature of the institutional mechanisms at work, the inter-relationships between them and their combined impact on development. Whereas previous analysis of development had mainly drawn on the instruments derived from national accounts, there are not as yet internationally standardised observation instruments for tackling the questions now being raised. A few institutional indicators were created since the end of the 1990s but these cover only a limited part of the institutional domain. This document attempts to fill the gap, putting forward an original database covering a broad and detailed field of institutional characteristics for 51 countries (developing, in transition and developed countries). The basic data were collected using a questionnaire completed in 2001 by the economic missions of the French Ministry of the Economy, Finance and Industry in the selected countries, enabling us to cover 80% of the world's GDP and population. In this document, we set out the method used for the construction of our indicators. We then compare them with other existing indicators, noting the existence of convergence for elements that are common to the respective inquiries. On the basis of our indicators we confirm the causal relationship between institutions and levels of development. We then go on to explore the database using a non-inferential (data analysis) approach. We identify an «institutional core» consisting of four major institutional characteristics (governance, security of transactions, innovation and regulations), leading us to draw up an initial typology of institutional profiles: «Authoritarian-paternalistic», «mild liberal», «pure liberal» and «informal». This typology is then supplemented by a combination of both institutional and economic variables, highlighting the main thrusts providing the framework for the database: welfare and reform. The Classification obtained aggregates countries by relevant sub-groups. This approach, which was initiated by the Ministry for economic policy purposes, has since been opened up, first, to the academic world, by bringing together a scientific committee composed of development economists in order to monitor the progress of the work described here, and second by making it possible for Research Centres to use the database