Developing new measurements of State institutional capacity
AbstractAccording to a narrow definition, institutional capacity of the state is the ability of the government to enforce laws and regulations. There are a lot of subjective indices (control over corruption, rule of law, government effectiveness, etc.) that are designed to measure the state institutional capacity and are based on experts’ estimates. The logical objective measures of the state institutional capacity are the murder rate – non-compliance with the state’s monopoly on violence, and the shadow economy – non compliance with the economic regulations. It appears that political regime (democratic or authoritarian) matters for the subjective ranking. It could be shown, for instance, that out of two countries with the same murder rate, government effectiveness is higher in countries that were more democratic in the past (1970s-1990s on average) and in the year (2002) when government effectiveness was measured. This result holds for all other five World Bank subjective indices of institutional capacity – rule of law, control over corruption, voice and accountability, political stability and regulation quality. And they hold also for the share of shadow economy: out of two countries with the same share of shadow economy, government effectiveness is higher in a more democratic one.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 32389.
Date of creation: Mar 2011
Date of revision:
Institutional capacity; murder rate; shadow economy; democratization;
Find related papers by JEL classification:
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-08-02 (All new papers)
- NEP-IUE-2011-08-02 (Informal & Underground Economics)
- NEP-REG-2011-08-02 (Regulation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Polterovich, Victor & Popov, Vladimir, 2007. "Democratization, Quality of Institutions and Economic Growth," MPRA Paper 19152, University Library of Munich, Germany.
- Popov, V., 2012. "Why the West got Rich Before Other Countries and Why China is Catching Up With the West Today? New Answer to the Old Question," Journal of the New Economic Association, New Economic Association, vol. 15(3), pages 35-64.
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