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Institutional flexibility and economic growth

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  • Davis, Lewis S.

Abstract

This paper develops a formal model to investigate the relationship between institutional quality - the current set of property rights - and institutional flexibility - the ability to develop new institutions - and relate these aspects of institutional structure to dynamic economic performance. The model is used to analyze two types of institutional reform. An increase in institutional quality lowers market transaction costs, producing an immediate but short lived increase in the rate of economic growth. In contrast, an increase in institutional flexibility results in a delayed but permanent increase in economic growth. The analysis suggests that the current work on institutions places too much emphasis on property rights and too little on the determinants of institutional change.

Suggested Citation

  • Davis, Lewis S., 2010. "Institutional flexibility and economic growth," Journal of Comparative Economics, Elsevier, vol. 38(3), pages 306-320, September.
  • Handle: RePEc:eee:jcecon:v:38:y:2010:i:3:p:306-320
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    Cited by:

    1. Flachaire, Emmanuel & García-Peñalosa, Cecilia & Konte, Maty, 2014. "Political versus economic institutions in the growth process," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 212-229.
    2. repec:eee:jcecon:v:46:y:2018:i:1:p:174-191 is not listed on IDEAS
    3. Pierre-Alexandre Balland & David Rigby & Ron Boschma, 2015. "The technological resilience of US cities," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 8(2), pages 167-184.
    4. Yasir Khan & Attiya Yasmin Javid, 2015. "The Impact of Formal and Informal Institutions on Economic Performance: A Cross-Country Analysis," PIDE-Working Papers 2015:130, Pakistan Institute of Development Economics.
    5. Thi Mai Phuong, Chu, 2018. "Impacts of Institutions on the Performances of Enterprises in Vietnam," Papers 1149, World Trade Institute.
    6. Tamilina, Larysa & Tamilina, Natalya, 2015. "The Impact of Variations in Institutional Grafting Modes on Economic Growth: A Three-Dimensional Approach," MPRA Paper 68648, University Library of Munich, Germany, revised 16 Apr 2015.
    7. De Luca, Giacomo & Litina, Anastasia & Sekeris, Petros G., 2015. "Growth-friendly dictatorships," Journal of Comparative Economics, Elsevier, vol. 43(1), pages 98-111.
    8. Tamilina, Larysa & Tamilina, Natalya, 2014. "Heterogeneity in Institutional Effects on Economic Growth: Theory and Empirical Evidence," MPRA Paper 63170, University Library of Munich, Germany.
    9. repec:kap:ecopln:v:51:y:2018:i:2:d:10.1007_s10644-016-9196-8 is not listed on IDEAS
    10. Larysa Tamilina & Natalya Tamilina, 2014. "Heterogeneity in Institutional Effects on Economic Growth: Theory and Empirical Evidence," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 11(2), pages 205-249, December.
    11. Tamilina, Larysa & Tamilina, Natalya, 2012. "When formal institutions fail in fostering economic growth: the case of post-communist countries," MPRA Paper 48352, University Library of Munich, Germany, revised 01 Nov 2012.

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