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Institutions: Key variable for economic development in Latin America

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  • Vianna, Andre C.
  • Mollick, Andre V.

Abstract

This article examines economic development from 1996 to 2015 for 192 countries and specifically Latin America. Evidence shows that each 0.1-point increase in institutions impacts a 3.9% improvement in Latin American per capita output versus a 2.6% effect on world development. This new evidence from Latin America shows a missing opportunity to develop at higher annual pace than the 2.14% average, mainly due to the deterioration in rule of law. We conjecture the efficiency of monetary/fiscal policies will improve if policymakers emphasize projects that foster improvements to institutional quality, such as transparency, public spending quality and fiscal responsibility.

Suggested Citation

  • Vianna, Andre C. & Mollick, Andre V., 2018. "Institutions: Key variable for economic development in Latin America," Journal of Economics and Business, Elsevier, vol. 96(C), pages 42-58.
  • Handle: RePEc:eee:jebusi:v:96:y:2018:i:c:p:42-58
    DOI: 10.1016/j.jeconbus.2017.12.002
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    Keywords

    Economic development; Institutions; Latin America; Panel data;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean

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