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Institutional interactions and economic growth: the joint effects of property rights, veto players and democratic capital

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  • Mogens Justesen
  • Peter Kurrild-Klitgaard

Abstract

We investigate the possible interaction effects that the extent of property rights protection and separation of powers in a political system have on economic growth. Using analysis of panel data from more than countries over the period 1970-2010 we find that the growth effects of property rights increase when political power is divided among more veto players. When distinguishing between institutional veto players (political institutions) and partisan veto players (fractionalization among political parties), we further find that the growth effects of property rights are driven mainly by checks on the chief executive (in bicameral systems) and primarily found in countries with large stocks of democratic capital.
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  • Mogens Justesen & Peter Kurrild-Klitgaard, 2013. "Institutional interactions and economic growth: the joint effects of property rights, veto players and democratic capital," Public Choice, Springer, vol. 157(3), pages 449-474, December.
  • Handle: RePEc:kap:pubcho:v:157:y:2013:i:3:p:449-474
    DOI: 10.1007/s11127-013-0143-1
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    Cited by:

    1. Tenryu, Yohei, 2013. "The Role of the Private Sector under Insecure Property Rights," MPRA Paper 74893, University Library of Munich, Germany, revised 27 Oct 2016.
    2. Peter Kurrild-Klitgaard, 2015. "Classical Liberalism and Modern Political Economy in Denmark," Econ Journal Watch, Econ Journal Watch, vol. 12(3), pages 400–431-4, September.
    3. Martin Roessler, 2019. "Political regimes and publicly provided goods: why democracy needs development," Public Choice, Springer, vol. 180(3), pages 301-331, September.
    4. Christian Bjørnskov, 2015. "Constitutional property rights protection and economic growth: evidence from the post-communist transition," Constitutional Political Economy, Springer, vol. 26(3), pages 247-280, September.
    5. Kunal Sen & Lant Pritchett & Sabyasachi Kar & Selim Raihan, 2016. "Democracy versus dictatorship? The political determinants of growth episodes," Global Development Institute Working Paper Series esid-070-16, GDI, The University of Manchester.
    6. Yohei Tenryu, 2017. "The role of the private sector under insecure property rights," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 64(3), pages 285-311, September.
    7. Miguel-Angel Galindo-Martín & María-Soledad Castaño-Martínez & María-Teresa Méndez-Picazo, 2020. "The Relationship between Green Innovation, Social Entrepreneurship, and Sustainable Development," Sustainability, MDPI, Open Access Journal, vol. 12(11), pages 1-19, June.
    8. Daniel L. Bennett & Hugo J. Faria & James D. Gwartney & Daniel R. Morales, 2016. "Evaluating Alternative Measures of Institutional Protection of Private Property and Their Relative Ability to Predict Economic Development," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 31(Summer 20), pages 57-78.
    9. Christian Bjørnskov, 2017. "Growth, Inequality, And Economic Freedom: Evidence From The U.S. States," Contemporary Economic Policy, Western Economic Association International, vol. 35(3), pages 518-531, July.

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    More about this item

    Keywords

    Economic growth; Institutions; Property rights; Veto players; Democracy;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P14 - Economic Systems - - Capitalist Systems - - - Property Rights
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • P17 - Economic Systems - - Capitalist Systems - - - Performance and Prospects
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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