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Institutional Quality and Economic Growth: Maintenance of the Rule of Law or Democratic Institutions, or Both?

  • James L. Butkiewicz


    (Department of Economics,University of Delaware)

  • Halit Yanikkaya


    (Department of Economics, Celal Bayar University)

Analysis of the factors determining rates of economic growth has found that country-specific characteristics have important effects on growth performance. Empirical evidence to date suggests that maintenance of the rule of law promotes growth, while adopting democratic institutions does not appear to improve growth performance. We find that these conclusions are very sensitive to sample selection and to estimation technique. When an identical sample of countries is used, we find that countries with democratic institutions do enjoy superior growth performance. The relationship between growth and democratic institutions is also sensitive to the estimation technique used. Estimates using instrumental variable techniques suggest that democratic institutions do experience better growth performance. These results are especially relevant for developing nations. Length pages: 25 pages

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Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 04-03.

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Date of creation: 2004
Date of revision:
Publication status: Published in Economic Modeling, Vol 23. pp. 648-661, 2006
Handle: RePEc:dlw:wpaper:04-03
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