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Institutions, ratings and economic growth: in search of reliable indicators

  • Rinat Menyashev


    (National Research University Higher School of Economics)

  • Timur Natkhov


    (National Research University Higher School of Economics)

  • Konstantin Yanovskiy


    (Gaidar Institute for Economic Policy, Head of Department of Institutional Development)

The ratings of political institutions are well-known and widely used in academic literature. These ratings are mostly based on expert evaluations. However, such evaluations can be subjective and occasionally driven by ideological considerations. In this paper we propose two new indicators of institutional quality for 154 countries. These indicators are constructed in a way that minimizes the subjectivity of the evaluations. Only the presence or absence of a particular institutional phenomenon is identified. This puts much less weight on possible bias and makes easy to verify. We show that these indices predict economic growth better than those commonly used, primarily because they include information about institutions that has been accumulated over a period of approximately two centuries

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Paper provided by National Research University Higher School of Economics in its series HSE Working papers with number WP BRP 47/EC/2013.

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Length: 21 pages
Date of creation: 2013
Date of revision:
Publication status: Published in WP BRP Series: Economics / EC, December 2013, pages 1-21
Handle: RePEc:hig:wpaper:47/ec/2013
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  1. Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers.
  2. Moral-Benito, Enrique, 2009. "Determinants of Economic Growth: A Bayesian Panel Data Approach," Policy Research Working Paper Series 4830, The World Bank.
  3. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
  4. Torsten Persson & Guido Tabellini, 2006. "Democratic capital: The nexus of political and economic change," Levine's Bibliography 122247000000001304, UCLA Department of Economics.
  5. Xavier Sala-i-Martin, 1997. "I just ran four million regressions," Economics Working Papers 201, Department of Economics and Business, Universitat Pompeu Fabra.
  6. Konstantin Yanovskiy & Sergey Shulgin, 2013. "Institutions, Democracy And Growth In The Very Long Run," Working Papers 0082, Gaidar Institute for Economic Policy, revised 2013.
  7. Cohen, Joseph N, 2010. "Neoliberalism’s relationship with economic growth in the developing world: Was it the power of the market or the resolution of financial crisis?," MPRA Paper 24527, University Library of Munich, Germany.
  8. Gernot Doppelhofer & Ronald I. Miller & Xavier Sala-i-Martin, 2000. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (Bace) Approach," OECD Economics Department Working Papers 266, OECD Publishing.
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