IDEAS home Printed from https://ideas.repec.org/p/oec/ecoaaa/843-en.html
   My bibliography  Save this paper

The Policy and Institutional Drivers of Economic Growth Across OECD and Non-OECD Economies: New Evidence from Growth Regressions

Author

Listed:
  • Romain Bouis

    (OECD)

  • Romain Duval

    (OECD)

  • Fabrice Murtin

    (OECD)

Abstract

This paper analyses the policy and institutional determinants of long-run economic growth for a sample of OECD and non-OECD countries, with two objectives. First, it assesses the extent to which the main findings from growth regressions covering industrial countries are robust to a larger sample covering lower-income OECD and non-OECD countries. Confirmation is found from pooled mean group estimates for the larger sample of countries that long-run GDP per capita levels are increased inter alia by education policies, trade openness, R&D expenditures and policy frameworks that are conducive to low inflation, although the estimated effect of education is implausibly large. Second, the paper proposes a new growth regression framework that explicitly models technology diffusion and allows exploring the growth effects of a wider set of policies and institutions, while alleviating some of the constraints of the pooled mean group estimator. Under this approach, the estimated return to education is more in line with available evidence from microeconomic studies. Regulatory barriers to entrepreneurship, explicit barriers to trade and – especially – patent rights protection appear to be fairly robust determinants of long-run cross-country differences in technology. Some other policies and institutions such as trade liberalisation are found to speed up technology convergence. There is limited evidence here that the effects of policies and institutions vary depending on countries’ level of development. These findings are subject to the usual limitations of growth regression analysis. Les déterminants politiques et institutionnels de la croissance économique au sein des économies OCDE et non OCDE : nouveaux résultats à partir d'équations de croissance Cet article analyse les déterminants politiques et institutionnels de la croissance économique de long terme pour un échantillon de pays membres et non membres de l’OCDE avec deux objectifs. Premièrement, il évalue dans quelle mesure les principaux résultats de régressions couvrant des pays industrialisés sont robustes à un échantillon plus large couvrant les pays de l’OCDE à bas revenus et des pays non membres. Les résultats d’estimations en pooled mean group sur l’échantillon élargi de pays confirment que la croissance de long terme du PIB par tête augmente notamment avec les politiques d’éducation, l’ouverture aux échanges commerciaux, les dépenses en R-D et les structures politiques associées à un faible niveau d’inflation, bien que l’estimation élevée de l’effet de l’éducation soit peu plausible. Deuxièmement, le papier propose un nouveau cadre de régressions de croissance qui modélise de façon explicite la diffusion technologique et permet d’explorer les effets sur la croissance d’un ensemble plus vaste de politiques et d’institutions, tout en allégeant certaines des contraintes de l’estimateur pooled mean group. Sous cette approche, le rendement estimé de l’éducation est davantage en accord avec les estimations provenant d’études microéconomiques. Les barrières réglementaires à l’entreprenariat, les barrières explicites aux échanges commerciaux et surtout, la protection des droits sur les brevets apparaissent comme des déterminants assez robustes des différences technologiques de long terme entre pays. D’autres politiques et institutions, telles que la libéralisation des échanges commerciaux, accélèrent la convergence technologique. Il existe une évidence limitée en faveur d’effets différents des politiques et des institutions suivant le niveau de développement des pays. Ces résultats sont soumis aux limites habituelles de l’analyse en régressions de croissance.

Suggested Citation

  • Romain Bouis & Romain Duval & Fabrice Murtin, 2011. "The Policy and Institutional Drivers of Economic Growth Across OECD and Non-OECD Economies: New Evidence from Growth Regressions," OECD Economics Department Working Papers 843, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:843-en
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1787/5kghwnhxwkhj-en
    Download Restriction: no

    References listed on IDEAS

    as
    1. Eric Hanushek & Ludger Woessmann, 2012. "Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation," Journal of Economic Growth, Springer, vol. 17(4), pages 267-321, December.
    2. Andrea Bassanini & Luca Nunziata & Danielle Venn, 2009. "Job protection legislation and productivity growth in OECD countries," Economic Policy, CEPR;CES;MSH, vol. 24, pages 349-402, April.
    3. Christian Morrisson & Fabrice Murtin, 2009. "The Century of Education," Journal of Human Capital, University of Chicago Press, vol. 3(1), pages 1-42.
    4. Rachel Griffith & Stephen Redding & John Van Reenen, 2004. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 883-895, November.
    5. Angel de la Fuente & Rafael Doménech, 2006. "Human Capital in Growth Regressions: How Much Difference Does Data Quality Make?," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 1-36, March.
    6. Aghion, Philippe & Askenazy, Philippe & Bourlès, Renaud & Cette, Gilbert & Dromel, Nicolas, 2009. "Education, market rigidities and growth," Economics Letters, Elsevier, vol. 102(1), pages 62-65, January.
    7. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 717-737.
    8. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2008. "Earnings Functions and Rates of Return," Journal of Human Capital, University of Chicago Press, vol. 2(1), pages 1-31.
    9. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    10. Philippe Aghion & Yann Algan & Pierre Cahuc & Andrei Shleifer, 2010. "Regulation and Distrust," The Quarterly Journal of Economics, Oxford University Press, vol. 125(3), pages 1015-1049.
    11. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934 Elsevier.
    12. Daniel Cohen & Marcelo Soto, 2007. "Growth and human capital: good data, good results," Journal of Economic Growth, Springer, vol. 12(1), pages 51-76, March.
    13. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    14. Christian Morrisson & Fabrice Murtin, 2010. "The Kuznets Curve of Education: A Global Perspective on Education Inequalities," CEE Discussion Papers 0116, Centre for the Economics of Education, LSE.
    15. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    16. Renaud Bourlès & Gilbert Cette & Jimmy Lopez & Jacques Mairesse & Giuseppe Nicoletti, 2013. "Do Product Market Regulations In Upstream Sectors Curb Productivity Growth? Panel Data Evidence For OECD Countries," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1750-1768, December.
    17. Duval, Romain & de la Maisonneuve, Christine, 2010. "Long-run growth scenarios for the world economy," Journal of Policy Modeling, Elsevier, vol. 32(1), pages 64-80, January.
    18. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    19. Tavares, Jose & Wacziarg, Romain, 2001. "How democracy affects growth," European Economic Review, Elsevier, vol. 45(8), pages 1341-1378, August.
    20. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
    21. Easterly, William & Rebelo, Sergio, 1993. "Fiscal policy and economic growth: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 417-458, December.
    22. David E. Bloom & David Canning & Jaypee Sevilla, 2002. "Technological Diffusion, Conditional Convergence, and Economic Growth," NBER Working Papers 8713, National Bureau of Economic Research, Inc.
    23. Ashish Arora & Andrea Fosfuri & Alfonso Gambardella, 2004. "Markets for Technology: The Economics of Innovation and Corporate Strategy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511819, January.
    24. Walter G. Park & Douglas C. Lippoldt, 2008. "Technology Transfer and the Economic Implications of the Strengthening of Intellectual Property Rights in Developing Countries," OECD Trade Policy Papers 62, OECD Publishing.
    25. Christiansen, Lone & Schindler, Martin & Tressel, Thierry, 2013. "Growth and structural reforms: A new assessment," Journal of International Economics, Elsevier, vol. 89(2), pages 347-356.
    26. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    27. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    28. William Hauk & Romain Wacziarg, 2009. "A Monte Carlo study of growth regressions," Journal of Economic Growth, Springer, vol. 14(2), pages 103-147, June.
    29. Andrea Bassanini & Stefano Scarpetta & Philip Hemmings, 2001. "Economic Growth: The Role of Policies and Institutions: Panel Data. Evidence from OECD Countries," OECD Economics Department Working Papers 283, OECD Publishing.
    30. Jens Arnold & Andrea Bassanini & Stefano Scarpetta, 2007. "Solow or Lucas?: Testing Growth Models Using Panel Data from OECD Countries," OECD Economics Department Working Papers 592, OECD Publishing.
    31. Stefano Scarpetta & Thierry Tressel, 2002. "Productivity and Convergence in a Panel of OECD Industries: Do Regulations and Institutions Matter?," OECD Economics Department Working Papers 342, OECD Publishing.
    32. Jens Arnold, 2008. "Do Tax Structures Affect Aggregate Economic Growth?: Empirical Evidence from a Panel of OECD Countries," OECD Economics Department Working Papers 643, OECD Publishing.
    33. Abdul Abiad & Enrica Detragiache & Thierry Tressel, 2010. "A New Database of Financial Reforms," IMF Staff Papers, Palgrave Macmillan, vol. 57(2), pages 281-302, June.
    34. Xavier Sala-I-Martin & Gernot Doppelhofer & Ronald I. Miller, 2004. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," American Economic Review, American Economic Association, vol. 94(4), pages 813-835, September.
    35. Anita Wölfl & Isabelle Wanner & Oliver Röhn & Giuseppe Nicoletti, 2010. "Product Market Regulation: Extending the Analysis Beyond OECD Countries," OECD Economics Department Working Papers 799, OECD Publishing.
    36. Fabian Valencia & Luc Laeven, 2008. "Systemic Banking Crises; A New Database," IMF Working Papers 08/224, International Monetary Fund.
    37. Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
    38. Lee, Young & Gordon, Roger H., 2005. "Tax structure and economic growth," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 1027-1043, June.
    39. Hervé Boulhol & Alain de Serres & Margit Molnár, 2008. "The contribution of economic geography to GDP per capita," OECD Journal: Economic Studies, OECD Publishing, vol. 2008(1), pages 1-37.
    40. Paul Conway & Donato de Rosa & Giuseppe Nicoletti & Faye Steiner, 2006. "Regulation, Competition and Productivity Convergence," OECD Economics Department Working Papers 509, OECD Publishing.
    41. Wolfgang Lutz & Anne Goujon & Samir K.C. & Warren Sanderson, 2007. "Reconstruction of population by age, sex and level of educational attainment of 120 countries for 1970-2000," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 5(1), pages 193-235.
    42. Cellini, Roberto, 1997. "Implications of Solow's Growth Model in the Presence of a Stochastic Steady State," Journal of Macroeconomics, Elsevier, vol. 19(1), pages 135-153, January.
    43. Romain Duval & Jørgen Elmeskov & Lukas Vogel, 2007. "Structural Policies and Economic Resilience to Shocks," OECD Economics Department Working Papers 567, OECD Publishing.
    44. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1127-1170.
    45. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472 Elsevier.
    46. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Silvia Fedeli & Francesco Forte & Ottavio Ricchi, 2013. "The long term negative relation between public deficit and structural unemployment: An empirical study of OECD countries (1980-2009)," Working Papers 160, University of Rome La Sapienza, Department of Public Economics.
    2. McQuinn, Kieran & Whelan, Karl, 2015. "Europe's Long-Term Growth Prospects: With and Without Structural Reforms," Papers WP501, Economic and Social Research Institute (ESRI).
    3. Mihaela Simionescu, 2014. "A Comparative Analysis Of Real And Predicted Inflation Convergence In Cee Countries During The Economic Crisis," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 6(2), pages 142-155, July.
    4. Silvia Fedeli & Francesco Forte & Ottavio Ricchi, 2015. "The Long Term Negative Relationship Between Public Deficit and Structural Unemployment: An Empirical Study of OECD Countries (1980–2009)," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(1), pages 39-54, March.
    5. Karl Aiginger & Susanne Bärenthaler-Sieber & Johanna Vogel, 2013. "Competitiveness under New Perspectives," WWWforEurope Working Papers series 44, WWWforEurope.
    6. Karl Aiginger & Susanne Bärenthaler-Sieber & Johanna Vogel, 2015. "Competitiveness of EU vs. US," WWWforEurope Policy Paper series 29, WWWforEurope.
    7. Georg Licht & Bettina Peters & Christian Köhler & Franz Schwiebacher, 2014. "The Potential Contribution of Innovation Systems to Socio-Ecological Transition," WWWforEurope Deliverables series 4, WWWforEurope.
    8. Pier Carlo Padoan & Urban Sila & Paul van den Noord, 2012. "Avoiding Debt Traps: Financial Backstops and Structural Reforms," OECD Economics Department Working Papers 976, OECD Publishing.
    9. Sara Barcenilla-Visús & José-María Gómez-Sancho & Carmen López-Pueyo & María-Jesús Mancebón & Jaime Sanaú, 2013. "Technical Change, Efficiency Change and Institutions: Empirical Evidence for a Sample of OECD Countries," The Economic Record, The Economic Society of Australia, vol. 89(285), pages 207-227, June.
    10. Kezia De Lucas Bondezan & Joilson Dias, 2014. "Crescimento Econômico De Longo Prazo No Brasil: Uma Abordagem Sobre O Da Acumulação De Capital E Das Instituições," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 096, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    11. Åsa Johansson & Yvan Guillemette & Fabrice Murtin & David Turner & Giuseppe Nicoletti & Christine de la Maisonneuve & Philip Bagnoli & Guillaume Bousquet & Francesca Spinelli, 2013. "Long-Term Growth Scenarios," OECD Economics Department Working Papers 1000, OECD Publishing.
    12. Boris Cournède & Antoine Goujard & Álvaro Pina, 2013. "How to Achieve Growth- and Equity-friendly Fiscal Consolidation?: A Proposed Methodology for Instrument Choice with an Illustrative Application to OECD Countries," OECD Economics Department Working Papers 1088, OECD Publishing.
    13. Marta C. N. Simões, 2011. "Education Composition and Growth: A Pooled Mean Group Analysis of OECD Countries," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(4), pages 455-471, December.
    14. repec:bla:ecorec:v:93:y:2017:i::p:57-69 is not listed on IDEAS
    15. Alejandro Izquierdo & Jimena Llopis & Umberto Muratori & José Juan Ruiz, 2016. "In Search of Larger Per Capita Incomes: How To Prioritize across Productivity Determinants?," IDB Publications (Working Papers) 7511, Inter-American Development Bank.
    16. Dan Andrews & Chiara Criscuolo, 2013. "Knowledge-Based Capital, Innovation and Resource Allocation," OECD Economics Department Working Papers 1046, OECD Publishing.
    17. Muge Adalet McGowan & Dan Andrews & Valentine Millot, 2017. "Insolvency Regimes, Technology Diffusion and Productivity Growth: Evidence from Firms in OECD Countries," OECD Economics Department Working Papers 1425, OECD Publishing.

    More about this item

    Keywords

    croissance économique; données de panel; economic growth; panel data; policy and institutions; politiques et institutions;

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oec:ecoaaa:843-en. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/edoecfr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.