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Unbundled Institutions, Human Capital and Growth

  • Sambit Bhattacharyya

We investigate the partial effects of institutions and human capital on growth. We find that cross-country regressions of the log-level of per capita GDP on instrumented measures of institutions and schooling are uninformative about the relative importance of institutions and human capital in the long run because of multicollinearity problems. Using dynamic panel regressions we show that both institutions and human capital have significant effects on growth. Using Rodrik's (2005) four-way partition of institutions, we also unbundle institutions. We show that strong market creating institutions and market stabilising institutions are growth enhancing. Market regulating institutions matter up to a certain extent and market legitimising institutions does not seem to matter.

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File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2008/wp_econ_2008_14.pdf
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Paper provided by The Australian National University, Arndt-Corden Department of Economics in its series Departmental Working Papers with number 2008-14.

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Length: 38 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:pas:papers:2008-14
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