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A new look at the effect of the determinants of government institutions: A cross-sectional analysis

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  • Kalonda-Kanyama, Isaac

Abstract

Many papers have found mixed results in studying the relationship between institutional quality and some of its determinants, namely openness to trade, GDP per capita and economic globalization. This paper reexamines the relationship between government institutions and these factors. The main findings in this paper is that the three factors have a threshold effect on institutional quality. Specifically, there exists a significant nonlinear relationship between three measures of government institutions (government efficiency, political stability and the rule of law) and trade. Moreover, GDP per capita has a significant nonlinear effect on government effectiveness, political stability, regulatory quality, rule of law and control of corruption. Finally, there is a significant nonlinear relationship between each of the six measures of institutional quality and globalization. Some of the findings are robust to controlling for average IQ levels and regional grouping of countries while others are not. Specifically, the results show that the nonlinear relationship was robust only two measures of institutional quality both for trade and GDP per capita. Accounting for the level of IQ revealed a significant nonlinear relationship between Voice and Accountability and both trade and GDP per capita.

Suggested Citation

  • Kalonda-Kanyama, Isaac, 2012. "A new look at the effect of the determinants of government institutions: A cross-sectional analysis," MPRA Paper 47575, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:47575
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    File URL: https://mpra.ub.uni-muenchen.de/47575/1/MPRA_paper_47575.pdf
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    References listed on IDEAS

    as
    1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    2. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
    3. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    4. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    5. Daron Acemoglu & Simon Johnson & James A. Robinson, 2002. "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1231-1294.
    6. Anwar Shah, 2005. "Public Services Delivery," World Bank Publications, The World Bank, number 7424, July.
    7. repec:hrv:faseco:30747160 is not listed on IDEAS
    8. Treisman, Daniel, 2000. "The causes of corruption: a cross-national study," Journal of Public Economics, Elsevier, vol. 76(3), pages 399-457, June.
    9. Alberto Chong & Luisa Zanforlin, 2000. "Law tradition and institutional quality: some empirical evidence," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(8), pages 1057-1068.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    governance; institutions; trade; globalization;

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • I2 - Health, Education, and Welfare - - Education

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