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The formal and informal institutional framework of capital accumulation

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  • Pierre-Guillaume Méon
  • Khalid Sekkat

Abstract

This paper studies the impact of social trust and formal legal and institutional determinants of capital accumulation in a panel of countries. It reports that formal determinants and trust interact, and that the two are substitutes. Specifically, the marginal impact of formal legal institutions decreases with trust, and vice versa. These findings apply both to total investment and to its foreign component, foreign direct investment.

Suggested Citation

  • Pierre-Guillaume Méon & Khalid Sekkat, 2013. "The formal and informal institutional framework of capital accumulation," Working Papers CEB 13-036, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:2013/149744
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    Cited by:

    1. Shima'a Hanafy, 2015. "Determinants of FDI Location in Egypt—Empirical Analysis Using Governorate Panel Data," MAGKS Papers on Economics 201513, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

    More about this item

    Keywords

    investment; foreign direct investment; institutions; trust;

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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