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The Determinants of Institutional Quality. More on the Debate

  • José Antonio Alonso

    (Universidad Complutense de Madrid, Departamento de Economía Aplicada)

  • Carlos Garcimartín

    (Universidad Rey Juan Carlos de Madrid, Departamento de Economía Aplicada)

This paper provides new evidences about the determinants of institutional quality. Prior to implementing our empirical research, we discuss the criteria that should be used to judge the quality of institutions. Then, we identify the factors that, according to these criteria, determine institutional quality. The results obtained in the estimated model enable to draw some interesting conclusions. First of all, development level determines institutional quality: the highest the former, the highest the latter. Secondly, income distribution seems to condition institutional quality. A certain degree of social cohesion is needed to provide institutional predictability and legitimacy. Thirdly, a sound tax system is positively asso-ciated with institutional quality improvement. Taxes provide the necessary revenue to ge-nerate quality institutions, while creating a narrower and more demanding relation between State and citizens. Finally, education improves institutional quality. On the contrary, some of the variables identified in the literature either they do not seem to determine institutional quality or their effects are indirect, through the aforementioned variables.

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File URL: http://eprints.ucm.es/9665/1/WP_03-09.pdf
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Paper provided by Universidad Complutense de Madrid, Instituto Complutense de Estudios Internacionales in its series Working Papers del Instituto Complutense de Estudios Internacionales with number 03-09.

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Length: 27 pages ISBN Number: 978-84-692-0927-1
Date of creation: 2009
Date of revision:
Handle: RePEc:ucm:wpaper:03-09
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