Preliminary conclusions on institutions and economic performance
Using institutional indicators describing 122 countries, we conduct an exploratory study highlighting which institutional characteristics differ across countries with different levels of income and rates of growth. We describe a country's institutions by the degree of formalization of its regulations, the depersonalization of their implementation, and by the degree of control and intervention of the state. Our findings reveal that the variation in state control and intervention decreases along with countries formalization of regulations. This phenomenon may be explained by institutional convergence, by endogeneity in the data and/or by bias. In addition, we find evidence of a strong relationship between institutions and income levels; however, we find no such evidence on growth rates. We find mixed evidence for a relationship between institutions and growth volatility.
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- Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2008.
"Governance matters VII : aggregate and individual governance indicators 1996-2007,"
Policy Research Working Paper Series
4654, The World Bank.
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- Avinash Dixit, 2009. "Governance Institutions and Economic Activity," American Economic Review, American Economic Association, vol. 99(1), pages 5-24, March.
- Huynh, Kim P. & Jacho-Chávez, David T., 2009. "Growth and governance: A nonparametric analysis," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 121-143, March.
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