The paper attempts to empirically test the link between Institutional Quality Indicators and Industrial Growth. We found significant evidence of the effect of the above indicators on Industrial Growth in 27 Asian and Latin American countries. The results suggest that developed legal and regulatory framework work their way to industrial growth both through investment and Total Factor Productivity. The findings are robust with respect to the type of institutional quality measures used in the analysis. The main policy recommendation made in the paper is that institution building in Transition Countries should be an essential complementary measure to accompany privatization, flow of public and private investments in education and R&D, and measures promoting Foreign Direct Investment.
This work is a product of the staff of The World Bank with external contributions. The fi ndings, interpretations, and conclusions expressed in this work do not necessarily refl ect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifi cally reserved.
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