Institutional framework and economic development: international evidence

Abstract

This paper examines the effect of 'quality' of the institutional framework on economic development. Our empirical results support the hypothesis that 'good' institutions improve efficiency and accelerate growth. The positive effect of institutional 'quality' is more pronounced with mutually reinforcing support of economic freedom. Our results also indicate that 'good' institutions help developing countries grow faster to achieve conditional convergence. We infer from the results that economic development requires not only physical and human capital formation, but also freedom to choose and institutional support.

A cross-country analysis of electricity market reforms: Potential contribution of New Institutional Economics

“…In the literature, the relationship between institutions and economic transformations has been investigated by many scholars. For instance, the link between political institutions and economic change is explored by Aghion et al (2008), Alesina et al (1996), Alesina andRodrik (1994), Besley and Kudamatsu (2008), Caselli et al (1996), Clague et al (1996), Drury et al (2006), Helliwell (1994, Isham et al (1997), Mauro (1995), Persson and Tabellini (2008) and Scully (1988); while the impact of economic institutions on economic change is investigated by Assane and Grammy (2003), Barro (1991Barro ( , 1996Barro ( , 2000, Keefer and Knack (1997), Persson and Tabellini (1994), Spindler (1991) and Vanssay and Spindler (1994).…”

Institutional Infrastructure and Economic Performance: Dynamic Panel Data Evidence

“…Importantly, trade also has a positive impact on institutional quality, suggesting that trade can have an indirect effect on incomes by improving institutional quality. Assane and Grammy (2003) determine the effect of institutional quality on economic development using the Solow model. The independent variables consist of physical capital accumulation, labour force growth, human capital formation, economic freedom and institutional quality.…”

Institutions and Economic Performance: An Overview of Empirical Research with the Main Focus on Transition Economies

“…Assane et al 2003;Gwartney et al 2004;Redek et al 2005;Eicher et al 2006). For example, Assane et al (2003) estimate the following regression model:…”

“…Some authors apply this approach using the output of institutions as an "additional factor of production" or include institutions as a "natural extension" of the production function (e.g. Assane et al 2003;Gwartney et al 2004;Redek et al 2005;Eicher et al 2006). For example, Assane et al (2003) estimate the following regression model:…”

“…Most research is based on existing institutional development indices that measure structural reform and institutional efficiency (Havrylyshyn, 2000;Sachs, 2001;Selowsky et al 2001;Rodrik et al 2002;Assane et al 2003;Redek et al 2005). Using indices such as the EBRD transition index, the Freedom House index, the Heritage Foundation index, the Indices of Economic Freedom, and the World Bank and Euro-money indices, researchers establish indices that capture the quality of the institutional framework.…”