Institutional quality and economic growth: Maintenance of the rule of law or democratic institutions, or both?

Abstract

Analysis of the factors determining rates of economic growth has found that country-specific characteristics have important effects on growth performance. Empirical evidence to date suggests that maintenance of the rule of law promotes growth, while adopting democratic institutions does not appear to improve growth performance. We find that these conclusions are very sensitive to sample selection and to estimation technique. When an identical sample of countries is used, we find that countries with democratic institutions do enjoy superior growth performance. The relationship between growth and democratic institutions is also sensitive to the estimation technique used. Estimates using instrumental variable techniques suggest that democratic institutions do experience better growth performance. These results are especially relevant for developing nations.

What fundamentally drives growth? Revisiting the institutions and economic performance debate

“…Once we take into account the econometric problems arising from endogeneity, and controlling for other deep determinants such as economic integration and physical geography, our main finding is that (political-economic) institutions exert a significant impact on the level of income, whereas the political institution of democracy is insignificant. Although similar to the findings in Butkiewicz and Yanikkaya (2006), our result that democracy is insignificant is stable across both cross-sectional and panel data.…”

“…In a slightly different vein, Mobarak (2005) establishes a positive relationship between democracy and growth volatility. The work that is probably most closely associated with the approach of this study is that of Butkiewicz and Yanikkaya (2006). In particular, the authors consider decomposing institutions into measures associated with either rule of law or democracy.…”

Is There Any Evidence on the Existence of an Environmental Taxation Kuznets Curve? The Case of European Countries under Their Rule of Law Enforcement

“…When these taxes achieve major efficacy, the curve reaches a turning point where pollution levels start to decline. This turning point reflects a moment when a relatively high level of per capita income is achieved and institutional quality is improved (the relationship between income and rule of law has been recognised in the economic literature as a positive one [38,39]). Thus, no further increase in taxation is needed, since the existing one is able to reduce pollution.…”

Šalies konkurencingumą lemiantys veiksniai

“…Šiandien jau nekyla abejonių dėl institucinės aplinkos svarbos šalies ekonomikai, jos žmonių gerovei, o kartu nacionaliniam konkurencingu mui (Butkiewicz, Yanikkaya 2006;Eicher, Leukert 2009;Šeputienė 2009). pagrindinės funkcijos, kurias atlikdamos institucijos teigiamai veikia ekonomiką, yra (Rodrik et al 2004;Gagliardi 2008): sandorio sąnaudų ir neapibrėžtu mo mažinimas, ekonomikos agentų veiksmų koordinacija, bendradarbiavimo skatinimas, nuosavybės teisių apsauga, įstatymų viršenybės užtikrinimas, kova su korupcija, tin kamas produktų ir gamybos veiksnių reguliavimas, makro ekonominio stabilumo užtikrinimas ir socialinės vienybės skatinimas.…”