Institutions and growth: a developing country case study

Abstract

The Brazilian municipalities show an enormous inequality on its development level. Even within the states considered relatively prosperous, there are huge internal disparities on income levels. The richest Brazilian municipality"s GDP per capita is about 190 times greater than the poorest municipality"s, according to IBGE (2000) database. A possible explanation for this phenomenon relies on institutional theory. Many theoretical and empirical studies, mainly based on crosscountry data, emphasize the role played by institutions on the determination of long run development. Nevertheless, there still is little research concerning the income differences within the national territory and its connection to institutional quality. The literature points out that institutions matter for the level of economic development because of their effects on political power distribution, generation of economic opportunities, innovation, human capital accumulation, and so on. Based on this assumption, the present study main goal is to analyze the effects of Brazilian municipalities" institutional quality on their GDP per capita levels. The results indicate that institutions are relevant and its importance is greater for large municipalities. On the other hand, human capital human capital is more important to small municipalities. To address the endogeneity problem inherent to the relationship between institutions and development, we employ the 2SLS method.

Physical and Human Capital and Brazilian Regional Growth: A Spatial Econometric Approach for the Period 1970–2010

“…Although this is not so common as a proxy for measuring the total stock of physical capital in an economy, it is the only variable available at the micro-regional geographic scale, and, as will be discussed below, it has good potential as a proxy. In this context, BARROS et al (2013) andNAKABASHI et al (2013) were the pioneers in using residential capital as the proxy for measuring the physical capital stock of the smaller geographical units in Brazil.…”

Institutions and Firms’ Performance in Transition Countries: The Case of Selected Cesee Countries

“…al. 2013), and country case studies (Lanjouw and Levy 2002;Atieno 2001;Nakabashi, Gonçalves Pereira, and Sachsida 2013).…”

Diffusion of Innovations and Labor Market Challenges: A Multiple Case Study from Angola

“…Some researchers believed that the economic imbalances in sub-Saharan Africa are tied to many of its countrys' institutional qualities, which reflect disparities and complex interaction among several factors through which governments play a key role (Adanu, 2017;Nakabashi, Pereira, & Sachsida, 2013). One reason for the institutional complexity is the slow process required to create knowledge institutions that can transform national and regional economies.…”

“…Fertile in natural resources, Angola is an oil and gas production dependent economy from which related activities account for 85% of its GDP (Silva, Roque, & Caetano, 2015). Angola is located on the west coast of southern Africa with an area of 1,246.700 km 2 that was discovered by the Portuguese explorers in 1482, becoming then a trade link with Southeast Asia and India and later a major source of slave trade for Portugal's colonies in Brazil and Caribbean (Nakabashi et al, 2013;Ojo, 2015;Silva et al, 2015). With the end of the slave trade by 1878 (Ball, 2017), an uprising between Angolan national liberation movements in 1950 led to a civil war conflict that lasted 27 years, which culminated to Angola's independence in 1975 and the end of the armed conflict by 2002 (Baumgartner, 2016a;Silva et al, 2015).…”

“…Lack of financial resources and infrastructure. The growing level of poverty in sub-Saharan Africa and the role of innovation in reduction of poverty and the power of the quality of governance institutions in improvement of innovative capacity of states should become a focused area of future research (Amavilah, 2016;Asongu & Biekpe, 2017;Beilock & Dimitrova, 2003;Biseswar et al, 2012;Grabowski, 2017;Nakabashi et al, 2013). Gaps and arguments continue in the literature on the diffusion of innovation that focuses the quality of government institutions in sub-Saharan Africa (Bennett et al, 2017;Chattopadhyay & Mondal, 2016;Lovrić, 2012;Nguimkeu, 2014).…”