Institutions and the convergence hypothesis: The cross-national evidence

Abstract

DeLong and others have shown that cross-country convergence in per capita incomes is limited to samples of currently-industrialized nations, or universal-literacy nations. In particular, income dispersion has failed to decline in groups of ex ante rich nations. This study finds strong convergence in per capita incomes among nations with institutions (namely secure property rights) conducive to saving, investing, and producing. Incomes are shown to converge even within ex ante rich samples when measures of institutional quality are held constant.

The Omani and Bahraini Paths to Development: Rare and Contrasting Oil-Based Economic Success Stories

“…There is a vast literature linking economic freedom to growth and measures of well being. Studies by Scully (1988Scully ( , 1992; Barro (1991);Barro and Sala-i-Martin (1995); Knack and Keefer (1995), Knack (1996), Keefer and Knack (1997) all show that measures of well-defined property rights, public policies that do not attenuate property rights and the rule of law tend to generate economic growth. Using the Fraser and Heritage indexes of economic freedom, Norton finds that strong property rights tend to reduce deprivation of the world's poorest people while weak property rights tend to amplify it.…”

Social capital, growth, and poverty: a survey of cross-country evidence

“…In related work, Knack (1996) and Keefer and Knack (1997) show that the rate at which poor countries converge to the richest countries' income levels varies with the quality of governance, as proxied by the ICRG and BERI indexes. Keefer and Knack test interactions between initial per capita income and institutional quality.…”

Building institutions in post‐conflict African economies

“…In the second place, there is also evidence, though it is weak, for a direct relationship between institutions and growth in Solow growth equations (Knack 1996;Knack and Keefer 1995;Barro 1996). When institutional quality proxies are included in growth regressions (alongside investment) they may be interpreted as improving the efficiency of investment.…”