Measuring world governance: revisiting the institutions hypothesis

Abstract

We consider the weighting scheme that results in a best-case scenario in the construction of the World Governance Indicators (WGIs), a proxy of institutional quality. To do that we use an approach that relies on consistent tests for stochastic dominance e¢ ciency of a given index with respect to all possible indices constructed from a set of individual components. The test statistics and the estimators are computed using mixed integer programming methods. The results show that the equally-weighted (…xed weights) composite WGI index is not the best-case scenario and that governance indicators at di¤erent years should be weighted di¤erently. Furthermore, we revisit the institutions hypothesis in the empirical growth literature, where institutional quality is the main determinant of long term development. We …nd that not only institutions matter for economic development, but also geography and macroeconomic policies do a¤ect economic development directly. JEL Classi…cations: C12; C13; C14; C15; O1; O57

Emerging market MNCs' cross-border acquisition completion: Institutional image and strategies

“…They are based on 32 individual data sources produced by a variety of survey institutes, think tanks, non-governmental organizations, international organizations, and private sector firms (Kaufmann et al 2010). The WGI index has been widely used in the literature to measure the quality of institutions (Adkisson and McFerrin 2014;Brockman et al 2013;Langbein and Knack 2010;Lu et al 2014;Pinar 2015). These perception-based indicators are ideal for measuring our key individual variable, institutional image, which consists of the perceptions in the minds of people toward a country's institutions for two reasons.…”

“…To assess the moderating effects, we use the approach used by Friedrich (1982) and Brambor, Clark and Golder (2006), and we consider employing a combination of the coefficients' variance, the covariance of the corresponding variable and interaction, and the value of the moderating variable. By doing so, we are able to overcome the limitations of the traditional method, which uses the estimated coefficient of the interaction terms to judge the moderating effect (Pinar 2015) Prior to running the regression analysis, we calculate the correlations between the independent variables to check for potential multicollinearity problems. As shown in Table 3, two pairs of variables, Foreign partnership and Subsidiary acquirer and Foreign partnership and Acquirer institution quality, have high correlations.…”

Institutions and information flows, and their effect on capital flows

“…instrumental variable for institutions areRodrik et al (2004),Bosker and Garretsen (2009),Haggard and Tiede (2011),Acemoglu et al (2012),Pinar (2015) among many others.…”

Sensitivity of university rankings: implications of stochastic dominance efficiency analysis

“…For instance, Saisana et al (2011) use three alternative weighting (i.e., factor analysis derived weights, equal weighting and "university-specific weighting" that maximizes that university's performance relative to all other universities).4 The most popular use of the pair-wise SD analysis in the literature is to determine which population is better in terms of a given well-being dimension compared to the other (see e.g.,Atkinson, 1970; Shorrocks, 1983;Kakwani, 1984;Atkinson, 1987;Foster and Shorrocks, 1988;Ravallion, 1994;Davidson and Duclos, 2000;Barrett and Donald, 2003;, 2017 among many others). This SD comparisons has moved to a multivariate one by analyzing various welfare dimensions and portfolios (see e.g.,Post, 2003;Kuosmanen, 2004;Linton et al, 2005;Duclos et al, 2006;Agliardi et al, 2012;Pinar et al, 2013;Delgado and Escanciano, 2013;Agliardi et al, 2014;Gonzalo and Olmo, 2014;Linton et al, 2014; Yalonetzky, 2014;Agliardi et al, 2015;Pinar, 2015;Pinar et al, 2015;, 2017 among many others).5 For instance,Bazen and Moyes (2012), and Carayol and Lahatte (2014) use pair-wise SD tests to compare the distribution of publication performance of sta↵ members to rank these institutes. In their application, both the quality and quantity of publications are taken into account and all possible pairs of institutes are compared based on the publication performance.…”