The Impact of the Institutional Environment on the Economic Development

Abstract

Economic literature recognizes three “deep determinants” of economic development: institutions, geography and openness to trade. Discussion in the literature focuses on what part of the income per capita variation can be explained by institutions, geography and openness to trade. The empirical results can’t offer a clear answer, but there is a broader agreement in the literature that institutions play a more important role than geography and openness to trade. What is unclear whether the institutions also can explain variation in per capita income across countries, in which institutional environment is to some degree similar..This article aims to explore and quantify the relationship of the income level with institutional environment, geography and openness to trade across countries, grouped according their institutional environment quality.The results reveal that extent to which the variation in GDP per capita can be associated with the quality of institutional environment differs a lot between good and bad institutional environment samples. The results in good institutional environment sample come in line with series of studies in which the strong and positive link between various measures of institutions and economic development was established and support primacy of institutions over openness to trade and geography. I In bad institutional environment sample, on the contrary,no evidence was found that institutions mean a lot in respect of differences in GDP per capita. These results should not be interpreted so as to mean that institutional environment is not important, rather the degree of “badness” makes no difference.

Institutional environment differences and their application for entrepreneurship development in India

“…Additionally, the adoption of the framework of the developed nations with large urban centers may not be beneficial for the developing countries (Roundy, 2017). Consequently, the regional institutional environment is usually measured through variables such as security of property rights, rule of law, corruption, bureaucratic quality, the size of the market, the availability of capital, accessibility, thickness of input markets, quality of the regional workforce and availability of resources and other institutional variables (Brekke, 2015; Fritsch, 2013; Jankauskas and Seputien, 2009). The selection of such factors which are directly or indirectly related to institutions and can be compared at interstate level is also constrained by the limited and reliable data availability.…”

Вплив Підприємницького Середовища На Розвиток Ринку Інноваційних Технологій В Україні

“…-щорічне дослідження групи Всесвітнього банку «Doing Business», спрямоване на оцінку якості інституційного середовища і регулятивних процедур (тобто спирається на концепцію екосистеми підприємництва); наукові дослідження підприємницького середовища, що проводяться науковцями різних країн [6][7][8][9][10];…”

Do informal institutions affect entrepreneurial intentions?

“…Many authors attribute differences between the growth rates of different economies to their institutional frameworks (Acemoglu et al, 2005;Henderson, 2002;Reynolds et al, 1999;Zacharakis et al, 2000). Economic growth and the development of institutions is a highly interdependent process at the macro level (Aixala and Fabro, 2008;Jankauskas and Seputiene, 2009;Rodrik, 2000). Broadman et al (2004) found that economic growth in the emerging economies of Eastern Europe was impeded by the absence of effective market-based institutions to protect property rights and to ensure fair competition.…”