Traditional Values and Institutional Quality

Abstract

Why do similar economic and political institutions function differently in various cultures? This paper tries to identify potentially important factors related to the institutional quality. We investigate the relationship between cultures, cultural dimensions: non-tradition in particular, and formal institutions to explain differences in the quality of institutions around the world. We use a measure of traditional values, structured by Inglehart and Baker, from the World Values Survey, to extend the literature on the determinants of institutions’ quality. We show that differences in traditional values are suggestive to explain differences in the quality of institutions across countries. The OLS method is utilized in order to analyze the factors of institutional quality in sixty countries in 2010–2014. In this study, the OLS models are employed in order to understand the key factors of institutional differences among countries in the period of 2010–2014. The empirical model results show that (i) non-tradition is a reliable significant variable with positive contributions on six institutional quality variables, (ii) urbanization has unexpected negative effects on some institutional quality indicators like rule of law, political stability and voice/accountability. However, it has meaningful contribution to control of corruption in the countries, (iii) economic development have increasing impacts on the majority of the institutional quality variables, (iv) while education has positive effects on government effectiveness, political stability and regulation quality, it has negative unexpected impacts on rule of law and voice/accountability, (v) openness has only effects on corruption and political stability, (vi) there are non-linear relationships between dependent variable(s) and independent variables rather than linear relationships