Developing new measurements of State institutional capacity

Popov, Vladimir (2011): Developing new measurements of State institutional capacity.

Abstract

According to a narrow definition, institutional capacity of the state is the ability of the government to enforce laws and regulations. There are a lot of subjective indices (control over corruption, rule of law, government effectiveness, etc.) that are designed to measure the state institutional capacity and are based on experts’ estimates. The logical objective measures of the state institutional capacity are the murder rate – non-compliance with the state’s monopoly on violence, and the shadow economy – non compliance with the economic regulations. It appears that political regime (democratic or authoritarian) matters for the subjective ranking. It could be shown, for instance, that out of two countries with the same murder rate, government effectiveness is higher in countries that were more democratic in the past (1970s-1990s on average) and in the year (2002) when government effectiveness was measured. This result holds for all other five World Bank subjective indices of institutional capacity – rule of law, control over corruption, voice and accountability, political stability and regulation quality. And they hold also for the share of shadow economy: out of two countries with the same share of shadow economy, government effectiveness is higher in a more democratic one.

• Item Type: MPRA Paper
• Language: English
• Keywords: Institutional capacity, murder rate, shadow economy, democratization
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law

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Victor Polterovich, Vladimir Popov (2007). Democratization, Quality of Institutions and Economic growth. – In: Political Institutions And Development. Failed Expectations and Renewed Hopes. Edited by Natalia Dinello and Vladimir Popov. Edward Elgar Publishing, 2007.