The Institutions-Growth Nexus: Stages of Development

Nawaz, Saima (2011): The Institutions-Growth Nexus: Stages of Development.

Abstract

The objective of this study is to analyze the impact of institutions on the economic growth and examine whether the ultimate impact differs at various stages of development among 24 Asian countries over the period 1996-2008 using a dynamic panel data analysis model based on the SYS-GMM estimation procedure. The overall analysis of this study shows that institutions indeed are important in determining the long-run economic growth. However, the impact of the institutions on economic growth varies across the regions and depends upon the existence level of development. This study concludes that the institutions are more effective in developed region as compared to developing region. More specially, control over corruption, rule of law and regulatory quality are highly effective in promoting long rum economic growth in East Asia than South Asia. Different countries require different set of institutions to promote long run economic growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Institutions, Economic Growth, Stages of Development
• Subjects: E - Macroeconomics and Monetary Economics > E0 - General > E02 - Institutions and the Macroeconomy; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth

References

Acemoglu, D. & Robinson, J. A. 2010. The role of institutions in growth and development. The Review of Economics and Institutions, 1(2):1-33.

Acemoglu, D., Culter, D., Finkelstein, A. & Linn, J. 2006. Did Medicare induce pharmaceutical innovations? The American Economic Review, 96(2): 103-107

Alonso, J. A & Garcimarth, C. 2010. The determinants of institutional quality: more on the debate. The Journal of International Development.

Arellano, M. 7 Bover, O. 1995. Another look at the instrumental variables estimation of error-components models. The Journal of Econometrics, 68(1):29-51.

Barro, R. J. 1991. Economic growth in a cross section of countries. The Quarterly Journal of Economics, 106(2):407-443.

Barro, R. J. 1996. Democracy and growth. The Journal of Economic Growth, 1(1):1-27.

Bernard, B. A. & Jones, C. 1996. Technology and convergence. The Economic Journal, 106.1037-1044.

Blundel, R. & Bond, S. 1998. Initial conditions and moments restrictions in dynamic panel data models. The Journal of Econometrics, 87(1):115-143.

Bond, S. Bowsher, C. & Windmeijer, F. 2001. Criterion-based inference for GMM in autoregressive panel data models. Economics Letters, 73(3):397-388.

Caselli, F., Esquivel, G. & Lefort, F. 1996. Reopening the convergence debate: a new look at cross-country growth empirics. The Journal of Economic Growth, 1(3):363-389.

Hall, R. E. & Jones, C. I. 1999. Why do some countries produce so much more output per workers than others? The Quarterly Journal of Economics, 114(1):83-116.

Jones, E. L. 1981. The European miracle: Environments, economies and geopolitics in history of Europe and Asia. Cambridge: Cambridge University Press.

Knack, S. & Keefer, P. 1995. Institutions and economic performance: cross-country tests using alternative institutional measures. The Journal of Economic and Politics, 7(3):207-227.

Levine, R. & Renelt, D. 1992. A sensitivity analysis of cross-country growth regressions. American Economic Review, 82(4):942-963

Lin, Y. J. & Nugent, J. B. 1995. Institutions and economic development. Handbook of Development Economics, in: Hollis, C. and T. N. Srinivasan (ed.), Handbook of Development Economics, 1(3):2301-2370.

Lucas, R. E. 1988. On mechanism of economic planning. The Journal of Monetary Economics, 21(1):3-42.

Mankiw, N. G., Romer, P. M., & Weil, D. N. 1992. A contribution to the empirics of economic growth. The Quarterly Journal of Economics, 107(2):407-437.

Mauro, P. 1995. Corruption and growth. The Quarterly Journal of Economics, 110(4):681-712.

Murphy, K. M., Shleifer, A. & Vishny, R. W. 1991. The allocation of talent: Implication for growth. The Quarterly Journal of Economics, 106(2):503-530.

North, D. C. 1981. Structure and change in economic history. Norton, New York

North, D. C. 1990. Institutions, institutional change and economic performance. Cambridge, MA: Cambridge University Press, New York.

North, D. C. 1991. Institutions. Journal of Economic Perspectives, 5(1):97-112.

Olson. M. 1981. The rise and decline of nations: Economic growth, stagflation, and social rigidities. New Haven: Yale University Press.

Rodrik, D. Subramanian, A. & Trebbi, F. 2004. Institutions rules: the primacy of institutions over geography and integration in economic development. The Journal of Economic Growth, 9(2):131-165.

Romer, P. M. 1986. Increasing returns and long run growth. Journal of Political Economy, 94(5):1002-1037.

Solow, R. 1956. A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70:65-94.

Valeriani, E. & Peluso, S. 2011. The impact of institutional quality on economic growth and development: an empirical study. The Journal of Knowledge Management, Economics and Information Technology, 1(6):274-299.