Title

The effect of institutions on economic growth: A global analysis based on GMM dynamic panel estimation

Author Affiliation

Qazi Masood Ahmed is Professor at Institute of Business Administration (IBA), Karachi

Faculty / School

Faculty of Business Administration (FBA)

Department

Department of Economics

Was this content written or created while at IBA?

Yes

Document Type

Article

Source Publication

Structural Change and Economic Dynamics

ISSN

0954-349X

Abstract

This study examines how institutional indicators influence economic growth in a theoretical framework proposed by North (1981). Thirty-one indicators each covering 84 countries over a span of 5 years have been used to extract factors based on principal component analysis. Factors based on these indicators are classified as institutional and policy rents, political rents and risk-reducing technologies. These institutional factors are then used in a formal growth model employing panel OLS and GMM-based estimation methodologies. The findings suggest that favorable institutions positively affect economic growth. This study also shows that for a developing country the institutional and policy rent is more important than other two indices that curb political rents and those that reduce transaction risks. This study also highlights the positive complementarities between index of political rents and index of risk-reducing technologies.

Indexing Information

HJRS - W Category, Scopus, Web of Science - Social Sciences Citation Index (SSCI)

Journal Quality Ranking

Impact Factor: 3.579

Publication Status

Published

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