Institutional Quality and Economic Growth: A Dynamic Panel Data Analysis of MICs and HICs for 2000–2020

IF 0.9 Q3 ECONOMICS INTERNATIONAL ECONOMIC JOURNAL Pub Date : 2023-10-06 DOI:10.1080/10168737.2023.2261012
Mirwais Parsa, Soumya Datta
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While the quality of the legal system and property rights and regulatory quality all positively and significantly influence output per capita, output gains from each unit of improvement in the quality of legal systems and protection of private property rights are comparatively higher than gains from a unit of improvement in the regulatory environment. An average MIC gains relatively more from improving its quality of legal system and property rights, whereas an average HIC benefits relatively more from each unit of improvement in its regulatory environment. The results from the Granger non-causality test demonstrate and unidirectional causality from institutions to economic growth in MICs but no significant causal relationship between institutions and economic growth in HICsKEYWORDS: Institutionsinstitutional qualityproperty rightsregulationseconomic growthtransmission mechanismGMMJEL CLASSIFICATIONS: O43O47 AcknowledgementThis article is drawn from the first author's Ph.D. thesis, titled ‘Essays in Institutions and Economic Development’, completed at South Asian University, New Delhi, India. The authors gratefully acknowledge the useful comments of the referees on earlier versions of the article. The authors are also grateful to Sunil Kumar and Binoy Goswami for their comments and suggestions. The usual disclaimer applies.Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 The extent to which regulations and bureaucratic procedures restrain entry and reduce competition.2 We dropped a couple of indicators from Area 4 of EFW database that were relevant to our perception of institutions but had extensive missing values. We excluded Area 1 because it is all about the size of the government. We have included a direct independent variable in the model that captures the size of the government. Adding this area to the index would have led to identification issues. 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Abstract

ABSTRACTWe investigate the dynamic impact of institutions on economic growth using a panel dataset of 77 countries, divided into MICs and HICs for the period 2000-2020. We critically examine the available institutional indices and construct three weighted indices from 20 indicators closely related to the meaning of the term ‘institutions’ as the ‘rules of the game’ defined by Douglas North. Next, we use the Generalized Method of Moments (GMM) to show that institutions significantly influence economic growth through investment and trade more than the total factor productivity channel. While the quality of the legal system and property rights and regulatory quality all positively and significantly influence output per capita, output gains from each unit of improvement in the quality of legal systems and protection of private property rights are comparatively higher than gains from a unit of improvement in the regulatory environment. An average MIC gains relatively more from improving its quality of legal system and property rights, whereas an average HIC benefits relatively more from each unit of improvement in its regulatory environment. The results from the Granger non-causality test demonstrate and unidirectional causality from institutions to economic growth in MICs but no significant causal relationship between institutions and economic growth in HICsKEYWORDS: Institutionsinstitutional qualityproperty rightsregulationseconomic growthtransmission mechanismGMMJEL CLASSIFICATIONS: O43O47 AcknowledgementThis article is drawn from the first author's Ph.D. thesis, titled ‘Essays in Institutions and Economic Development’, completed at South Asian University, New Delhi, India. The authors gratefully acknowledge the useful comments of the referees on earlier versions of the article. The authors are also grateful to Sunil Kumar and Binoy Goswami for their comments and suggestions. The usual disclaimer applies.Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 The extent to which regulations and bureaucratic procedures restrain entry and reduce competition.2 We dropped a couple of indicators from Area 4 of EFW database that were relevant to our perception of institutions but had extensive missing values. We excluded Area 1 because it is all about the size of the government. We have included a direct independent variable in the model that captures the size of the government. Adding this area to the index would have led to identification issues. Similarly, we left out some variables from Area Three and Area Four, like ‘control of the movement of capital and people,’ ‘Freedom of foreigners to visit,’ ‘capital controls,’ etc., as we believe these indicators do not relate closely to our perception of institutions.3 The index is based on years of schooling and returns to education.4 One-unit increase in institutional quality in the sample of high-income countries is a difference between the rating of a country like the United States 0.78 and South Korea 0.61, or the United Kingdom 0.82 and Latvia 0.65. In the sample of middle-income countries, a one-unit increase in institutional quality is the difference between countries like Indonesia 0.39 and Zambia 0.25, or countries like Israel 0.6 and India 0.46 (see Table B7, ratings for 2020).5 The marginal impact of domestic investment on output per capita is computed at the average rating of institutional quality for each income group.Additional informationNotes on contributorsMirwais ParsaDr Mirwais Parsa is a Research Scholar at the Center for Governance and Markets, University of Pittsburgh. He holds a Ph.D. in economics from South Asian University. His Ph.D. thesis focuses on institutions and economic development. His research interest lies in the areas of macroeconomic theory, institutions and political economy.Soumya DattaDr Soumya Datta is an Associate Professor of Economics at the Faculty of Economics, South Asian University. His research interest lies broadly in the area of macroeconomic theory, non-linear dynamics and complex systems. His current research work focuses on growth cycles, asset price bubbles, models with heterogeneous agents and macroeconomic epidemiological models.
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制度质量与经济增长:2000-2020年中等收入国家和高收入国家动态面板数据分析
摘要本文利用2000-2020年期间77个国家的面板数据集(分为中等收入国家和高收入国家)研究了制度对经济增长的动态影响。我们批判性地考察了现有的制度指数,并从20个指标中构建了三个加权指数,这些指标与道格拉斯·诺斯(Douglas North)定义的“制度”作为“游戏规则”一词的含义密切相关。其次,我们使用广义矩量法(GMM)证明制度通过投资和贸易而不是全要素生产率渠道显著影响经济增长。虽然法制质量、产权质量和监管质量都对人均产出产生积极而显著的影响,但法制质量和私有产权保护每一单位的改善所带来的产出收益相对高于监管环境每一单位的改善所带来的收益。中等收入国家从改善其法律制度和产权质量中获得的收益相对更多,而中等收入国家从其监管环境的每一单位改善中获得的收益相对更多。格兰杰非因果检验结果表明,中等收入国家的制度与经济增长之间存在单向的因果关系,而高收入国家的制度与经济增长之间没有显著的因果关系。关键词:制度;制度质量;产权;O43O47 AcknowledgementThis文章是来自第一作者的博士论文,题为“论文在机构和经济发展”,南亚大学完成,新德里,印度。作者感谢审稿人对文章早期版本的有用评论。作者也感谢Sunil Kumar和Binoy Goswami提出的意见和建议。通常的免责声明适用。披露声明作者未报告潜在的利益冲突。注1规章和官僚程序限制进入和减少竞争的程度我们从EFW数据库的第4区删除了几个指标,这些指标与我们对机构的看法有关,但存在大量缺失值。我们排除了区域1,因为它是所有大小的政府。我们在模型中加入了一个反映政府规模的直接自变量。将这个区域添加到索引中会导致识别问题。同样,我们从第三区和第四区遗漏了一些变量,如“资本和人员流动的控制”、“外国人访问的自由”、“资本控制”等,因为我们认为这些指标与我们对机构的看法不密切相关该指数基于受教育年限和教育回报增加1个单位制度质量样品的一个区别是高收入国家的评级0.78国家像美国和韩国0.61,或英国0.82和0.65拉脱维亚。在中等收入国家的样本中,制度质量每增加一个单位,印度尼西亚和赞比亚之间的差异为0.39,赞比亚为0.25,以色列和印度为0.6,印度为0.46(见表B7, 2020年评级)国内投资对人均产出的边际影响是按每个收入群体的制度质量平均评级计算的。本文作者是匹兹堡大学治理与市场研究中心的研究学者。他拥有南亚大学经济学博士学位。他的博士论文主要研究制度和经济发展。主要研究方向为宏观经济理论、制度经济学和政治经济学。Soumya Datta,南亚大学经济学院经济学副教授。主要研究方向为宏观经济理论、非线性动力学和复杂系统。他目前的研究工作主要集中在增长周期、资产价格泡沫、异质性主体模型和宏观经济流行病学模型。
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来源期刊
INTERNATIONAL ECONOMIC JOURNAL
INTERNATIONAL ECONOMIC JOURNAL Economics, Econometrics and Finance-Economics, Econometrics and Finance (all)
CiteScore
2.10
自引率
0.00%
发文量
22
期刊介绍: International Economic Journal is a peer-reviewed, scholarly journal devoted to publishing high-quality papers and sharing original economics research worldwide. We invite theoretical and empirical papers in the broadly-defined development and international economics areas. Papers in other sub-disciplines of economics (e.g., labor, public, money, macro, industrial organizations, health, environment and history) are also welcome if they contain international or cross-national dimensions in their scope and/or implications.
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