Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/46125 
Year of Publication: 
2010
Series/Report no.: 
IZA Discussion Papers No. 5247
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Institutions are now widely believed to be important in explaining performance. In this paper, we analyze whether commonly used measures of institutions have any significant, measurable impact on performance, whether of countries or firms. We look at three 'levels' of institutions and associated conjectures. The first concerns whether the political system affects performance. The second concerns whether the business and investment environment affects the performance of countries and the third concerns whether perceived business constraints directly affect the performance of firms. In all instances, we find little evidence of a robust link between widely used measures of institutions and our indicators of performance. We consider why this might be the case and argue that mis-measurement, misspecification, complexity and non-linearity are all relevant factors.
Subjects: 
institutions
growth
JEL: 
D24
L21
O12
P48
Document Type: 
Working Paper

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