Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/77420 
Year of Publication: 
2008
Series/Report no.: 
HEI Working Paper No. 04/2008
Publisher: 
Graduate Institute of International Studies, Geneva
Abstract: 
The paper aims to examine the role of institutions relative to economic policy and geography in explaining the differential level of development across countries over time. To that end, it attempts to construct a Development Quality Index (DQI) and an Institutional Quality Index (IQI) by using multivariate statistical method of principal components. It shows that (i) higher level of IQI along with economic policy and geography factors lead to a positive improvement in the level of DQI; and (ii) results remain robust for IQI and relatively robust for economic policy and geography even when it is compared across cross-section and panel data estimation for a set of 102 countries over 1980 to 2004. The results strongly indicate that institutions matter in the context of specific economic policy mixes and geography related factors illustrated by disease burden, etc. It demonstrates that relative influence of institutions varies across stages of development.
Subjects: 
Development
Institutions
Economic policy
Geography
Principal component
Instrumental variables
Panel data
JEL: 
C3
O10
O57
P51
R11
Document Type: 
Working Paper

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