Comparing institutional determinants of economic growth in developing regions

Karla Simone Prime, Roseline Wanjiru

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

A range of institutions perform key roles in supporting the effective functioning of national markets in developing economies. Debates on the role of institutions in economic growth assume that particular institutional frameworks drive economic performance in developing economies. However, institutions vary greatly across economies. This study conducts a comparative investigation into the relationship between institutional quality and economic growth in selected developing economies of West Africa and the Caribbean. The persistence and quality of institutions in these West African and the Caribbean countries can historically be traced to their different colonial legacies including Belgium, Italian, French, Portuguese and English heritage. Despite exhibiting different institutional characteristics, these economies achieve similar levels of economic growth. This study investigates the impact of colonial heritage on the evolution, quality and characteristics of their institutional infrastructure on long-run economic growth. In particular, we identify those institutions that positively and significantly impact levels of productivity. Forty-one institutional indicators were categorised using principal component analysis and the institutional categories analysed using Arellano-Bond dynamic panel GMM model. Granger causality tests examined the directionality of the relationship between these categories of institutions and economic growth. Our findings confirm the existence of a long-run relationship between institutional quality and economic growth and that institutions cause economic growth. In particular, different categories of institutions are found to exert varying degrees of influence on levels of productivity. We also find evidence of a relationship between colonial heritage and the evolution and quality of institutions of these countries.
Original languageEnglish
Title of host publicationGreat Regional Awakening: New Directions
Subtitle of host publicationRSA Annual Conference 2017
EditorsLesa Reynolds
Publication statusPublished - Jun 2017
EventRSA Annual Conference 2017 - Great Regional Awakenings: New Directions - Dublin, Ireland
Duration: 4 Jun 2017 → …

Conference

ConferenceRSA Annual Conference 2017 - Great Regional Awakenings: New Directions
Period4/06/17 → …

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