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Institutional Quality and Economic Growth (in Korean)

Author

Listed:
  • Young Soo Shin

    (Department of Economics, Seoul Women's University)

  • Yong-Hwan Noh

    (Department of Economics, Seoul Women's University)

  • Dongwon Lee

    (College of Economics, Sungkyunkwan University)

  • Weh-Sol Moon

    (Department of Economics, Seoul Women's University)

Abstract

This study investigates the link between institutional quality and economic growth. Our theoretical investigation suggests that good institutions can achieve long-run economic growth by making consensus building relatively easy to promote the adoption of good economic policies. The members in such society easily accept the outcome of the economic policies. This, in turn, implies the adoption of a good economic policy that will ensure future economic growth. We employ a pooled data consisting of about 50 countries over a period of 30 years (1981-2010) and the result shows that institutional quality measured by corruption and the rule of law has a significantly positive effect on long-run economic growth. Also, introducing instrument variables to solve an endogeneity problem associated with institutional quality enables us to show that social conflict variables such as high levels of trust and democracy can be conducive to improving institutional quality.

Suggested Citation

  • Young Soo Shin & Yong-Hwan Noh & Dongwon Lee & Weh-Sol Moon, 2014. "Institutional Quality and Economic Growth (in Korean)," Economic Analysis (Quarterly), Economic Research Institute, Bank of Korea, vol. 20(3), pages 75-110, September.
    • Handle: RePEc:bok:journl:v:20:y:2014:i:3:p:75-110
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    More about this item

    Keywords

    Institutional quality; Social Capital; Economic Growth; Social Conflict;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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