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Institutions and growth: a developing country case study

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  • Luciano Nakabashi
  • Ana Elisa Gonçalves Pereira
  • Adolfo Sachsida

Abstract

Purpose - – The Brazilian municipalities show a huge disparity in income level. The GDPper capitadifference between the richest and the poorest municipalities is about 190 times, according to IBGE (2000) database. This paper aims to analyze the impacts of Brazilian municipalities institutional quality on their levels ofper capitaincome. Design/methodology/approach - – Institutionalist theory provides a plausible explanation for the gap among municipalities income level. Many empirical studies based on cross-country data have found a high correlation between institutional quality and the level of economic development, but there is little research concerning the extreme inequality within the national territory and its relationship with institutional quality. The theory suggests that the institutions matter for the level of economic development because of their effects on political power distribution, generation of economic opportunities, innovation, human capital accumulation, and so on. Findings - – Overall, an increase by one point in the average quality of the institutions is able to increase the average GDPper capitaaround 20 percent. This means that each point of increase in the quality of the municipality institutions is able to increase the municipality GDPper capitaby R$1,000 (around US$600). Originality/value - – This is an important research that sheds light to the importance of institutional quality at local level and its influence over growth in a developing country.

Suggested Citation

  • Luciano Nakabashi & Ana Elisa Gonçalves Pereira & Adolfo Sachsida, 2013. "Institutions and growth: a developing country case study," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 40(5), pages 614-634, October.
    • Handle: RePEc:eme:jespps:v:40:y:2013:i:5:p:614-634
    DOI: 10.1108/JES-09-2011-0111
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    Citations

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    Cited by:

    1. Ana Elisa Gonçalves Pereira & Luciano Nakabashi, 2014. "Factors Of Production, Institutions And Development In Brazil," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41st Brazilian Economics Meeting] 090, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    2. Pedro H. Leivas & Anderson M.A. dos Santos, 2016. "Patterns and trends of group-based inequality in Brazil," WIDER Working Paper Series 127, World Institute for Development Economic Research (UNU-WIDER).
    3. Luciano Nakabashi & Ana Elisa Pereira, 2023. "Factors of production, productivity, institutions, and development: Evidence from Brazil," Review of Development Economics, Wiley Blackwell, vol. 27(2), pages 1034-1055, May.
    4. Thais W. Niquito & Felipe Garcia Ribeiro & Marcelo Savino Portugal, 2018. "Institutions or human capital: which is more important for economic performance? Evidence from Brazil," Economics Bulletin, AccessEcon, vol. 38(2), pages 1069-1076.
    5. Sarela Enriquez-Perales & Conrado Diego García-Gómez & José María Díez-Esteban & Edmundo R. Lizarzaburu Bolaños, 2023. "Formal institutions, ICSID arbitration and firm performance: evidence from Latin America," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(2), pages 429-464, June.
    6. Aralica Zoran & Svilokos Tonci & Bacic Katarina, 2018. "Institutions and Firms’ Performance in Transition Countries: The Case of Selected Cesee Countries," South East European Journal of Economics and Business, Sciendo, vol. 13(1), pages 68-80, June.
    7. William Y. N. Suzuki & Marcio P. Laurini & Luciano Nakabashi, 2022. "Spatial heterogeneities, institutions, and income: Evidence for Brazil," Papers in Regional Science, Wiley Blackwell, vol. 101(3), pages 537-571, June.
    8. Edward Nissan & Farhang Niroomand, 2015. "Gender and Spatial Educational Attainment Gaps in Turkey," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(1), pages 102-109, January.
    9. Pedro H. Leivas & Anderson M. A. dos Santos, 2016. "Patterns and trends of group-based inequality in Brazil," WIDER Working Paper Series wp-2016-127, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    Brazilian municipalities; Institutions; Income level;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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