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Institutions Quality and Growth

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  • Fabien NGENDAKURIYO

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

We analyze the dynamic interaction between civil society organizations and Government in a representative developing economy. Government favors corruption and so fails to build efficient institutions. On its side, civil society exerts pressure on Government to constrain it to halt corruption. We distinguish between an authoritarian Government and an unrestrictive one: the latter does not repress society's protests while the former implements punishment mechanisms. We demonstrate analytically the existence of a unique stable equilibrium by solving a linear quadratic differential game for three Regimes respectively the optimal control problem, noncooperative and cooperative games. Numerical assessment indicates that civil monitoring always increases as corruption increases, but civil monitoring is low and institutions improve much faster under cooperation. Furthermore, total factor Productivity effects always dominate the detrimental effect of civil monitoring on growth in the first regime, under some restrictions in the second and never in the third. In response to a change in the government's aversion to rent variations in the presence of authoritarian government, total factor productivity effects always dominate under both the noncooperative and cooperative scenario.

Suggested Citation

  • Fabien NGENDAKURIYO, 2009. "Institutions Quality and Growth," LIDAM Discussion Papers IRES 2009014, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2009014
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    References listed on IDEAS

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    1. Paul J. Zak, 2002. "Institutions, Property Rights, and Growth," Recherches économiques de Louvain, De Boeck Université, vol. 68(1), pages 55-73.
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    6. Rubio, Santiago J. & Casino, Begona, 2002. "A note on cooperative versus non-cooperative strategies in international pollution control," Resource and Energy Economics, Elsevier, vol. 24(3), pages 251-261, June.
    7. Paul Zak, "undated". "Institutions, Property Rights, and Growth," Gruter Institute Working Papers on Law, Economics, and Evolutionary Biology 2-1-1009, Berkeley Electronic Press.
    8. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 681-712.
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    1. Ngendakuriyo, Fabien & Zaccour, Georges, 2017. "Should civil society organizations cooperate or compete in fighting a corrupt government?," Mathematical Social Sciences, Elsevier, vol. 85(C), pages 30-36.
    2. Chang, Chong-Chuo, 2023. "The impact of quality of institutions on firm performance: A global analysis," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 694-716.
    3. Fuentes, Raúl & Mishra, Tapas & Scavia, Javier & Parhi, Mamata, 2014. "On optimal long-term relationship between TFP, institutions, and income inequality under embodied technical progress," Structural Change and Economic Dynamics, Elsevier, vol. 31(C), pages 89-100.
    4. Ngendakuriyo, Fabien & Zaccour, Georges, 2013. "Fighting corruption: To precommit or not?," Economics Letters, Elsevier, vol. 120(2), pages 149-154.
    5. Ni, Niannian & Liu, Yulin & Zhou, Hui, 2022. "Financial openness, capital rents and income inequality," European Journal of Political Economy, Elsevier, vol. 71(C).

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