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Institutions and economic performance: a review of the theory and evidence

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  • Ugur, Mehmet

Abstract

The aim of this article is to take stock of the theoretical debate and empirical findings concerning the impact of institutions on economic performance and the channels through which the institutional impact unfolds. The review is limited to work published until 2004 due to space limitations and the exponential increase in the literature after 2004 – a development that justifies a separate review in itself. We trace the evolution of the institutional approach, identify the channels through which institutional quality might affect economic performance, report the empirical findings, and assess the institutional approach’s contribution to economic analysis and policy design. Our findings suggest that the institutional approach has made both theoretical and empirical contributions to economics research and has inspired policy debate, but the debate is lopsided with its focus on developing countries only.

Suggested Citation

  • Ugur, Mehmet, 2010. "Institutions and economic performance: a review of the theory and evidence," MPRA Paper 25909, University Library of Munich, Germany, revised Oct 2010.
    • Handle: RePEc:pra:mprapa:25909
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    References listed on IDEAS

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    Cited by:

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    2. Laura Heras Recuero & Roberto Pascual González, 2019. "Economic growth, institutional quality and financial development in middle-income countries," Working Papers 1937, Banco de España.
    3. Néstor Le Clech & Juan Carlos Guevara-Pérez, 2023. "Latin America and the Caribbean’s Productivity: The Role of Pro-Market Policies, Institutions, Infrastructure, and Natural Resource Endowments," Economies, MDPI, vol. 11(5), pages 1-21, May.
    4. Philip Franses & Rianne Legerstee, 2014. "Statistical institutes and economic prosperity," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(1), pages 507-520, January.
    5. William Orlando Prieto Bustos & Joan Miguel Tejedor Estupiñán, 2019. "Eficiencia Técnica de las Instituciones Públicas Locales en Colombia," Revista de Estudios Regionales, Universidades Públicas de Andalucía, vol. 2, pages 15-41.
    6. Javed, Omer, 2014. "Institutional quality, macroeconomic stabilization and economic growth: a case study of IMF programme countries," MPRA Paper 56370, University Library of Munich, Germany.

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    More about this item

    Keywords

    Institutions; governance; growth; investment; technological change;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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