Research Article
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The Relationship between Political Institutions and Economic Development: An Application on Middle Income Countries

Year 2022, Volume: 6 Issue: 2, 528 - 551, 28.05.2022
https://doi.org/10.25295/fsecon.1084374

Abstract

The reason for the differences in economic development between countries is mostly tried to be explained by economic factors, and the effects of institutions related to the social and political environment are ignored. For this reason, the primary aim of the study is to question the interaction of the institutional quality of the countries' social and political environment with their economic development levels. In the previous empirical analyzes on economic development, the Human Development Index (HDI) could not be used due to the lack of data, and GDP mostly represented economic development. In this study, unlike other studies HDI, which includes education and health indices as well as income, was used. The data of 76 middle-income countries between 1990 and 2016 were analyzed with second generation advanced panel data analysis techniques that take into account cross-sectional dependence and heterogeneity.
According to the results, a two-way causality relationship was found between the level of accountability, the effectiveness of government interventions, the quality of political stability and private sector regulations and economic development, while a one-way causality relationship was found from economic development to corruption and the rule of law.

References

  • Adedoyin, F., Erum, N., Bekun, F. (2021). How does institutional quality moderates the impact of tourism on economic growth? Startling evidence from high earners and tourism-dependent economies. Tourism Economics, 1-22.
  • Afonso, O. (2022). The impact of institutions on economic growth in OECD countries. Applied Economics Letters, 63-67.
  • Aisen A. ve Veiga F. (2013) How does political instability affect economic growth? European Journal of Political Economy, 2013, vol. 29, issue C, 151-167
  • Akpan, G. E. (2012). Governance and Development Performance : A Cross-Country Analysis of Sub-Saharan Africa, 3(14), 54–66.
  • Alesina, A., Perotti, R. (1996). Income Distribution, Political Stability and Investment, European Economic Review, 40, 1203-1220.
  • Aron, J. (2000). Growth and institutions: A review of the evidence. The World Bank Research Observer, 15(1), 99-135.
  • Asteriou, D., Hall, S. G., (2007). “Applied Econometrics : A Modern Approach Using Eviews And Microfit”. New York: Palgrave Macmillan.
  • Aytun, C. Akın, C. S., (2014) Kurumsal Kalite ve Ekonomik Büyüme: Panel Nedensellik Analizi Çukurova Üniversitesi İİBF Dergisi, Cilt:18. Sayı:1. Haziran 2014 ss.89-100
  • Baltagi, B. H. (2005), Econometric Analysis of Panel Data, Chichester: John Wiley & Sons Ltd.
  • Bartlett, W., Cuckovic, N., Jurlin, K., Nojkovic, A., Popovski, V. (2013). Institutional quality and growth in EU neighbourhood countries. Search Working Paper, 5/11
  • Basu, S.R. (2008). “A new way to link development to institutions, policies and geography”,Policy issues in international trade and commodities, UNCTAD/ITCD/TAB/38, United Nations, New York
  • Behnezhad, S., Razmi, S., Sadati, S. (2021). The Role of Institutional Conditions in the Impact of Economic Growth on Income Inequality. Journal of Finance and Economics, 11-15.
  • Boateng, E., Agbola, F., Mahmood, A. (2021). Foreign aid volatility and economic growth in Sub-Saharan Africa: Does institutional quality matter? Economic Modelling 96, 111-127.
  • Breusch, T. S. Pagan A. R. (1980) “The Lagrange Multiplier Test and Its Applications to Model Specification Tests in Econometrics”, Review of Economic Studies, 47 (1): 239-53.
  • Brøns Petersen, O., Gjedsted, S. (2021). Climate change and institutional change: what is the relative importance for economic performance? Environmental Economics and Policy Studies, 333-360.
  • Buchanan, J., M. (1989) Marke failure and Political Failure. Explorations into constitutional economies A&M universty press, Texas
  • Bulte, E.H., R. Damania., R.T. Deacon, (2005). Resource Intensity, Institutions and Development. World Development 33: 1029-1044
  • Dias, J., Tebaldi, E. (2012). Institutions, human capital, and growth: The institutional mechanism. Structural Change and Economic Dynamics 23, 300-312.
  • Dumitrescu, E. I., Hurlin, C. (2012), “Testing for Granger Non-Causality in Heterogeneous Panels”, Economic Modelling, 29(4), 1450-1460.
  • Gerring, J., Thacker, S. C. (2001). Political Institutions and Human Development. Boston University, Boston. Unpublished, (January).Gilpin, 2001
  • Gilpin, R. (2001). Global Political Economy . Princeton University Press, Princeton.
  • Granger, C. W. J. (1969). Investigating Causal Relations by Econometric Models and Cross-spectral Methods. Econometrica, 37(3), 424–438. http://dx.doi.org/10.2307/1912791
  • Gujarati, D., N. (2001) Temel Ekonometri, Çev: Ümit Senesen ve Gülay G. Senesen, Literatür Yayincilik, Istanbul.
  • Güneş, S., Polat, F.,Akın, T. (2014). Kalkınma bağlamında büyüme, yolsuzluk ve demokrasi ilişkisi. Economic Development: Social&Political Interactions, 13-21.
  • Iddawela, Y., Lee, N., Rodriguez-Pose, A. (2021). Quality of Sub-national Government and Regional Development in Africa. The Journal of Development Studies, 1282-1302.
  • Kaufmann, Daniel, Aart Kraay., Massimo Mastruzzi (2010). The Worldwide Governance Indicators: Methodology and Analytical Issues World Bank Policy Research Working Paper (Erişim tarihi: 10 Ekim 2021) http://info.worldbank.org/governance/wgi/pdf/WGI.pdf
  • Lopez, L., Weber, S. (2017). Testing for Granger causality in Panel Data. University of Neuchatel Institute of Economic Research, IRENE Working paper 17-03.
  • Marakbi, R., Turcu, C. (2016). Corruption, Institutional Quality and Growth: a Panel Smooth Transition Regression Approach. JEL classification, 1-39.
  • Meyer, DF, TM Masehla, S Kot (2017) The Relationship between Economic Growth and Economic Development: A Regional Assessment in South Africa J. Advanced Res. L. & Econ. 1377
  • Nabli, M. K., J. B. Nugent (1989). "The New Institutional Economics and its Applicability to Development." World Development 17(9): 1333-1347
  • Ndjokou, I., Tsopmo, P. (2017). The effects on economic growth of natural resources in Sub-Saharan Africa: Does the quality of institutions matters? Economics Bulletin, 248-263.
  • Ngo, M., Nguyen, L. (2020). Economic Growth, Total Factor Productivity, and Institution Quality in Low-Middle Income Countries in Asia. Journal of Asian Finance, Economics and Business, 251-260.
  • North, D. C. Thomas P. (1970). An economic theory of the growth of the western World. The economic history review, 23(1), 5.
  • North, D., (1990) Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press.
  • Olanrewaju, G., Okwu, A., Obiakor, R. (2021). Institutional Quality, Development Strategies and Productive Employment Growth: Evidence from Nigeria. Journal of Good Governance and Sustainable Development in Africa, 1-16.
  • Okoh, A. S. Ebi, B. O. (2013). Infrastructure investment, institutional quality, and economic growth in Nigeria: An interactive approach. European Journal of Humanities and Social Sciences, 26(1), 1342-1358. Retrieved from http:// www.journalsbank.com
  • Okoi, I. E., Benjamin, O. O., Bassey, C. E. (2015). Institutional Quality, Macroeconomic Policy and Economic Development in Nigeria. Journal of Economics and Development Studies, 3(2), 140–145. http://doi.org/10.15640/jeds.v3n2a14
  • Özsoy, C., Adaçay, F., Kar, M., Taban, S., Günsoy, B., Tosunoğlu, B., Aktaş, T. (2012). İktisadi Kalkınma. Eskişehir: Anadolu Üniversitesi.
  • Pesaran, M. Hashem (2004), General Diagnostic Tests for Cross Section Dependence in Panels, Cambridge Working Papers in Economics, 435.
  • Pesaran, M. Hashem (2006), “Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure” Econometrica, 74 (4): 967-1012. Peseran, M. Hashem (2007), "A Simple Panel Unit Root Test in the Presen-ce of Cross Section Dependence", Journal of Applied Econometrics, 22(2), pp. 265-312.Pesaran vd. (2008
  • Pesaran, M. Hashem, Aman Ullah ve Takashi Yamagata (2008), “A Bias-Adjusted LM Test of Error Cross-Section Independence” Econometrics Journal, 11 (1): 105-127.
  • Pesaran, M. Hashem., Yamagata, T. (2008), “Testing Slope Homogeneity in Large Panels”, Journal of Econometrics, 142 (1), 50-93.
  • Rodrik, D. (2000). Institution for hıgh- quality growth: What they are and how to acquire them. Studies in Comparative International Development, 35(3), 3-31.
  • Sajjad, Muhammad, Nishat Kaleem, Muhammad Irfan Chani, Munir Ahmed (2020). Worldwide role of women entrepreneurs in economic development Asia Pacific Journal of Innovation and Entrepreneurship Vol. 14 No. 2, pp. 151-160
  • Salman, M., Long, X., Dauda, L., Mensah, C. (2019). The impact of institutional quality on economic growth and carbon emissions: Evidence from Indonesia, South Korea and Thailand. Journal of Cleaner Production 241, 1-15.
  • Sharma, Gagan Deep , Aviral Kumar Tiwari , Burak Erkut, Hardeep Singh Mundi (2021) Exploring the nexus between non-renewable and renewable energy consumptions and economic development: Evidence from panel estimations Renewable and Sustainable Energy Reviews Volume 146, https://doi.org/10.1016/j.rser.2021.111152
  • Swamy, P.A.V.B. (1970), “E􀆥cient Inference in a Random Coe􀆥cient Regression Model”, Econometrica, 38(2), 311-323.
  • Tenaw, Dagmawe, Abebe D. Beyene (2021) Environmental sustainability and economic development in sub-Saharan Africa: A modified EKC hypothesis Renewable and Sustainable Energy Reviews, Volume 143, https://doi.org/10.1016/j.rser.2021.110897
  • Tornell, A. (1997). Economic growth and decline with endogenous rights. Journal of Economic Growth, 2(3), 219-50.
  • Tran, O., Le, H., Nguyen, A. (2021). Role of institutional quality in economic development: A case study of Asian countries. Problems and Perspectives in Management, 357-369.
  • Wei, S. J. (2000). How taxing is corruption on international investors? Review of Economics and Statistics, 82(1), 1-11.
  • Welsch, H. (2003). Corruption, crowth and the enviroment: Across-country analysis. German Institute for Economic Research Discussion Paper
  • World Bank. (2021). World development indicators and global development finance. Erişim 19.09.2021, http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators
  • Vianna, A., Mollick, A. (2018). Institutions: Key variable for economic development in Latin America. Journal of Economics and Business 96, 42-58.
  • Vita, G. (2018). Institutional quality and the growth rates of the Italian regions: The costs of regulatory complexity. Papers in Regional Science, 1057-1081.

Politik Kurumlar Ekonomik Kalkınma İlişkisi: Orta Gelir Grubu Ülkeleri Üzerine Bir Uygulama

Year 2022, Volume: 6 Issue: 2, 528 - 551, 28.05.2022
https://doi.org/10.25295/fsecon.1084374

Abstract

Ülkeler arası ekonomik kalkınma farklılıklarının nedeni daha çok ekonomik faktörler ile açıklanmaya çalışılmakta, sosyal ve siyasal çevreye ilişkin kurumların etkileri göz ardı edilmektedir. Bu nedenle çalışmanın öncelikli amacı ülkelerin sosyal ve siyasal çevreye ilişkin kurumsal kalitelerinin, ekonomik kalkınma düzeyleri ile olan etkileşimini sorgulamaktır. Ekonomik kalkınmaya ilişkin gerçekleştirilen önceki ampirik analizlerde veri yetersizliği nedeni ile İnsani Gelişim Endeksi (İGE) kullanılamamış, daha çok GSYH ekonomik kalkınmayı temsil etmiştir. Bu çalışmada diğer çalışmalardan farklı olarak ekonomik kalkınmayı temsilen, gelirin yanı sıra eğitim ve sağlık endekslerini de kapsayan İGE kullanılmış, orta gelir grubuna ait 76 ülkenin 1990-2016 yılları arası verileri yatay kesit bağımlılığı ve heterojeniteyi dikkate alan, ikinci nesil ileri panel veri analizi teknikleri ile sorgulanmıştır. Analiz sonuçlarına göre hesap verilebilirlik düzeyi, hükümet müdahalelerinin etkinliği, politik istikrar ve özel sektöre ilişkin düzenlemelerin kalitesi ile ekonomik kalkınma arasında iki yönlü nedensellik ilişkisine rastlanırken, ekonomik kalkınmadan yolsuzluk ve hukukun üstünlüğüne doğru tek yönlü nedensellik ilişkisine rastlanılmıştır.

References

  • Adedoyin, F., Erum, N., Bekun, F. (2021). How does institutional quality moderates the impact of tourism on economic growth? Startling evidence from high earners and tourism-dependent economies. Tourism Economics, 1-22.
  • Afonso, O. (2022). The impact of institutions on economic growth in OECD countries. Applied Economics Letters, 63-67.
  • Aisen A. ve Veiga F. (2013) How does political instability affect economic growth? European Journal of Political Economy, 2013, vol. 29, issue C, 151-167
  • Akpan, G. E. (2012). Governance and Development Performance : A Cross-Country Analysis of Sub-Saharan Africa, 3(14), 54–66.
  • Alesina, A., Perotti, R. (1996). Income Distribution, Political Stability and Investment, European Economic Review, 40, 1203-1220.
  • Aron, J. (2000). Growth and institutions: A review of the evidence. The World Bank Research Observer, 15(1), 99-135.
  • Asteriou, D., Hall, S. G., (2007). “Applied Econometrics : A Modern Approach Using Eviews And Microfit”. New York: Palgrave Macmillan.
  • Aytun, C. Akın, C. S., (2014) Kurumsal Kalite ve Ekonomik Büyüme: Panel Nedensellik Analizi Çukurova Üniversitesi İİBF Dergisi, Cilt:18. Sayı:1. Haziran 2014 ss.89-100
  • Baltagi, B. H. (2005), Econometric Analysis of Panel Data, Chichester: John Wiley & Sons Ltd.
  • Bartlett, W., Cuckovic, N., Jurlin, K., Nojkovic, A., Popovski, V. (2013). Institutional quality and growth in EU neighbourhood countries. Search Working Paper, 5/11
  • Basu, S.R. (2008). “A new way to link development to institutions, policies and geography”,Policy issues in international trade and commodities, UNCTAD/ITCD/TAB/38, United Nations, New York
  • Behnezhad, S., Razmi, S., Sadati, S. (2021). The Role of Institutional Conditions in the Impact of Economic Growth on Income Inequality. Journal of Finance and Economics, 11-15.
  • Boateng, E., Agbola, F., Mahmood, A. (2021). Foreign aid volatility and economic growth in Sub-Saharan Africa: Does institutional quality matter? Economic Modelling 96, 111-127.
  • Breusch, T. S. Pagan A. R. (1980) “The Lagrange Multiplier Test and Its Applications to Model Specification Tests in Econometrics”, Review of Economic Studies, 47 (1): 239-53.
  • Brøns Petersen, O., Gjedsted, S. (2021). Climate change and institutional change: what is the relative importance for economic performance? Environmental Economics and Policy Studies, 333-360.
  • Buchanan, J., M. (1989) Marke failure and Political Failure. Explorations into constitutional economies A&M universty press, Texas
  • Bulte, E.H., R. Damania., R.T. Deacon, (2005). Resource Intensity, Institutions and Development. World Development 33: 1029-1044
  • Dias, J., Tebaldi, E. (2012). Institutions, human capital, and growth: The institutional mechanism. Structural Change and Economic Dynamics 23, 300-312.
  • Dumitrescu, E. I., Hurlin, C. (2012), “Testing for Granger Non-Causality in Heterogeneous Panels”, Economic Modelling, 29(4), 1450-1460.
  • Gerring, J., Thacker, S. C. (2001). Political Institutions and Human Development. Boston University, Boston. Unpublished, (January).Gilpin, 2001
  • Gilpin, R. (2001). Global Political Economy . Princeton University Press, Princeton.
  • Granger, C. W. J. (1969). Investigating Causal Relations by Econometric Models and Cross-spectral Methods. Econometrica, 37(3), 424–438. http://dx.doi.org/10.2307/1912791
  • Gujarati, D., N. (2001) Temel Ekonometri, Çev: Ümit Senesen ve Gülay G. Senesen, Literatür Yayincilik, Istanbul.
  • Güneş, S., Polat, F.,Akın, T. (2014). Kalkınma bağlamında büyüme, yolsuzluk ve demokrasi ilişkisi. Economic Development: Social&Political Interactions, 13-21.
  • Iddawela, Y., Lee, N., Rodriguez-Pose, A. (2021). Quality of Sub-national Government and Regional Development in Africa. The Journal of Development Studies, 1282-1302.
  • Kaufmann, Daniel, Aart Kraay., Massimo Mastruzzi (2010). The Worldwide Governance Indicators: Methodology and Analytical Issues World Bank Policy Research Working Paper (Erişim tarihi: 10 Ekim 2021) http://info.worldbank.org/governance/wgi/pdf/WGI.pdf
  • Lopez, L., Weber, S. (2017). Testing for Granger causality in Panel Data. University of Neuchatel Institute of Economic Research, IRENE Working paper 17-03.
  • Marakbi, R., Turcu, C. (2016). Corruption, Institutional Quality and Growth: a Panel Smooth Transition Regression Approach. JEL classification, 1-39.
  • Meyer, DF, TM Masehla, S Kot (2017) The Relationship between Economic Growth and Economic Development: A Regional Assessment in South Africa J. Advanced Res. L. & Econ. 1377
  • Nabli, M. K., J. B. Nugent (1989). "The New Institutional Economics and its Applicability to Development." World Development 17(9): 1333-1347
  • Ndjokou, I., Tsopmo, P. (2017). The effects on economic growth of natural resources in Sub-Saharan Africa: Does the quality of institutions matters? Economics Bulletin, 248-263.
  • Ngo, M., Nguyen, L. (2020). Economic Growth, Total Factor Productivity, and Institution Quality in Low-Middle Income Countries in Asia. Journal of Asian Finance, Economics and Business, 251-260.
  • North, D. C. Thomas P. (1970). An economic theory of the growth of the western World. The economic history review, 23(1), 5.
  • North, D., (1990) Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press.
  • Olanrewaju, G., Okwu, A., Obiakor, R. (2021). Institutional Quality, Development Strategies and Productive Employment Growth: Evidence from Nigeria. Journal of Good Governance and Sustainable Development in Africa, 1-16.
  • Okoh, A. S. Ebi, B. O. (2013). Infrastructure investment, institutional quality, and economic growth in Nigeria: An interactive approach. European Journal of Humanities and Social Sciences, 26(1), 1342-1358. Retrieved from http:// www.journalsbank.com
  • Okoi, I. E., Benjamin, O. O., Bassey, C. E. (2015). Institutional Quality, Macroeconomic Policy and Economic Development in Nigeria. Journal of Economics and Development Studies, 3(2), 140–145. http://doi.org/10.15640/jeds.v3n2a14
  • Özsoy, C., Adaçay, F., Kar, M., Taban, S., Günsoy, B., Tosunoğlu, B., Aktaş, T. (2012). İktisadi Kalkınma. Eskişehir: Anadolu Üniversitesi.
  • Pesaran, M. Hashem (2004), General Diagnostic Tests for Cross Section Dependence in Panels, Cambridge Working Papers in Economics, 435.
  • Pesaran, M. Hashem (2006), “Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure” Econometrica, 74 (4): 967-1012. Peseran, M. Hashem (2007), "A Simple Panel Unit Root Test in the Presen-ce of Cross Section Dependence", Journal of Applied Econometrics, 22(2), pp. 265-312.Pesaran vd. (2008
  • Pesaran, M. Hashem, Aman Ullah ve Takashi Yamagata (2008), “A Bias-Adjusted LM Test of Error Cross-Section Independence” Econometrics Journal, 11 (1): 105-127.
  • Pesaran, M. Hashem., Yamagata, T. (2008), “Testing Slope Homogeneity in Large Panels”, Journal of Econometrics, 142 (1), 50-93.
  • Rodrik, D. (2000). Institution for hıgh- quality growth: What they are and how to acquire them. Studies in Comparative International Development, 35(3), 3-31.
  • Sajjad, Muhammad, Nishat Kaleem, Muhammad Irfan Chani, Munir Ahmed (2020). Worldwide role of women entrepreneurs in economic development Asia Pacific Journal of Innovation and Entrepreneurship Vol. 14 No. 2, pp. 151-160
  • Salman, M., Long, X., Dauda, L., Mensah, C. (2019). The impact of institutional quality on economic growth and carbon emissions: Evidence from Indonesia, South Korea and Thailand. Journal of Cleaner Production 241, 1-15.
  • Sharma, Gagan Deep , Aviral Kumar Tiwari , Burak Erkut, Hardeep Singh Mundi (2021) Exploring the nexus between non-renewable and renewable energy consumptions and economic development: Evidence from panel estimations Renewable and Sustainable Energy Reviews Volume 146, https://doi.org/10.1016/j.rser.2021.111152
  • Swamy, P.A.V.B. (1970), “E􀆥cient Inference in a Random Coe􀆥cient Regression Model”, Econometrica, 38(2), 311-323.
  • Tenaw, Dagmawe, Abebe D. Beyene (2021) Environmental sustainability and economic development in sub-Saharan Africa: A modified EKC hypothesis Renewable and Sustainable Energy Reviews, Volume 143, https://doi.org/10.1016/j.rser.2021.110897
  • Tornell, A. (1997). Economic growth and decline with endogenous rights. Journal of Economic Growth, 2(3), 219-50.
  • Tran, O., Le, H., Nguyen, A. (2021). Role of institutional quality in economic development: A case study of Asian countries. Problems and Perspectives in Management, 357-369.
  • Wei, S. J. (2000). How taxing is corruption on international investors? Review of Economics and Statistics, 82(1), 1-11.
  • Welsch, H. (2003). Corruption, crowth and the enviroment: Across-country analysis. German Institute for Economic Research Discussion Paper
  • World Bank. (2021). World development indicators and global development finance. Erişim 19.09.2021, http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators
  • Vianna, A., Mollick, A. (2018). Institutions: Key variable for economic development in Latin America. Journal of Economics and Business 96, 42-58.
  • Vita, G. (2018). Institutional quality and the growth rates of the Italian regions: The costs of regulatory complexity. Papers in Regional Science, 1057-1081.
There are 55 citations in total.

Details

Primary Language Turkish
Journal Section Articles
Authors

İzzettin Ulusoy 0000-0001-6464-7995

Publication Date May 28, 2022
Published in Issue Year 2022 Volume: 6 Issue: 2

Cite

APA Ulusoy, İ. (2022). Politik Kurumlar Ekonomik Kalkınma İlişkisi: Orta Gelir Grubu Ülkeleri Üzerine Bir Uygulama. Fiscaoeconomia, 6(2), 528-551. https://doi.org/10.25295/fsecon.1084374

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