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An Investigation on The Causality Between Institutions and Economic Performance in Developing Countries

Year 2021, , 1014 - 1022, 27.09.2021
https://doi.org/10.32709/akusosbil.863945

Abstract

With the institutional economics approach, it is generally accepted that institutions are one of the most important factors in explaining the differences in economic development among countries, in this framework, the relationship between institutions and economic performance was analyzed based on the assumption of the "primacy of institutions," and in this context, it was admitted that the institutional structure was the main underlying reason for economic growth and development in the literature. However, with regard to the reverse relationship, the effect of economic growth and development on institutional performance has become one of the less emphasized issues in the literature. The results of the relatively few studies in the literature addressing the causality relationship between institutions and economic performance are ambiguous. Within this framework, the study aimed to investigate the causality between institutions and economic performance in developing countries using the panel VECM model. According to the results, while a causality was found from institutional factors to economic growth between the effectiveness of the government and the quality of regulations and economic growth in the long term, it was concluded that there was a bidirectional causality between the rule of law and economic growth. Moreover, it was found that there was a short-term causality from the quality of regulations to economic growth but there is no short-term causality between government efficiency and quality and economic growth.

References

  • Acemoglu, D., Johnson, S. ve Robinson J. A. (2005). Institutions as a fundamental cause of long-run growth. P. Aghion ve S. N. Durlauf (Ed), Handbook of economic growth içinde (ss.386-472). Amsterdam: Elsevier.
  • Aceomoglu, D. ve Robinson, J. A. (2010). The role of institutions in growth and development. Review of Economics and Institutions, 1(2), 1-33.
  • Asghar, N., Qureshi, S. ve Nadeem, M. (2015). Institutional quality and economic growth: panel ARDL analysis for selected developing economies of Asia. South Asian Studies, 30(2), 381-403.
  • Breitung, J. (2000). The local power of some unit root tests for panel data. B. Baltagi (Ed), Advances in econometrics: non-stationary panels, panel cointegration, and dynamic panels içinde (ss.161-178). New York: Elsevier.
  • Chong, A. ve Calderon, C. (2000). Causality and feedback between ınstitutional measures and economic growth. Economics and Politics, 12, 69–81.
  • Dawson, J.W. (2003). Causality in the freedom–growth relationship. European Journal of Political Economy, 19, 479–495.
  • Engle, R. ve Granger, C. (1987). Co-integration and error correction: representation, estimation, and testing. Econometrica, 55, 251-76.
  • Glaeser, E.L., La Porta, R., Lopez-De-Silane, F. ve Shleifer, A. (2004). Do Institutions Cause Growth? Journal of Economic Growth, 9, 271–303.
  • Im, K.S., Pesaran, M.H. ve Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115(1), 53-74.
  • Justesen, M.K. (2008). The effect of economic freedom on growth revisited: new evidence on causality from a panel of countries 1970–1999. European Journal of Political Economy 24, 642–660.
  • Kebede, J. G. ve Takyii, P. O. (2017). Causality between institutional quality and economic growth: evidence from Sub-Saharan Africa. European Journal of Economic and Financial Research, 2(1), 114-131.
  • Knack, S. ve Keefer, P. (1995). Institutions and economic performance: cross-country tests using alternative institutional measures. Economics and Politics, 7, 207–227.
  • Law, S. H. ve Bany-Ariffin, A.N. (2008). Institutional infrastructure and economic performance: dynamic panel data evidence. Transition Studies Review, 15, 542–557.
  • Lee, K. ve Kim, B. (2009). Both institutions and policies matter but differently for different income groups of countries: determinants of long-run economic growth revisited. World Development 37, 533–549.
  • Levin, A., Lin, C.F. ve Chu, C.S.J. (2002). Unit root tests in panel data: asymptotic and finite-sample properties. Journal of Econometrics, 108(1), 1-24.
  • Lipset, S.M. (1960). Political man: the social basis of modern politics. New York: Doubleday.
  • Maddala, G.S. ve Wu, S. (1999). A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, 61(S1), 631-652.
  • Mauro, P. (1995). Corruption and growth. Quarterly Journal of Economics, 110, 681–712.
  • North, D. (2002). Kurumlar, kurumsal değişim ve ekonomik performans (Çağalı-Güven G. Çev.). İstanbul: Sabancı Üniversitesi Yayınları.
  • Paldam, M. ve Gundlach, E. (2008). Two views on institutions and development: the grand transition vs the primacy of institutions. Kyklos, 61(1), 65-100.
  • Pedroni, P. (2004). Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the ppp hypothesis. Econometric Theory, 3, 579–625.
  • Rigobon, R. ve Rodrik, D. (2005). Rule of law, democracy, openness and ıncome: estimating the interrelationships Economics of Transition, 13, 533–564.
  • Rodrik, D. (2004). Institutions and economic performance - getting ınstitutions right. CESifo DICE Report, 2, 10-15.
  • Rodrik, D., Subramanian, A. ve Trebbi, F. (2004). Institutions rule: the primacy of institutions over geography and ıntegration in economic development. Journal of Economic Growth, 9, 131–165.
  • Siddiqui, D. A. ve Ahmed, Q. M. (2009). The causal relationship between institutions and economic growth: An empirical investigation for Pakistan economy. MPRA Working Pape,r No.19745. https://mpra.ub.uni-muenchen.de/19747/ (Erişim Tarihi: 10.09.2020).
  • World Bank (2020). World Development Indicators. https://databank.worldbank.org/source/world-development-indicators (Erişim Tarihi: 11.11.2020).
  • World Bank (2020). World Governance Indicators. https://databank.worldbank.org/source/worldwide-governance-indicators (Erişim Tarihi: 11.11.2020).

Gelişmekte Olan Ülkelerde Kurumlar ve Ekonomik Performans Arasındaki Nedensellik İlişkisi Üzerine Bir İnceleme

Year 2021, , 1014 - 1022, 27.09.2021
https://doi.org/10.32709/akusosbil.863945

Abstract

Kurumsal iktisat yaklaşımı ile birlikte kurumların ülkeler arasındaki ekonomik gelişmişlik farklılıklarını açıklamada en önemli faktörlerden biri olduğu genel kabul görmüş, bu doğrultuda, literatürde, kurumlar ve ekonomik büyüme ilişkisi “kurumların üstünlüğü” varsayımı çerçevesinde incelenmiştir. Söz konusu yaklaşımda, kurumsal yapının iktisadi büyüme ve kalkınmanın altında yatan temel neden olduğu kabul edilmiştir. Ancak tersi yöndeki ilişki, iktisadi büyüme ve kalkınmanın kurumsal performans üzerindeki etkisi üzerinde az durulan konulardan olmuştur. Literatürde, kurumlar ve ekonomik performans arasındaki nedensellik ilişkisini ele alan göreli olarak az sayıdaki çalışmanın sonuçları ise karmaşıktır. Bu çerçevede, çalışmada, gelişmekte olan ülkelerde kurumlar ve ekonomik performans arasındaki nedensellik ilişkisinin panel VECM modeli kullanılarak araştırılması amaçlanmıştır. Çalışmadan elde edilen sonuçlara göre, uzun dönemde, hükümetin etkinliği ve düzenlemelerin kalitesi ile ekonomik büyüme değişkenleri arasında, kurumsal faktörlerden, ekonomik büyümeye doğru bir nedensellik ilişkisi bulunmuştur. Ancak, ekonomik büyümeden hükümetin etkinliği ve düzenlemelerin kalitesine doğru bir nedensellik ilişkisi bulunamamıştır. Diğer taraftan, hukukun üstünlüğü ve ekonomik büyüme arasında çift yönlü bir nedensellik ilişkisi olduğu sonucuna ulaşılmıştır. Çalışmadan elde edilen kısa dönemli nedensellik ilişkilerine ilişkin bulgulara göre ise hükümetin etkinliği ve düzenlemelerin kalitesi ile ekonomik büyüme arasında nedensellik ilişkisi bulunamazken, düzenlemelerin kalitesinden iktisadi büyümeye doğru tek yönlü bir nedensellik ilişkisi olduğu sonucuna ulaşılmıştır.

References

  • Acemoglu, D., Johnson, S. ve Robinson J. A. (2005). Institutions as a fundamental cause of long-run growth. P. Aghion ve S. N. Durlauf (Ed), Handbook of economic growth içinde (ss.386-472). Amsterdam: Elsevier.
  • Aceomoglu, D. ve Robinson, J. A. (2010). The role of institutions in growth and development. Review of Economics and Institutions, 1(2), 1-33.
  • Asghar, N., Qureshi, S. ve Nadeem, M. (2015). Institutional quality and economic growth: panel ARDL analysis for selected developing economies of Asia. South Asian Studies, 30(2), 381-403.
  • Breitung, J. (2000). The local power of some unit root tests for panel data. B. Baltagi (Ed), Advances in econometrics: non-stationary panels, panel cointegration, and dynamic panels içinde (ss.161-178). New York: Elsevier.
  • Chong, A. ve Calderon, C. (2000). Causality and feedback between ınstitutional measures and economic growth. Economics and Politics, 12, 69–81.
  • Dawson, J.W. (2003). Causality in the freedom–growth relationship. European Journal of Political Economy, 19, 479–495.
  • Engle, R. ve Granger, C. (1987). Co-integration and error correction: representation, estimation, and testing. Econometrica, 55, 251-76.
  • Glaeser, E.L., La Porta, R., Lopez-De-Silane, F. ve Shleifer, A. (2004). Do Institutions Cause Growth? Journal of Economic Growth, 9, 271–303.
  • Im, K.S., Pesaran, M.H. ve Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115(1), 53-74.
  • Justesen, M.K. (2008). The effect of economic freedom on growth revisited: new evidence on causality from a panel of countries 1970–1999. European Journal of Political Economy 24, 642–660.
  • Kebede, J. G. ve Takyii, P. O. (2017). Causality between institutional quality and economic growth: evidence from Sub-Saharan Africa. European Journal of Economic and Financial Research, 2(1), 114-131.
  • Knack, S. ve Keefer, P. (1995). Institutions and economic performance: cross-country tests using alternative institutional measures. Economics and Politics, 7, 207–227.
  • Law, S. H. ve Bany-Ariffin, A.N. (2008). Institutional infrastructure and economic performance: dynamic panel data evidence. Transition Studies Review, 15, 542–557.
  • Lee, K. ve Kim, B. (2009). Both institutions and policies matter but differently for different income groups of countries: determinants of long-run economic growth revisited. World Development 37, 533–549.
  • Levin, A., Lin, C.F. ve Chu, C.S.J. (2002). Unit root tests in panel data: asymptotic and finite-sample properties. Journal of Econometrics, 108(1), 1-24.
  • Lipset, S.M. (1960). Political man: the social basis of modern politics. New York: Doubleday.
  • Maddala, G.S. ve Wu, S. (1999). A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, 61(S1), 631-652.
  • Mauro, P. (1995). Corruption and growth. Quarterly Journal of Economics, 110, 681–712.
  • North, D. (2002). Kurumlar, kurumsal değişim ve ekonomik performans (Çağalı-Güven G. Çev.). İstanbul: Sabancı Üniversitesi Yayınları.
  • Paldam, M. ve Gundlach, E. (2008). Two views on institutions and development: the grand transition vs the primacy of institutions. Kyklos, 61(1), 65-100.
  • Pedroni, P. (2004). Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the ppp hypothesis. Econometric Theory, 3, 579–625.
  • Rigobon, R. ve Rodrik, D. (2005). Rule of law, democracy, openness and ıncome: estimating the interrelationships Economics of Transition, 13, 533–564.
  • Rodrik, D. (2004). Institutions and economic performance - getting ınstitutions right. CESifo DICE Report, 2, 10-15.
  • Rodrik, D., Subramanian, A. ve Trebbi, F. (2004). Institutions rule: the primacy of institutions over geography and ıntegration in economic development. Journal of Economic Growth, 9, 131–165.
  • Siddiqui, D. A. ve Ahmed, Q. M. (2009). The causal relationship between institutions and economic growth: An empirical investigation for Pakistan economy. MPRA Working Pape,r No.19745. https://mpra.ub.uni-muenchen.de/19747/ (Erişim Tarihi: 10.09.2020).
  • World Bank (2020). World Development Indicators. https://databank.worldbank.org/source/world-development-indicators (Erişim Tarihi: 11.11.2020).
  • World Bank (2020). World Governance Indicators. https://databank.worldbank.org/source/worldwide-governance-indicators (Erişim Tarihi: 11.11.2020).
There are 27 citations in total.

Details

Primary Language Turkish
Journal Section Law
Authors

İrem Çetin 0000-0002-3717-7462

Publication Date September 27, 2021
Submission Date January 18, 2021
Published in Issue Year 2021

Cite

APA Çetin, İ. (2021). Gelişmekte Olan Ülkelerde Kurumlar ve Ekonomik Performans Arasındaki Nedensellik İlişkisi Üzerine Bir İnceleme. Afyon Kocatepe Üniversitesi Sosyal Bilimler Dergisi, 23(3), 1014-1022. https://doi.org/10.32709/akusosbil.863945