Democracy, Economic Freedoms and Economic Growth: An Investigation on the Role of Institutions

Year 2018, , 81 - 102, 30.04.2018

Emrah Koçak , Nisfet Uzay

https://doi.org/10.17233/sosyoekonomi.2018.02.05

Cited By: 15

Abstract

The main purpose of this paper is to investigate the impact of the institutional quality on economic growth in high, medium and low-income countries in the period of 1995-2013. In this study, institutional quality is represented as a component of democracy and economic freedoms. The institutional quality index for each country is calculated by the principal component analysis (PCA) method using democracy and economic freedoms indicators. Then, the relationship between the institutional quality index and economic growth is estimated by panel data analysis method (panel unit root, panel cointegration, panel causality analysis). The estimation results for all groups of countries are as follows: (i) the panel cointegration test confirms a long-run equilibrium relationship between institution quality and economic growth. (ii) According to this relationship, institutional quality has a positive effect on economic growth. (iii) The panel causality tests support a bidirectional causality between institution quality and economic growth. The results of the analysis indicate that institutions are a significant influence on economic growth.

Keywords

Democracy, Economic Freedoms, Institutions, Economic Growth, Panel Data, Principal Component Analysis

Demokrasi, Ekonomik Özgürlükler ve Ekonomik Büyüme: Kurumların Rolü Üzerine Bir Araştırma

Abstract

Bu çalışmanın temel amacı 1995-2013 dönemi yüksek, orta ve düşük gelirli ülkelerde kurumsal niteliğin ekonomik büyüme üzerindeki etkisini araştırmaktır. Çalışmada kurumsal nitelik, demokrasi ve ekonomik özgürlüklerin bir bileşeni olarak temsil edilmektedir. Kurumsal nitelik endeksi, demokrasi ve ekonomik özgürlük göstergeleri kullanılarak her bir ülke için temel bileşenler analiz (TBA) yöntemi ile hesaplanmıştır. Daha sonra, kurumsal nitelik endeksi ile ekonomik büyüme arasındaki ilişki panel veri analiz yöntemi (panel birim kök, panel eşbütünleşme, panel nedensellik) ile tahmin edilmiştir. Tüm ülke grupları için tahmin sonuçları aşağıdaki gibidir: (i) Panel eşbütünleşme testi kurumsal nitelik ve ekonomik büyüme arasında uzun dönemli bir denge ilişkisini doğrulamaktadır. (ii) Bu ilişkiye göre, kurumsal nitelik ekonomik büyüme üzerinde pozitif bir etkiye sahiptir. (iii) Panel nedensellik testleri kurumsal nitelik ve ekonomik büyüme arasında çift yönlü bir nedensellik ilişkisini desteklemektedir. Analiz sonuçları, kurumların ekonomik büyüme üzerinde önemli bir etkisi olduğunu işaret etmektedir.

Keywords

Demokrasi, Ekonomik Özgürlükler, Kurumlar, İktisadi Büyüme, Panel Veri, Temel Bileşenler Analizi

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