In this paper we revisit the institutions–growth nexus in developing countries including the East Asian region. The region has in the past 3 decades not only achieved spectacular economic growth, but also experienced one of the worst financial crises, i.e. Asian financial crisis (AFC) in 1997–1998. Utilising the neoclassical growth framework augmented with institutional controls and latest estimation technique in panel data analysis, this study finds evidence of positive institutions effect on growth. Nonetheless, the evidence is limited to security of property rights only with no similar evidence on efficient bureaucracy and strong government. This study also uncovers the channel of the institutional effects on economic growth, i.e. via total factors productivity. This study adds to the literature of East Asian growth, which hitherto, to the best of our knowledge, has seen only two studies, namely Rodrik (1997) Rodrik, D. (1997). TFPG controversies, institutions, and economic performance in East Asia. National Bureau of Economic Research working paper no. 5914. Cambridge, MA: National Bureau of Economic Research.
This is an output from the ‘Politics, Finance and Growth’ Project
Stephen G. Hall & Mahyudin Ahmad (2014) Revisiting the institutions–growth nexus in developing countries: The new evidence, New Zealand Economic Papers, 48:3, 301-312,
Revisiting the institutions-growth nexus in developing countries: The new evidence