Institutions, ratings and economic growth: in search of reliable indicators

Rinat Menyashev (), Timur Natkhov () and Konstantin Yanovskiy
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Rinat Menyashev: National Research University Higher School of Economics
Timur Natkhov: National Research University Higher School of Economics

HSE Working papers from National Research University Higher School of Economics

Abstract: The ratings of political institutions are well-known and widely used in academic literature. These ratings are mostly based on expert evaluations. However, such evaluations can be subjective and occasionally driven by ideological considerations. In this paper we propose two new indicators of institutional quality for 154 countries. These indicators are constructed in a way that minimizes the subjectivity of the evaluations. Only the presence or absence of a particular institutional phenomenon is identified. This puts much less weight on possible bias and makes easy to verify. We show that these indices predict economic growth better than those commonly used, primarily because they include information about institutions that has been accumulated over a period of approximately two centuries

Keywords: Rule of Law; Democracy; Limited Government; Institutions; Indicators; Economic growth (search for similar items in EconPapers)
JEL-codes: N40 O43 P50 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2013
New Economics Papers: this item is included in nep-gro
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Published in WP BRP Series: Economics / EC, December 2013, pages 1-21

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Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:47/ec/2013

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