Culture, Institutions and Economic Growth

Marion Payen and Patrick Rondé

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: Are formal and informal institutions complementary or substitutable ? In this article, we argue that formal and informal institutions have a complementary relationship rather than a substitutable one. We study the possible complementarity between formal institutions, measured by Institutional Profiles Database (IPD), and informal institutions, measured by the World Value Survey (WVS), by including both into a growth model. Our main result shows that the interaction effect between informal and formal institutions in a country positively impacts growth, which support the hypothesis of a complementary between both of them.

Keywords: economic growth; formal institutions; informal institutions. (search for similar items in EconPapers)
JEL-codes: O11 O43 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-gro and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2020-18

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