Institutions and the Impact of Investment on Growth
Randall Holcombe and
Robert A . Lawson
Kyklos, 2006, vol. 59, issue 2, 255-273
The literature on institutions and economic growth shows a close relationship between the quality of institutions and prosperity. This paper examines the impact of institutions on investment, and the resulting impact of investment on growth. The private investment rate of countries with better institutional quality is higher, and the productivity of any given level of investment is greater in countries with better institutions. Models that include various indicators of institutional quality along with inputs such as physical and human capital will generally underestimate the impact of institutional quality on growth because they do not account for the indirect impact of institutions on investment, as is done here. The paper also examines the direction of causality to show that higher institutional quality causes more investment, rather than the other way around. Further, future institutional improvements are more likely to occur against a background of poor economic performance than one of sustained growth. Copyright 2006 Blackwell Publishing Ltd..
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (84) Track citations by RSS feed
Downloads: (external link)
http://www.blackwell-synergy.com/links/doi/10.1111/j.1467-6435.2006.00327.x link to full text (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:kyklos:v:59:y:2006:i:2:p:255-273
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0023-5962
Access Statistics for this article
Kyklos is currently edited by Rene L. Frey
More articles in Kyklos from Wiley Blackwell
Series data maintained by Wiley-Blackwell Digital Licensing ().