The formal and informal institutional framework of capital accumulation

Pierre-Guillaume Méon and Khalid Sekkat

Journal of Comparative Economics, 2015, vol. 43, issue 3, 754-771

Abstract: This paper studies the impact of social trust and formal legal institutions on capital accumulation in a panel of countries. The results not only confirm that both social trust and the quality of formal legal institutions have a positive impact on capital accumulation, but also show that they are substitutes. Specifically, the impact on capital accumulation of an upgrade of the quality of formal legal institutions is larger when social trust is low than when social trust is high, and vice versa. These findings apply both to total investment and to its foreign component, foreign direct investment.

Keywords: Investment; Foreign direct investment; Formal legal institutions; Trust (search for similar items in EconPapers)
JEL-codes: E02 E22 F21 O11 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Journal Article: The formal and informal institutional framework of capital accumulation (2015)
Working Paper: The formal and informal institutional framework of capital accumulation (2015)
Working Paper: The formal and informal institutional framework of capital accumulation (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:43:y:2015:i:3:p:754-771

DOI: 10.1016/j.jce.2014.07.001

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