The role of institutions in economic development

Rasha Hashim Osman, Constantinos Alexiou and Persefoni Tsaliki

International Journal of Social Economics, 2012, vol. 39, issue 1/2, 142-160

Abstract: Purpose - The purpose of this paper is to explore the alleged link between institutional quality and economic performance in 27 Sub‐Saharan Africa (SSA) countries during the period 1984‐2003. Design/methodology/approach - Four institutions' quality indicators, namely government stability, corruption, ethnic tensions and socioeconomic conditions, along with other control and policy variables, are employed in a panel data analysis. Findings - The institutional variables assume a key role in the process of economic development whereas the control variables display a limited effect. Thus, the “conventional variables” of economic theory may not be able to fully explain the SSA experience. Research limitations/implications - Future research efforts should explore how the vast changes experienced by the countries in that region influenced their economic evolution during the last decades. Practical implications - Policy makers should primarily focus on improving institutional quality, which is likely to positively affect economic performance in SSA countries. Social implications - Improving institutional infrastructure (enhancing rule of law and quality regulation, improving contract enforcement, securing property rights and reducing uncertainty) play a key role in delivering long‐run economic development and social prosperity. Originality/value - The paper analyzes the impact of institutional quality on economic performance using data from 27 SSA countries.

Keywords: Sub Saharan Africa; National economy; Economic performance; Economic development; Institutional quality; Panel data (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijsepp:v:39:y:2012:i:1/2:p:142-160

DOI: 10.1108/03068291211188910

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