Institutions, Investment, and Growth: New Cross-Country and Panel Data Evidence
John Dawson ()
Economic Inquiry, 1998, vol. 36, issue 4, 603-19
This paper outlines the alternative channels through which institutions affect growth and studies the empirical relationship between institutions, investment, and growth. The empirical results indicate that (1) free-market institutions have a positive effect on growth; (2) economic freedom affects growth through both a direct effect on total factor productivity and an indirect effect on investment; (3) political and civil liberties may stimulate investment; (4) an important interaction exists between freedom and human capital investment; (5) Milton Friedman's conjectures on the relation between political and economic freedom are correct; and (6) promoting economic freedom is an effective policy toward facilitating growth and other types of freedom. Copyright 1998 by Oxford University Press.
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ecinqu:v:36:y:1998:i:4:p:603-19
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