Measuring Mancur Olson: What is the Influence of Culture, Institutions and Policies on Economic Development?

Tomáš Evan and Ilya Bolotov

Prague Economic Papers, 2021, vol. 2021, issue 3, 290-315

Abstract: Mancur Olson wrote his influential study Big Bills Left on the Sidewalk: Why Some Countries are Rich, and Others Poor in 1996. In his paper, Olson claimed that the differ-ences in economic development between countries are caused by only two factors: institutions and policies on the one hand and culture on the other. We attempt to test his conjecture using econometric modelling, combining and comparing it with a broadly defined orthodox production function in an indirect neoclassical notation (Solow-Minhas-Arrow-Chenery's SMAC framework). The "pseudo-production function" obtained is econometrically sound and of explanatory power similar to models including economic variables, although we find strong evidence of interdependence between capital-labour share and institutions and policies and culture. We consider the test, performed on panel data from 154 countries over five-year averages from 1980-2014, to be robust and consistent with Olson's ideas.

Keywords: Economic development; Olson' conjecture; institutions and policies; cultural values; Hofstede cultural frameworks; panel data (search for similar items in EconPapers)
JEL-codes: C23 H50 O15 O38 O43 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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DOI: 10.18267/j.pep.770

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