Measuring world governance: revisiting the institutions hypothesis

Mehmet Pinar

Empirical Economics, 2015, vol. 48, issue 2, 747-778

Abstract: We consider the weighting scheme that results in a best-case scenario in the construction of the world governance indicators (WGIs), a proxy of institutional quality. To perform that, we use an approach that relies on consistent tests for stochastic dominance efficiency of a given index with respect to all possible indices constructed from a set of individual components. The test statistics and the estimators are computed using mixed integer programming methods. The results show that the equally weighted (fixed weights) composite WGI index is not the best-case scenario and that governance indicators at different years should be weighted differently. Furthermore, we revisit the institutions hypothesis in the empirical growth literature, where institutional quality is the main determinant of long-term development. We find that not only do institutions matter for economic development but also geography and macroeconomic policies do affect economic development directly. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: World governance indicators; Institutions; Geography; Openness; Nonparametric stochastic dominance; Mixed integer programming; C12; C13; C14; C15; O1; O57 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://hdl.handle.net/10.1007/s00181-013-0796-0 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:empeco:v:48:y:2015:i:2:p:747-778

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-013-0796-0

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().