Authors
Usman Khalid
Publication date
2016
Issue
16/04
Publisher
CREDIT Research Paper
Description
There is a growing consensus among economists and policy makers that institutions matter for economic development and that institutional reforms should be a priority for developing economies. Considering the emphasis on institutional reforms, this study asks whether a catch-up in institutional quality has occurred across countries. The study uses data on 81 countries from 1985 to 2010 and tests the catch-up hypothesis using three different measures of institutional quality that capture both political and economic dimensions of institutions. The results indicate that a catch-up in economic institutional quality has occurred and that most countries with weak economic institutions have a higher rate of change than that of countries with strong economic institutions. In contrast, for political institutions, the catch-up process lasts only a few years.
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