Institutions, Innovation and Economic Growth (original) (raw)
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Institutions as the Main Determinant in Economic Growth
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The studies on human capital and technological progress have given incredible insights on how countries in the world differ from one another. Yet there are more than those two reasons to account for differences among countries. There is a third reason why a country would differ in terms of its economic development progress, namely institutional factors. Hence developing institutional indices would give a deeper explanation than a mere theory. On the other hand, we can corroborate the institutional index with the general theory that low-quality institutions will impact an economy negatively. This study seeks to broaden the understanding of causes of economic growth by incorporating institutional index into a semi-endogenous growth model and finds a relationship between that index with human capital and technological progress
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This paper looks at the link between the quality of economic institutions and innovation, and innovation and growth. We construct a measure of the innovation content of individual manufacturing industries and show that countries with stronger economic institutions specialise in more innovationintensive industries. Our results also provide evidence that industries involving higher levels of innovation grow relatively faster in countries with better economic institutions. The results suggest that innovation is an important channel through which higher-quality economic institutions contribute to better growth performance in the long run.
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This paper contributes to the debate on the relationship between human capital, institutions, and economic growth. The paper first develops a micro-foundation model linking institutions to human capital. The advantage of our modeling strategy is that the human capital accumulation function is derived from an endogenous process. The theoretical model shows that improvements in the quality of institutions foster human capital accumulation, decrease income inequality and change the historical development path. The paper uses cross-country panel data from 1965 to 2005 to test some of the model's propositions and finds that deep structures or structural institutions -which are very persistent and rooted on the historical development path of an economy -affect long-term economic performance, while political institutions are uncorrelated with productivity and long-term economic growth. The empirical estimates also show that growth of physical and human capital -instead of levels -determines long-run economic growth.
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This paper argues that technological advance is a necessary condition for sustained economic growth. Technologies and institutions co-evolve in a system of mutual causation. Although some institutions inhibit growth while others encourage it, no single institution is either necessary or sufficient to produce sustained growth. However, some non-unique bundle of encouraging institutions is necessary. Sustained growth began with the Industrial Revolutions that did not just 'fall out of the blue' but were instead the culmination of three trajectories of technological advance in steam power, electric power, and the mechanization of textile manufacturing. These stretched over several centuries. Growth then became sustained when the West 'invented how to invent'. A necessary condition for the Industrial Revolutions was Western science whose roots lie as far back as the scholastic philosophers and the medieval universities. Its absence elsewhere is a sufficient reason why no other place developed its own indigenous industrial revolution.
Do Institutions Impact Innovation?
This paper contributes to the literature on institutions and economic growth by conducting an empirical examination on the links between innovation and institutions. Using cross-country data and the instrumental variable method, this study finds that institutional arrangements explain much of the variation on patent production across countries. We find evidence that control of corruption, market-friendly policies, protection of property rights and a more effective judiciary system boost an economy’s rate of innovation. Most of the previous literature on institutional and economic performance finds a positive association between institutions and levels of income and between institutions and the transitional growth rates of per capita income; however an unambiguous empirical association between institutions and the steady state growth has not yet been established. Based on the theoretical model developed by Tebaldi and Elmslie (2006), which shows that the impacts of institutions on in...
Institutions, Humain capital ,Productivity and economic growth
This paper aims to study the effect of institutional factors on the economic growth of 37 developed and developing countries1during six consecutive five-yearly periodsstarting from 1975 up until 2000, through the use of a dynamic panel data model.The second part of this paper involves an empirical study of the effect that institutions have on the contribution of human capitalto economic growth. The main statements issued from these two empirical tests stipulate a positive interaction between the economic institutions and the country’s human capital within the total sample, a positive interaction between the political rights and the developed countries’ human capital, and the absence of any institutional impact on the economic growth for the three samples.
Institutions, Innovation and Economic Growth Patterns in East Asia: Learning Curves for Sub-Saharan Africa, 2019
ABSTRACT The study is an investigation into the roles of institutions and innovation in the economic progressiveness of Newly Industrializing Countries (NIEs) of East Asia, and the inherent lessons for the development of poor nations, especially in Sub-Saharan Africa. This is primarily germane given the historical and economic similarities that characterize these regions, and the quest to evolve development models relevant for African economic development. The study adopted a descriptive and theoretical stance in its analysis. Evidence from empirical and theoretical literature, as well as trend analysis of secondary data point to technological advancement and effectiveness of institutionsas the major drivers of economic development in East Asia. Others include innovation, manufacturing performance, etc. The study therefore recommends funding of Research and Development (R&D) in order to boost innovation and local technological capacities, prioritizing education at all levels and periodic review of education curricula to reflect technical competencies especially in primary and secondary schools. Also, the study strongly recommends the development and implementation of unconventional growth models in poor nations of the world taking into consideration country characteristics and structural differences. Keywords: Institutions, Innovation, Economic Growth, East Asia, Sub-Saharan Africa
Institutions and Economic Growth
The objective of this paper is to study the effect of institutional factors on economic growth of a set of 37 developed and developing countries for six successive periods of five years, from 1975 until 2000, using a static panel data model. The key findings generated by this empirical test stipulate a dominant effect exerted by economic institutions on economic growth of the total sample of countries and developed countries.