Institutions, Ratings and Economic Growth: In Search of Reliable Indicators

21 Pages Posted: 18 Jan 2014

See all articles by Rinat Menyashev

Rinat Menyashev

National Research University Higher School of Economics

Timur Natkhov

National Research University Higher School of Economics

Konstantin Yanovskiy

Gaidar Institute for Economic Policy

Multiple version iconThere are 2 versions of this paper

Date Written: December 31, 2013

Abstract

The ratings of political institutions are well-known and widely used in academic literature. These ratings are mostly based on expert evaluations. However, such evaluations can be subjective and occasionally driven by ideological considerations. In this paper we propose two new indicators of institutional quality for 154 countries. These indicators are constructed in a way that minimizes the subjectivity of the evaluations. Only the presence or absence of a particular institutional phenomenon is identified. This puts much less weight on possible bias and makes easy to verify. We show that these indices predict economic growth better than those commonly used, primarily because they include information about institutions that has been accumulated over a period of approximately two centuries.

Keywords: Rule of Law, Democracy, Limited Government, Institutions, Indicators, Economic growth

JEL Classification: P50, N40, O43

Suggested Citation

Menyashev, Rinat and Natkhov, Timur and Yanovskiy, Konstantin, Institutions, Ratings and Economic Growth: In Search of Reliable Indicators (December 31, 2013). Higher School of Economics Research Paper No. WP BRP 47/EC/2013 . Available at SSRN: https://ssrn.com/abstract=2380573 or http://dx.doi.org/10.2139/ssrn.2380573

Rinat Menyashev

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Timur Natkhov (Contact Author)

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Konstantin Yanovskiy

Gaidar Institute for Economic Policy ( email )

Gazetny pereulok, 3-5
Moscow, 125993
Russia

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