Economic Growth: The Role of Policies and Institutions. Panel Data Evidence from OECD Countries

70 Pages Posted: 30 Apr 2001

See all articles by Andrea Bassanini

Andrea Bassanini

Organization for Economic Co-Operation and Development (OECD); IZA Institute of Labor Economics

Stefano Scarpetta

OECD, Directorate for Employment, Labour and Social Affairs; IZA Institute of Labor Economics

Philip Hemmings

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Date Written: January 2001

Abstract

This paper discusses links between policy settings, institutions and economic growth in OECD countries on the basis of cross-country time-series regressions. The econometric approach allows short-term adjustments and convergence speeds to vary across countries, imposing restrictions only on the long-run coefficients. In addition to the 'primary' influences of capital accumulation and skills embodied in the human capital, the results confirm the importance for growth of R&D activity, the macroeconomic environment, trade openness and well developed financial markets. They also confirm that many of the policy influences operate not only 'directly' on growth but also indirectly via the mobilisation of resources for fixed investment. The paper also reports some bivariate correlations between OECD indicators of product regulation and growth. They provide some supporting evidence that the negative impact of stringent regulations and administrative burden on the efficiency of product markets also results in a negative impact on overall economic growth.

Keywords: economic growth, policy and institutions, panel data

JEL Classification: N10, O40, O47

Suggested Citation

Bassanini, Andrea and Scarpetta, Stefano and Hemmings, Philip, Economic Growth: The Role of Policies and Institutions. Panel Data Evidence from OECD Countries (January 2001). Available at SSRN: https://ssrn.com/abstract=265091 or http://dx.doi.org/10.2139/ssrn.265091

Andrea Bassanini (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

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IZA Institute of Labor Economics ( email )

P.O. Box 7240
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Germany

Stefano Scarpetta

OECD, Directorate for Employment, Labour and Social Affairs ( email )

2 rue Andre Pascal
Paris Cedex 16, 75016
France
+33 1 45 24 19 88 (Phone)
+33 1 45 24 18 59 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Philip Hemmings

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France
+33 1 45 24 76 69 (Phone)
+33 1 45 24 18 59 (Fax)

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