The Rise and Decline of Nations: The Dynamic Properties of Institutional Reform

40 Pages Posted: 15 Mar 2017

Date Written: March 13, 2017

Abstract

While it is now well-established in the literature that countries with better policies and institutions, as measured by the Economic Freedom of the World (EFW) index, have better outcomes in terms of prosperity, growth, and measures of human well-being. However, we know little about the process of institutional reform — that is why and how country policies undergo major changes either upward or downward in their levels of economic freedom. This research attempts to provide a systematic overview of this process, by uncovering what the data really show about this transition process. Institutional declines occur more abruptly than institutional improvements, and free trade appears to be a key ‘first mover’ in cases of large institutional change.

Keywords: Economic Freedom, Institutions, Transitional Economies, Policy Reform

JEL Classification: H10, O10, P00

Suggested Citation

Sobel, Russell S., The Rise and Decline of Nations: The Dynamic Properties of Institutional Reform (March 13, 2017). Available at SSRN: https://ssrn.com/abstract=2932385 or http://dx.doi.org/10.2139/ssrn.2932385

Russell S. Sobel (Contact Author)

The Citadel - School of Business ( email )

171 Moultrie St.
Charleston, SC 29409
United States

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