Do Institutions Cause Growth?

53 Pages Posted: 16 Jun 2004

See all articles by Edward L. Glaeser

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Rafael La Porta

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Florencio Lopez de Silanes

SKEMA Business School; National Bureau of Economic Research (NBER)

Andrei Shleifer

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2004

Abstract

We revisit the debate over whether political institutions cause economic growth, or whether, alternatively, growth and human capital accumulation lead to institutional improvement. We find that most indicators of institutional quality used to establish the proposition that institutions cause growth are constructed to be conceptually unsuitable for that purpose. We also find that some of the instrumental variable techniques used in the literature are flawed. Basic OLS results, as well as a variety of additional evidence, suggest that a) human capital is a more basic source of growth than are the institutions, b) poor countries get out of poverty through good policies, often pursued by dictators, and c) subsequently improve their political institutions.

Keywords: Institutions, growth, human capital

JEL Classification: O11, O40

Suggested Citation

Glaeser, Edward L. and La Porta, Rafael and Lopez de Silanes, Florencio and Shleifer, Andrei, Do Institutions Cause Growth? (June 2004). Available at SSRN: https://ssrn.com/abstract=556370 or http://dx.doi.org/10.2139/ssrn.556370

Edward L. Glaeser

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Rafael La Porta

Dartmouth College - Tuck School of Business ( email )

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National Bureau of Economic Research (NBER)

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Florencio Lopez de Silanes

SKEMA Business School ( email )

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National Bureau of Economic Research (NBER)

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Andrei Shleifer (Contact Author)

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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European Corporate Governance Institute (ECGI)

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