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THE IMPACT OF THE INSTITUTIONAL ENVIRONMENT ON THE ECONOMIC DEVELOPMENT

Ekonomika

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Title THE IMPACT OF THE INSTITUTIONAL ENVIRONMENT ON THE ECONOMIC DEVELOPMENT
 
Creator Jankauskas, Vidmantas
Šeputienė, Janina
 
Description Economic literature recognizes three “deep determinants” of economic development: institutions, geography and openness to trade. Discussion in the literature focuses on what part of the income per capita variation can be explained by institutions, geography and openness to trade. The empirical results can’t offer a clear answer, but there is a broader agreement in the literature that institutions play a more important role than geography and openness to trade. What is unclear whether the institutions also can explain variation in per capita income across countries, in which institutional environment is to some degree similar..This article aims to explore and quantify the relationship of the income level with institutional environment, geography and openness to trade across countries, grouped according their institutional environment quality.The results reveal that extent to which the variation in GDP per capita can be associated with the quality of institutional environment differs a lot between good and bad institutional environment samples. The results in good institutional environment sample come in line with series of studies in which the strong and positive link between various measures of institutions and economic development was established and support primacy of institutions over openness to trade and geography. I In bad institutional environment sample, on the contrary,no evidence was found that institutions mean a lot in respect of differences in GDP per capita. These results should not be interpreted so as to mean that institutional environment is not important, rather the degree of “badness” makes no difference.
 
Publisher Vilniaus universiteto Ekonomikos fakultetas / Vilnius University Faculty of Economics
 
Date 2009-01-01
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.zurnalai.vu.lt/ekonomika/article/view/1040
10.15388/Ekon.2009.0.1040
 
Source Ekonomika; Ekonomika 2009 87
1392-1258
1392-1258
 
Language lit
 
Relation http://www.zurnalai.vu.lt/ekonomika/article/view/1040/529
 
Rights Autorinės teisės (c) 2014 Ekonomika