Abstract
The main unsolved issue in the qualitative research of the new institutional economics in the area of the institutional impact on economic growth is how productive institutions occur, i.e., which variables explicitly stand behind the institutional infrastructure impact on economic growth. The research presents the postulates of the new institutional economics, claiming a connection between the institutional structure and the movement of economic growth. Furthermore, the impact of institutional quality on economic growth was analyzed on examples of individual national economies. The comparative method of the assessment based on six criteria: voice and accountability, political stability, government effectiveness, regulatory quality, the rule of law and control of corruption, and the comparison of the GDP per capita of the same as one of the most significant economic indicators, tested the primary hypothesis (H1) in this work: institutions are the fundamental determinant of the long-term success in economy, and the importance of government effectiveness is seen through economic growth, especially long-term growth. The conducted research showed a high level of correlation between institutions' success and the gross domestic product with indications of equal returns per ratio and the fact that the advancement of institutional quality, indirectly through GDP, can lead to the growth of the relative significance of economies.
Highlights
The effect of institutions, their “quality” and capacity on the level of economic growth is the research object of institutional economics, and in the last twenty years of the “new” institutional economics as well, and the theoretical postulates and cognitions which rose from the theoretical and empirical research of the same will be presented and analyzed
The comparative method of the assessment based on six criteria: voice and accountability, political stability, government effectiveness, regulatory quality, the rule of law and control of corruption, and the comparison of the GDP per capita of the same as one of the most significant economic indicators, tested the primary hypothesis (H1) in this work: institutions are the fundamental determinant of the long-term success in economy, and the importance of government effectiveness is seen through economic growth, especially long-term growth
According to the indicators of government effectiveness published by the World Bank by which the comparative representation of all countries in the world can be obtained, a comparative graphic representation was created in line with the indicators of public administration quality by the World Bank for Austria, Bosnia and Herzegovina, Croatia, France and Poland from 2008 to 2018
Summary
The effect of institutions, their “quality” and capacity on the level of economic growth is the research object of institutional economics, and in the last twenty years of the “new” institutional economics as well, and the theoretical postulates and cognitions which rose from the theoretical and empirical research of the same will be presented and analyzed. The comparative method of the assessment of government effectiveness based on six criteria: voice and accountability, political stability, government effectiveness, regulatory quality, the rule of law and control of corruption, and the comparison of the GDP per capita of the same as one of the most significant economic indicators, tested the primary hypothesis (H1) in this work: institutions are the fundamental determinant of the long-term success in economy, and the importance of government effectiveness is seen through economic growth, especially long-term growth. Regulatory quality is essential as an institutional factor for competitiveness but not that determinant as government effectiveness and political stability. We can see financial crisis (and financial cycles) significantly negatively impact a country's level of competitiveness
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