Indicators Of Institutional Quality Research Articles

The importance of selected structural competitiveness indicators for exports : a comparative analysis between the euro area and Greece

Structural (non-price) competitiveness departs from price or cost competitiveness and captures a multitude of dimensions, both quantitative and qualitative, affecting the trade and openness of a country. Greece over time has lagged behind in key structural competitiveness indicators relative to other euro area countries, but has improved its position in some of the indicators in the recent years, in terms of relative prices and unit labour costs. The paper examines the evolution of selected price and structural competitiveness indicators approximated with institutional quality indicators (published by international organisations), recording the performance of Greece and euro area countries over the last decade, on an annual basis, in order to gain more insight into how exports are affected. A panel regression of an export demand function is estimated for the 19 euro area member countries, separately for each of the selected indicators. It is confirmed that structural competitiveness, along with price competitiveness, has played an important role in determining exports in the euro area and in Greece over the 2007-19 period. Greater sensitivity of Greek exports to institutional quality indicators is found, compared with average euro area exports. This is an indication of the faster pace of reform implementation in other euro area countries, while the reforms in Greece are in a process of catching up. The implementation of structural reforms in the direction of improving institutional deficiencies has contributed, among other factors, to the observed post-crisis export-led growth in Greece. In conclusion, the pace of reforms already under way should be accelerated and this will be mirrored in the structural competitiveness indicators of the country and expressed as better scores and higher rankings converging towards the performance of the other euro area countries.

China’s outward FDI and environmental sustainability in belt and road countries: does the quality of institutions matter?

This study aims to unravel the environmental effects of institutional quality in relationship with China’s Foreign Direct Investment (FDI) in Belt and Road Initiative (BRI) countries. The empirical analysis is conducted over the period 2003–2018, using the System-GMM approach with the Windmeijer finite-sample correction. We infer that China’s FDI has a detrimental effect on environmental quality, which validates the ‘pollution haven hypothesis’ in the BRI region. Importantly, the interaction effect of China’s FDI with indicators of institutional quality yields negative and significant results. This entails that strong institutions can boost the quality of the environment through FDI attractiveness. In further assessment, the threshold levels of institutional quality are calculated, beyond which China’s FDI can reduce carbon emissions in the BRI region. This substantiates both the pollution haven and pollution halo hypotheses. The study underscores the importance of institutional reform in the quest for sustainable development, owing to the fact that most economies prioritize FDI-led growth strategies.

Exploring the linkage between tourism, governance quality, and poverty reduction in Latin America

It has been of great concern for policymakers and government officials to increase the economic trajectory of living standards. Tourism development over the years is outlined in the extant literature as an alternative pathway to sustainable development. However, there has been no consensus on the combined impact of institutional quality and key macroeconomic indicators and how they moderate tourism development and eradicate poverty. Thus, there is a need to eradicate extreme poverty and achieve Sustainable Development Goals (SDGs) by the end of 2030 to remain focused on areas for policymakers and researchers. To achieve this goal, this study examines the moderating effect of governance quality on the relationship between tourism and poverty alleviation using a panel of 15 Latin American countries over the period 2003–2015 using fixed effect (FE) as an estimation technique. For soundness of analysis, we applied the Panel Corrected Standard Errors (PCSE) model estimation, the two-system generalized method of moment (GMM) model estimation in this study. Our findings show that governance quality contributes to poverty reduction, while tourism development exacerbates poverty. Interestingly, the results reveal that tourism and governance quality have complementary impacts in alleviating poverty. Further, policy prescriptions are outlined in the concluding section.

Institutional Quality, Governance and Progress towards the SDGs

Whether institutional quality and governance help or hinder progress towards the 17 Sustainable Development Goals (SDGs) of UN Agenda 2030 is an important issue to consider. These fundamental social structures are generally under-represented among the SDGs, but institutional quality and governance often have an important role in supporting or constraining efforts to achieve sustainable development. We compare estimates of the changes in net welfare that reflect progress towards the 17 SDGs over 2000–2018 with two institutional quality and governance indicators over the same period. We do this at the world level, for the group of low-income countries and for nine representative developing countries. We utilize the Worldwide Governance Indicators and OECD’s Country Risk Classification as our two institutional quality and governance measures. We find that SDG welfare gains are somewhat correlated with institutional quality and highly correlated with lower country risk. These results suggest that good governance and institutional effectiveness are associated with long-run development and sustainability success. Long-term progress towards the SDGs may hinge on improved institutional quality and reduced country risk.

Institutional Quality and Tourism: Panel Causality Analysis in the Case of Mediterranean Countries

Using panel data methods this study examines the relationship between institutional quality and tourism in the case of 12 Mediterranean countries. Six indexes of the Worldwide Governance Indicators database and a general index calculated as their average were taken into consideration as institutional quality indicators. International tourism receipts per tourist and international tourism receipts as a percentage of export were used as tourism performance indicators. In analysis, the cross-sectional dependence was examined by Pesaran (2004) CD test and in accordance with the findings of this test, first and second-generation panel unit root tests were applied. Taking into consideration of the stationarity of the variables and non-homogeneity of the parameters, the relationship between institutional quality and international tourism revenues was examined by Dumitrescu and Hurlin (2012) heterogeneous panel causality test. Findings of the causality analysis strongly supported the causality toward international tourism receipts per tourist from institutional quality variables. Causality to the international tourism receipts as a percentage of export was supported for some of the institutional quality variables.

Fostering Labour Productivity Growth for Productive and Decent Job Creation in Sub-Saharan African Countries: the Role of Institutional Quality

The majority of jobs created in Africa are informal, low-paying jobs that do not allow employees to live decently. An improvement in labour productivity will contribute to the creation of productive and decent jobs. The objective of this work is to study the effect of institutional quality on labour productivity in sub-Saharan Africa (SSA). To do this, we consider a panel of 31 countries over the period from 1996 to 2016. Thus, we construct an empirical model based on the stochastic frontier production function developed by Battese and Coelli (1995), to which we apply panel estimation techniques (static and dynamic), particularly with system generalized method of moments (System-GMM) and within estimators. Our results show that institutional quality indicators have a positive and significant influence on labour productivity. Political stability, government effectiveness and the rule of law are the indicators that contribute most to increasing labour productivity in sub-Saharan Africa. A series of robustness tests are performed to confirm our results. Specific indicators that contribute to labour productivity growth in sub-Saharan Africa are identified for the different sectors of the economy (agriculture, industry, services). These results enable us to identify several policy implications relevant to African decision-makers in order to create productive and decent jobs, especially for young people.

Adherence to French and ESGO Quality Indicators in Ovarian Cancer Surgery: An Ad-Hoc Analysis from the Prospective Multicentric CURSOC Study.

Simple SummaryFrench and European Quality Indicators have been developed for the management of ovarian cancer. In this study, we aimed to assess the ovarian cancer care distribution in France according to the volume of patients treated per hospital, and to evaluate the adherence of different centers to the quality indicators. We found that the majority of ovarian cancer patients were treated in hospitals that did not reach recommended cut-off values in terms of volume, and it is known that surgical care in low-volume hospitals is associated with worse outcome. Only 44% of high-volume centers met all the quality indicator criteria. Therefore, access to high-volume ovarian cancer providers accomplishing all the recommended institutional quality indicators is restricted to a minority of patients in France. It is mandatory that national authorities work both to improve the centralization of ovarian cancer management and to incorporate quality assurance programs into certified centers.Background: Quality Indicators for ovarian cancer (OC) have been developed by the European Society of Gynaecological Oncology (ESGO) and by the French National Cancer Institute (Institut National du Cancer, INCa). The aim of the study was to characterize OC care distribution in France by case-volume and to prospectively evaluate the adherence of high-volume institutions to INCa/ESGO quality indicators. Methods: The cost-utility of radical surgery in ovarian cancer (CURSOC) trial is a prospective, multicenter, comparative and non-randomized study that includes patients with stage IIIC-IV epithelial OC treated in nine French health care tertiary institutions. Adherence to institutional quality indicators were anonymously assessed by an independent committee. OC care distribution in France were provided by the nationwide database of hospital procedures. Results: More than half of patients are treated in low-volume institutions. Among the nine high-volume centers participating in the study, four (44.4%) met all institutional INCa/ESGO quality indicators. The other five (55.6%) did not fulfil one of the quality indicator criteria. Conclusions: Access to high-volume OC providers in France is restricted to a minority of patients, and yet half of the referral institutions included in this study failed to meet all recommended institutional quality indicators. It is mandatory that national authorities work both to improve OC centralization and to incorporate quality assurance programs into certified centers.

Deciphering African Financial Development Interaction With Institutional Quality And Economic Growth Nexus

The paper scrutinized the correlation between financial development interaction with institutional quality and economic growth in Africa. The study adopted 30 different interactions. The study used the Augmented mean group estimation technique to estimate the model. Gross domestic savings/GDP and broad money/GDP positively influenced growth with the majority of interactions with institutional quality indicators. Credit to Private Sector/GDP interaction with Voice & Accountability; and Political Stability has a higher impact on growth than any interaction variable. However, government effectiveness, regulatory quality, and corruption control are weak in Africa; even if interacted with financial development indicators, it mostly reduces economic growth. This study recommends that governments in Africa strengthen financial development indicators; Bank Deposit/GDP, Gross Domestic Savings/GDP and Credit to private sector/GDP, and institutional quality indicator political stability & absence of violence since their interaction has proven to aid rapid economic growth.JEL Classification: E17, F62, F63How to Cite:Nketia, E. B., & Kong, Y. (2021). Decipheting African Financial Development Interaction with Institutional Quality and Economic Growth Nexus. Etikonomi: Jurnal Ekonomi, 20(1), 23 – 44. https://doi.org/10.15408/etk.v20i1.16177.

Does higher Institutional Quality improve the Appropriateness of Healthcare Provision?

We study the effect of institutional quality on the appropriateness of healthcare provision in Italian hospitals. We focus on cesarean section rates for first-time mothers, which is a common indicator of appropriateness in healthcare and is vulnerable to providers’ opportunistic behaviors. To identify the causal effect of institutional quality we rely on an IV strategy based on historical instruments, exploiting the idea that current differences in institutional quality across regions have been shaped by different cultural and political histories. We find that a standard deviation increase in our indicator of institutional quality leads to a decrease of about 10 percentage points in cesarean section rates. Our results are robust to different measures of institutional quality and samples.

Foreign investment and CO2 emissions: do technological innovation and institutional quality matter? Evidence from system GMM approach.

The study examines the moderating role of institutional quality and technological innovation on the empirical relationship between FDI inflows and four indicator variables of CO2emissions in 40 Asian countries for the period 1996-2016, by using generalized method of moment (GMM) estimation. First, from non-interactive regression, FDI inflows have positive impacts on CO2emissions; over all, from our empirical results, we conclude that the moderating role of institutional quality and technological innovation is crucial in the nexus between FDI and carbon CO2emissions and the interaction between institutional quality indicators and FDI inflows significantly reduce the level of CO2emissions. Furthermore, the significant moderating effect of technological innovation is observed on the association between FDI and CO2 emissions. The results are important for policy makers in setting up long- and short-term policy to protect environmental quality.

Традиционные ценности и качество институтов

Why do similar economic and political institutions function differently in various cultures? This paper tries to identify potentially important factors related to the institutional quality. We investigate the relationship between cultures, cultural dimensions: non-tradition in particular, and formal institutions to explain differences in the quality of institutions around the world. We use a measure of traditional values, structured by Inglehart and Baker, from the World Values Survey, to extend the literature on the determinants of institutions’ quality. We show that differences in traditional values are suggestive to explain differences in the quality of institutions across countries. The OLS method is utilized in order to analyze the factors of institutional quality in sixty countries in 2010–2014. In this study, the OLS models are employed in order to understand the key factors of institutional differences among countries in the period of 2010–2014. The empirical model results show that (i) non-tradition is a reliable significant variable with positive contributions on six institutional quality variables, (ii) urbanization has unexpected negative effects on some institutional quality indicators like rule of law, political stability and voice/accountability. However, it has meaningful contribution to control of corruption in the countries, (iii) economic development have increasing impacts on the majority of the institutional quality variables, (iv) while education has positive effects on government effectiveness, political stability and regulation quality, it has negative unexpected impacts on rule of law and voice/accountability, (v) openness has only effects on corruption and political stability, (vi) there are non-linear relationships between dependent variable(s) and independent variables rather than linear relationships

Institutional quality, macroeconomic factors and stock market volatility: A cross-country analysis for pre, during and post global financial crisis

This paper investigates how stock market volatility of Ten (10) developed and Seven (7) emerging economies were affected by the institutional quality and macroeconomic factors using data from 2001 to 2012. Applying the standard historical volatility model adopted by Jones et al. (1998) and Andersen and Bollerslev (1998) we find that stock market of the sample countries was volatile during the Global Financial Crisis (GFC) and these effects were statistically significant for the sample emerging countries as well as developed country groups. There is evidence that the sample emerging stock markets exhibited higher stock return volatility than developed stock markets during the observation period. We also find that stock return time-series variables were not stationary over the study period at 1 per cent difference. The study uses the fixed-effects approach to determine the institutional quality and macroeconomic factors that impacted higher stock market volatility for the sample emerging and developed country group. Aligned with institutional theory, we also document that several institutional quality country-level governance indicators and macroeconomic variables are statistically correlated with the stock market volatility during the observation period. For example, we find evidence that some institutional quality and macroeconomic indicators such as rule of law, and credit information have a significantly negative effect on stock market volatility, while other macroeconomic variables such as carbon dioxide (Co2) emission, tax revenue, and board money have a significant positive association with stock market volatility. These findings suggest that our sample markets were volatile not only because of the other macroeconomic factors but also for institutional quality factors. The robustness test also produces similar results with little variation. The findings of this investigation have several policy implications. First, there is evidence that stock markets of the developed and emerging countries were volatile during the GFC and the rule of law appears to be the dominant factor in deterring the stock market volatility. Further, several macroeconomic and fiscal factors, including Co2 emission, tax revenue and board money may seem to be a potential barrier for international investment and portfolio diversification. Therefore, an international investor needs to be careful on portfolio diversification while investing in a poorly structured economy.

A Tullock Index for Assessing the Efficiency of Redistribution

I propose two alternative versions of a for assessing the efficiency of redistribution. In the spirit of the Atkinson (1970) inequality index, the Tullock Index is constructed with reference to either (A) the maximum inequality reduction attainable with current transfer spending, or (B) the minimum transfer spending necessary to achieve current post-transfer inequality. Deviations from either of these ideals represent inefficiencies in the transfer system, insofar as its purported justification is an egalitarian one. Using Current Population Survey (CPS) microdata from 1988 to 2014, I construct annual estimates of the Tullock Index at the national level for the United States. The Tullock Index is increasing over this period, suggesting the pattern of redistribution has become less efficient. State-level panel fixed-effects estimates show that redistributional inefficiency is related to higher state-level poverty rates, lower employment-to-population ratios, and lower levels of overall employment. Finally, comparisons of the Tullock Index to other state-level indicators of institutional quality suggest that the efficiency of redistribution responds to changes in the quality of local governance.

Nonlinear Threshold Effects of Institutional Quality on Capital Flight

Over the years, capital flight is a major concern for the countries where institutional quality is severely deficient. Almost all the literature emphasized the role of institutional quality on development. However, a possible question still remains unsettled what would be the optimum or threshold level of institutional quality that would create a milieu of least possible capital flight. The purpose of this study is to find the threshold value of institutional quality indicators and its impact on the capital flight of Bangladesh. Using the ICRG and WGI governance data over the period 1989 to 2016, the nonlinear regression proved that up to certain threshold level of institutional quality, interest rate differential reduces while economic growth stimulates net capital flight (NCF) of Bangladesh. Additionally, up to a certain threshold, level of corruption and interest rate differential lower NCF while beyond that level no effect exists. However, none of those independent variables affects NCF whenever the role of government stability threshold is considered.

A Few Implications of the COVID‐19 Pandemic for International Business Strategy Research

A Few Implications of the COVID‐19 Pandemic for International Business Strategy Research

Drivers of income inequality in Africa: Does institutional quality matter?

AbstractThis paper examines the role institutional quality plays amongst the empirical drivers of income inequality in Africa. Using a dynamic two‐step difference GMM with robust standard errors over the period 1990–2017, we find no statistically significant effect of institutions in general, on income inequality. However, we find that institutional quality indicators such as control of corruption and the strict enforcement of the rule of law significantly reduce income inequality. We also find no statistically significant effects of the other institutional quality indicators such as government effectiveness, voice and accountability, regulatory quality and political stability on income inequality in our sample. We suggest that more premium be placed on corruption control and the stringent adherence to the rule of law in ensuring equitable distribution of income in Africa. Furthermore, we re‐echo suggestions that promote institutional development in Africa as institutions in general remain very weak.

The Impacts of Economic Freedom and Institutional Quality on Migration from African Countries

AbstractThe previous empirical literature suggests that socio‐economic conditions and demographic pressures are triggering factors of migration from Africa. We propose that economic freedom and institutional quality indicators of African countries are also important determinants of out‐migration from Africa. Hence, we investigate the effect of economic freedom and institutional quality on migration flow from 44 African countries to major migration destination countries. Aggregate indicators are derived for the quality of institutions and economic freedom using principal component analysis. Controlling for source and destination countries' income levels, population size, cultural, historical and physical distance, our findings provide evidence that migration flow from Africa is significantly determined by the institutional quality and economic freedom indicators in African countries. Our results are strongly robust to different econometric techniques used to control for sample selection bias, zero‐valued observations and endogeneity concern. Hence, improving institutional quality and maintaining economic freedom in African countries matters significantly to control out‐migration from Africa.

GELİŞMEKTE OLAN ÜLKELERDE KURUMLAR VE EKONOMİK BÜYÜME: DİNAMİK PANEL VERİ ANALİZİ

There is an increasing emphasis on the role of institutions in explaining the economic growth of DLC. However, there is no consensus on which institutions and governance indicators are essential for growth. This study aims to examine the effects of institutions on economic growth in DLC empirically. In this study, for the 62 Developing countries are examined and analyzed by the GMM in the 2002-2017 periods. Data obtained from the World Bank. Among the institutional quality indicators, regulatory quality seems to be an essential factor. Political stability and absence of violence, on the contrary, affect economic growth negatively and significantly in DLC. The findings of the study show that institutions are important in economic growth. Therefore, for stable and permanent growth, DLC should give priority to institutional strengthening policies.

The Lucas Paradox and Institutional Quality: Evidence from Emerging Markets

The neoclassical theory illustrates that the capital will flow from the capital-rich economies towards the capital-poor states. However, it is generally observed that the capital does not move from high-income to low-income economies. This contradictory behavior of global capital flows is called the Lucas paradox. According to Alfaro, Kalemli-Ozcan, & Volosovych (AKV) model, the Lucas paradox can be entirely explained by the institutional quality. In the light of AKV notion, this paper examines the role of institutional quality in explaining the Lucas paradox. The empirical analysis involves 17 major emerging economies of the world by using panel data for the period 1999-2018. The GMM estimation reveals that the Lucas paradox is explained by the institutional quality in case of FDI flows only. However, institutional quality indicators generally remain unable to explain the paradox in case of portfolio equity capital flows. Moreover, financial development is found to be a significant determinant of portfolio equity flows in the emerging markets. Finally, we suggest that the financial flows to the emerging markets are sensitive to the nature of the capital flows.

Institutional reforms for economic growth in the Western Balkan countries

The paper presents an empirical analysis of the impact of institutional reform policies and institutional quality on the economic growth of five Western Balkan countries (WB countries: Serbia, Montenegro, Bosnia and Herzegovina, Northern Macedonia and Albania) in the period 2006-2016. It was developed its own model of quantification concerning the impact of the most important indicators of the quality of institutions on the economic growth of these countries, which are in a delayed phase of transition and at some stage in the EU accession process. Achieving high and stable rates of economic growth for WB countries becomes the ultimate prerequisite for completing the EU transition and accession process. In order to improve growth dynamics, among other things, it is necessary to identify key drivers of growth and to model appropriate growth and development policies based on the results obtained. In the paper, WB countries were viewed as a whole. By empirically testing the impact of individual quality indicators of institutions on economic growth, according to the World Bank Governance Indicators methodology by using panel data multiple linear regression analysis, the largest statistically significant and positive impact came from the Government Effectiveness and Regulatory Quality variable. The intensity of the impact of the Control of Corruption and Rule of Law variable on GDP per capita is slightly weaker, but it is also very pronounced. In this respect, the empirical results obtained can be a useful framework for modeling the development policies of WB countries. They represent an important guide for policy makers to implement measures aimed at improving the quality of institutions and at the same time modeling economic growth policies.