Fundamentals of Institutional Quality and Economic Freedom
ABSTRACT: Social scientists have extensively studied the causes of good institutions, including the origins of economic freedom. Results concerning the causes of different kinds of institutions are often similar, often concluding that the geography, environment, and culture are important factors. Ho...
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crjohnshopkinsun:10.1353/jda.2024.a924523 2024-05-12T08:05:59+00:00 Fundamentals of Institutional Quality and Economic Freedom Murphy, Ryan H. 2024 http://dx.doi.org/10.1353/jda.2024.a924523 en eng Project MUSE The Journal of Developing Areas volume 58, issue 1, page 209-220 ISSN 1548-2278 Geography, Planning and Development journal-article 2024 crjohnshopkinsun https://doi.org/10.1353/jda.2024.a924523 2024-04-18T08:11:09Z ABSTRACT: Social scientists have extensively studied the causes of good institutions, including the origins of economic freedom. Results concerning the causes of different kinds of institutions are often similar, often concluding that the geography, environment, and culture are important factors. However, a recent political economy framework suggests that certain dimensions of economic freedom, namely specific dimensions of the size of government (government consumption, transfers and subsidies, and the top marginal tax rate), differ systematically from other dimensions of liberalization. This paper explores these arguments by constructing an index of a set of consensus predictors of institutional quality: ethnic fractionalization (predicts negatively), the natural log of the population size (negatively), absolute latitude (positively), natural resource rents (negatively), the presence of the country in the Americas (negatively), British legal origins (positively), the presence of the country in Eurasia (positively), and island geography (positively). The countries with the “best” fundamentals for institutional quality are Iceland, Ireland, Malta, Finland, and Cyprus, while the five with the “worst” fundamentals are Angola, Nigeria, Chad, Burkina Faso, and Ghana. It then takes this index of “fundamentals” of institutional quality and shows that, although they predict economic liberalism as a whole (as measured by the Economic Freedom of the World index) as they would predict other measures of institutional quality, they predict oppositely (i.e., corresponding to larger governments) for the dimensions of the size of government listed above. The result is congruent with the predictions of the political economy model. Additionally, this result is not contingent on the inclusion of any one of the “fundamental” variables, although natural resource rents and absolute latitude appear to be the most important variables. Countries with considerably more economic freedom than would be predicted by their fundaments include ... Article in Journal/Newspaper Iceland Johns Hopkins University Press The Journal of Developing Areas 58 1 209 220 |
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Johns Hopkins University Press |
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crjohnshopkinsun |
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English |
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Geography, Planning and Development |
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Geography, Planning and Development Murphy, Ryan H. Fundamentals of Institutional Quality and Economic Freedom |
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Geography, Planning and Development |
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ABSTRACT: Social scientists have extensively studied the causes of good institutions, including the origins of economic freedom. Results concerning the causes of different kinds of institutions are often similar, often concluding that the geography, environment, and culture are important factors. However, a recent political economy framework suggests that certain dimensions of economic freedom, namely specific dimensions of the size of government (government consumption, transfers and subsidies, and the top marginal tax rate), differ systematically from other dimensions of liberalization. This paper explores these arguments by constructing an index of a set of consensus predictors of institutional quality: ethnic fractionalization (predicts negatively), the natural log of the population size (negatively), absolute latitude (positively), natural resource rents (negatively), the presence of the country in the Americas (negatively), British legal origins (positively), the presence of the country in Eurasia (positively), and island geography (positively). The countries with the “best” fundamentals for institutional quality are Iceland, Ireland, Malta, Finland, and Cyprus, while the five with the “worst” fundamentals are Angola, Nigeria, Chad, Burkina Faso, and Ghana. It then takes this index of “fundamentals” of institutional quality and shows that, although they predict economic liberalism as a whole (as measured by the Economic Freedom of the World index) as they would predict other measures of institutional quality, they predict oppositely (i.e., corresponding to larger governments) for the dimensions of the size of government listed above. The result is congruent with the predictions of the political economy model. Additionally, this result is not contingent on the inclusion of any one of the “fundamental” variables, although natural resource rents and absolute latitude appear to be the most important variables. Countries with considerably more economic freedom than would be predicted by their fundaments include ... |
format |
Article in Journal/Newspaper |
author |
Murphy, Ryan H. |
author_facet |
Murphy, Ryan H. |
author_sort |
Murphy, Ryan H. |
title |
Fundamentals of Institutional Quality and Economic Freedom |
title_short |
Fundamentals of Institutional Quality and Economic Freedom |
title_full |
Fundamentals of Institutional Quality and Economic Freedom |
title_fullStr |
Fundamentals of Institutional Quality and Economic Freedom |
title_full_unstemmed |
Fundamentals of Institutional Quality and Economic Freedom |
title_sort |
fundamentals of institutional quality and economic freedom |
publisher |
Project MUSE |
publishDate |
2024 |
url |
http://dx.doi.org/10.1353/jda.2024.a924523 |
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Iceland |
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Iceland |
op_source |
The Journal of Developing Areas volume 58, issue 1, page 209-220 ISSN 1548-2278 |
op_doi |
https://doi.org/10.1353/jda.2024.a924523 |
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The Journal of Developing Areas |
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58 |
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1 |
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209 |
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220 |
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