Centre for Development Economics
Department of Economics, Delhi School of Economics


Economic Institutions and Growth Episodes


Sabyasachi Kar

  Institute of Economic Growth, Delhi

Thursday, 30th April 2015 at 3:00 PM

Venue : Seminar Room (First Floor)
Department of Economics, Delhi School of Economics

All are cordially invited

A number of influential studies have established that institutional quality is the most important determinant of long run growth rates of nations. This literature, however, has been criticized for its treatment of the growth of a country as a single long term episode, when in reality, it is the aggregation of very dissimilar and highly volatile medium term growth episodes. This shortcoming of the long term growth approach has motivated a separate literature on growth episodes. In this paper, we add to this literature in three important ways. Firstly, we undertake a regression-based analysis of the deep determinants of more successful growth episodes. Secondly, we reevaluate the relationship between growth and economic institutions within the growth episode framework, using separate measures of property rights institutions, contractual institutions and state capacity. Thirdly, we undertake an additional comparative analysis of growth and its determinants, based on successful and failed growth episodes separately. Our results show that higher institutional quality enhances the probability of a successful growth episode rather than one of growth failure. They also indicate reverse feedback running from growth outcomes to institutional quality. Initial conditions like per capita income and human capital are also found to be significant determinants of growth outcomes. Finally, the results indicate that the relationship is much more nuanced when we consider growth successes and growth failures separately.

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