Democracy, Economic Freedoms and Economic Growth: An Investigation on the Role of Institutions

Yıl 2018, Cilt: 26 Sayı: 36, 81 - 102, 30.04.2018

Emrah Koçak , Nisfet Uzay

https://doi.org/10.17233/sosyoekonomi.2018.02.05

Cited By: 15

Öz

The main purpose of this paper is to investigate the impact of the institutional quality on economic growth in high, medium and low-income countries in the period of 1995-2013. In this study, institutional quality is represented as a component of democracy and economic freedoms. The institutional quality index for each country is calculated by the principal component analysis (PCA) method using democracy and economic freedoms indicators. Then, the relationship between the institutional quality index and economic growth is estimated by panel data analysis method (panel unit root, panel cointegration, panel causality analysis). The estimation results for all groups of countries are as follows: (i) the panel cointegration test confirms a long-run equilibrium relationship between institution quality and economic growth. (ii) According to this relationship, institutional quality has a positive effect on economic growth. (iii) The panel causality tests support a bidirectional causality between institution quality and economic growth. The results of the analysis indicate that institutions are a significant influence on economic growth.

Anahtar Kelimeler

Democracy, Economic Freedoms, Institutions, Economic Growth, Panel Data, Principal Component Analysis

Demokrasi, Ekonomik Özgürlükler ve Ekonomik Büyüme: Kurumların Rolü Üzerine Bir Araştırma

Öz

Bu çalışmanın temel amacı 1995-2013 dönemi yüksek, orta ve düşük gelirli ülkelerde kurumsal niteliğin ekonomik büyüme üzerindeki etkisini araştırmaktır. Çalışmada kurumsal nitelik, demokrasi ve ekonomik özgürlüklerin bir bileşeni olarak temsil edilmektedir. Kurumsal nitelik endeksi, demokrasi ve ekonomik özgürlük göstergeleri kullanılarak her bir ülke için temel bileşenler analiz (TBA) yöntemi ile hesaplanmıştır. Daha sonra, kurumsal nitelik endeksi ile ekonomik büyüme arasındaki ilişki panel veri analiz yöntemi (panel birim kök, panel eşbütünleşme, panel nedensellik) ile tahmin edilmiştir. Tüm ülke grupları için tahmin sonuçları aşağıdaki gibidir: (i) Panel eşbütünleşme testi kurumsal nitelik ve ekonomik büyüme arasında uzun dönemli bir denge ilişkisini doğrulamaktadır. (ii) Bu ilişkiye göre, kurumsal nitelik ekonomik büyüme üzerinde pozitif bir etkiye sahiptir. (iii) Panel nedensellik testleri kurumsal nitelik ve ekonomik büyüme arasında çift yönlü bir nedensellik ilişkisini desteklemektedir. Analiz sonuçları, kurumların ekonomik büyüme üzerinde önemli bir etkisi olduğunu işaret etmektedir.

Anahtar Kelimeler

Demokrasi, Ekonomik Özgürlükler, Kurumlar, İktisadi Büyüme, Panel Veri, Temel Bileşenler Analizi

Kaynakça

• Abdi, H. & Williams, L. J. (2010), “Principal component analysis”, Wiley Interdisciplinary Reviews: Computational Statistics, 2(4), 433-459.
• Acemoğlu, D. & Johnson, S. & Robinson, J. A. (2001), Reversal of fortune: Geography and institutions in the making of the modern world income distribution, (No. w8460), National bureau of economic research.
• Acemoğlu, D. & Robinson, J. & Verdier, T. A. (2004), “Alfred Marshall Lecture: Kleptocracy and Divide-and-Rule: A Model of Personal Rule”, Journal of the European Economic Association, 2(2-3), 162-192.
• Acemoğlu, D. & Robinson, J. (2012), Ulusların Düşüşü- Güç, Zenginlik ve Yoksulluğun Kökenleri (Çeviren: Faruk Rasim Velioğlu), Doğan Kitap, İstanbul.
• Acemoğlu, D. & Naidu, S. & Restrepo, P. & Robinson, J. A. (2014), Democracy does cause growth, (No. w20004), National Bureau of Economic Research.
• Barro, R. J. (1996), “Democracy and growth”, Journal of Economic Growth, 1(1), 1-27.
• Behar, J. (2014), Principal Component Analysis. http://tocs.ulb.tu-darmstadt.de/ 182444961.pdf (Erişim Tarihi: Mart, 2015).
• Bhattacharya, M. & Paramati, S. R. & Ozturk, I. & Bhattacharya, S. (2016), “The effect of renewable energy consumption on economic growth: Evidence from top 38 countries”, Applied Energy, 162, 733-741.
• Breitung, J. (2000), “The Local Power of Some Unit Root Tests for Panel Data”, In Advances in Econometrics, Vol. 15: Nonstationary Panels, Panel Cointegration, and Dynamic Panels, JAI.
• Choi, I. (2001), “Unit root tests for panel data”, Journal of International Money and Finance, 20(2), 249-272.
• Coase, R. H. (1960), “Problem of social cost”, Journal of Law and Economics, 3, 1-44.
• De Haan, J., & Sturm, J. E. (2000), “On the relationship between economic freedom and economic growth”, European Journal of Political Economy, 16(2), 215-241.
• Doğan, A. (2005), “Demokrasi ve Ekonomik Gelişme”, Erciyes Üniversitesi İktisadi ve İdari Bilimler Dergisi, 25, 1-19.
• Doucouliagos, H. & Ulubaşoğlu, M. A. (2008), “Democracy and economic growth: a meta‐analysis”, American Journal of Political Science, 52(1), 61-83.
• Dumitrescu, E. I. & Hurlin, C. (2012), “Testing for Granger non-causality in heterogeneous panels”, Economic Modelling, 29(4), 1450-1460.
• Erdal, F. & Yenipazarli, A. (2013), “Which economic freedoms contribute income per capita? Are results sensitive to the indicators and the estimation methods?”, Emerging Markets Finance and Trade, 49(sup5), 130-147.
• Esposto, A. G. & Zaleski, P. A. (1999), “Economic freedom and the quality of life: an empirical analysis”, Constitutional Political Economy, 10(2), 185-197.
• Fatas, A. & Mihov, I. (2013), “Policy volatility, institutions, and economic growth”, Review of Economics and Statistics, 95(2), 362-376.
• Góes, C. (2016), “Institutions and growth: a gmm/iv panel var approach”, Economics Letters, 138, 85-91.
• Gould, D. M. & Gruben, W. C. (1996), “The role of intellectual property rights in economic growth”, Journal of Development Economics, 48(2), 323-350.
• Gounder, R. (2002), “Political and economic freedom, fiscal policy, and growth nexus: some empirical results for Fiji”, Contemporary Economic Policy, 20(3), 234-245.
• Gwartney, J. D. & Holcombe, R. G. & Lawson, R. A. (2004), “Economic freedom, institutional quality, and cross-country differences in income and growth”, Cato Journal, 24 (3), 205-233.
• Hanke, S. H. & Walters, S. J. (1997), “Economic freedom, prosperity, and equality: a survey”, Cato Journal, 17 (2), 117-146.
• Hasan, I. & Wachtel, P. & Zhou, M. (2009), “Institutional development, financial deepening and economic growth: Evidence from China”, Journal of Banking & Finance, 33(1), 157-170.
• Im, K. S. & Pesaran, M. H. & Shin, Y. (2003), “Testing for unit roots in heterogeneous panels”, Journal of Econometrics, 115(1), 53-74.
• Jaunky, V. C. (2013), “Democracy and economic growth in Sub-Saharan Africa: a panel data approach”, Empirical Economics, 45(2), 987-1008.
• Jolliffe, I. (2002), Principal component analysis., John Wiley & Sons, Ltd.
• Kao, C. (1999), “Spurious regression and residual-based tests for cointegration in panel data”, Journal of Econometrics, 90(1), 1-44.
• Kao, C. & Chiang, M. H. (1999), On the estimation and inference of a cointegrated regression in panel data, Available at SSRN 1807931.
• Ken Farr, W. & Lord, R. A. & Wolfenbarger, J. L. (1998), “Economic freedom, political freedom, and economic well-being: a causality analysis”, Cato Journal, 18, 247-262.
• Knack, S. & Keefer, P. (1995), “Institutions and economic performance: cross‐country tests using alternative institutional measures”, Economics and Politics,7(3), 207-227.
• Knack, S. & Keefer, P. (1997), “Does social capital have an economic payoff? A cross-country investigation”, The Quarterly Journal of Economics, 112 (4), 1251-1288.
• Kotera, G. & Okada, K. & Samreth, S. (2012), “Government size, democracy, and corruption: An empirical investigation”, Economic Modelling, 29(6), 2340-2348.
• Koçak, E. (2016), Demokrasi, Ekonomik Özgürlükler ve Büyüme: Teori ve Ampirik Uygulama, Erciyes Üniversitesi Sosyal Bilimler Enstitüsü İktisat Anabilimdalı, Yayınlanmamış Doktora Tezi, Kayseri.
• La Porta, R. & Lopez-de-Silanes, F. & Shleifer, A. & Vishny, R. W. (1998), “Law and Finance”, The Journal of Political Economy, 106(6), 1113-1155.
• Levin, A. & Lin, C. F. & Chu, C. S. J. (2002), “Unit root tests in panel data: asymptotic and finite-sample properties”, Journal of Econometrics, 108(1), 1-24.
• Maddala, G. S. & Wu, S. (1999), “A comparative study of unit root tests with panel data and a new simple test”, Oxford Bulletin of Economics and Statistics, 61(S1), 631-652.
• Mark, N. C. & Sul, D. (2003), “Cointegration Vector Estimation by Panel DOLS and Long‐run Money Demand”, Oxford Bulletin of Economics and Statistics, 65(5), 655-680.
• Narayan, P. K. & Smyth, R. (2006), “Democracy and economic growth in China: evidence from cointegration and causality testing”, Review of Applied Economics, 2(1), 81-98.
• Nazlıoğlu, Ş. (2010), Makro İktisat Politikalarının Tarım Sektörü Üzerindeki Etkileri: Gelişmiş Ve Gelişmekte Olan Ülkeler İçin Bir Karşılaştırma, Erciyes Üniversitesi Sosyal Bilimler Enstitüsü İktisat Anabilimdalı, Yayınlanmamış Doktora Tezi, Kayseri.
• North, D. C. & Thomas, R. P. (1973), The rise of the western world: A new economic history, Cambridge University Press.
• North, D. (2002), Kurumlar, Kurumsal Değişim ve Ekonomik Performans (Çeviren Gül Çağalı Güven), İstanbul, Sabancı Üniversitesi Yayınları.
• Pedroni, P. (1999), “Critical values for cointegration tests in heterogeneous panels with multiple regressors”, Oxford Bulletin of Economics and Statistics, 61(S1), 653-670.
• Pedroni, P. (2000), “Fully modified OLS for heterogeneous cointegrated panels”, Advances in Econometrics; 15, 93-130.
• Pedroni, P. (2001), “Purchasing power parity tests in cointegrated panels”, Review of Economics and Statistics, 83(4), 727-731.
• Pedroni, P. (2004), “Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis”, Econometric Theory, 20(03), 597-625.
• Perotti, R. (1996), “Growth, income distribution, and democracy: what the data say”, Journal of Economic Growth, 1(2), 149-187.
• Przeworski, A. & Limongi, F. (1997), Development and democracy, coautor en Alex Hadenius (comps.), Democracy's Victory and Crisis, Cambridge University Press, Cambridge.
• Rodrik, D. (2009), Tek Ekonomi Çok Reçete: Küreselleşme, Kurumlar ve Ekonomik Büyüme (Çeviren Neşenur Domaniç), Eflatun Yayınevi.
• Saha, S. & Gounder, R. & Su, J. J. (2009), “The interaction effect of economic freedom and democracy on corruption: A panel cross-country analysis”, Economics Letters, 105(2), 173-176.
• Shahbaz, M. & Zeshan, M. & Afza, T. (2012), “Is energy consumption effective to spur economic growth in Pakistan? New evidence from bounds test to level relationships and Granger causality tests”, Economic Modelling, 29(6), 2310-2319.
• Siddiqui, D. A. & Ahmed, Q. M. (2013), “The effect of institutions on economic growth: A global analysis based on GMM dynamic panel estimation”, Structural Change and Economic Dynamics, 24, 18-33.
• Sirowy, L. & Inkeles, A. (1990), “The effects of democracy on economic growth and inequality: A review”, Studies in Comparative International Development, 25(1), 126-157.
• Tavares, J. & Wacziarg, R. (2001), “How democracy affects growth”, European Economic Review, 45(8), 1341-1378.
• Torstensson, J. (1994), “Property rights and economic growth: an empirical study”, Kyklos, 47(2), 231-247.
• Williamson, O. E. (1985), The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting, University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship.
• Williamson, C. R. & Mathers, R. L. (2011), “Economic freedom, culture, and growth”, Public Choice, 148(3-4), 313-335.