Crecimiento económico e institucionesUna aproximación a Latinoamérica y el Caribe

Abstract

Despite considerable advances that reveal institutions� key role in economic performance, there remains a lack of empirical research on institutions� effect in underdeveloped and developing countries, which are characterized by their institutional deficiencies. From a general perspective, this research aims to fill this gap by providing evidence of institutions� effect on economic growth in Latin America and the Caribbean between 2002 and 2010. To achieve this aim, the research presents three forms of analysis, measuring the effect on income levels, growth rate and growth instability. The research draws on data from the economic freedom of the world indicator, published by the Fraser Institute, and from the worldwide governance indicators, published by the World Bank, to perform two types of estimations: the first with panel data, applying the generalized method of moments, and the second applying the two-stage least squares method for cross-sectional analysis. Results show the importance of institutions with respect to other variables, in both the short and long term, and in growth stability, as well as the need to use criteria of homogenization of the samples.