Review of institutions and economic growth empirical research

Abstract

To study further the relationship between institutions and economic growth, this paper reviewed the existing empirical researches in this area. These empirical literatures have provided compelling evidence for a causal link between a cluster of "good" institutions and more rapid long run economic growth. However, many questions would limit further research, such as coarseness of quantitative institutions, defects of instrumental variables and so on. Derived through two simple models, these questions could be proved. Finally, it gives three improved suggestions to the sample of study in China. These suggestions can help researchers understand better how economic growth arises in response to institution changing in China. © 2011 Springer-Verlag Berlin Heidelberg.