Comparative study of political institutions in developed and developing countries based on institutional economy

Abstract

From institutional view, development can't occurs in vacuum. Economic maturation and growth in the markets need institutional framework which facilitates the transactions in a regular order. Actors know that made decisions and contracts are supported and executed by the law. Savors, investors, consumers, employers, workers, and risk takers need a framework of rational laws which support their decisions. They need confidence about economic stability which is provided by strong leaders and decision-makers. On the contrary, the lack of ownership rights, laws, and political stability will lead to economic anarchy. This study aims to examine different indicators of political institutions related to economic development, reflecting the differences of developed countries with other regions. It also attempts to investigate whether effective political institutions can provide the grounds for economic development as the good indicators of governance or not. This study uses the data of worldwide governance indicators. The indicators include voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law, control of corruption from 1996-2011 in 215 countries of the world. The results show the better status of economically developed countries regarding good governance indicators.