The Composite Impact of Institutional Quality and Inequality on Economic Growth

Abstract

The relationship between institutions and economic growth has attracted significant attention in recent years with the dominant view being that institutional quality positively influences economic performance of a country. However, the impact of similar kind of institutions on economic growth varies across regions and countries. Various reasons including, Income inequality and ethnic fragmentation have been put forth as proximate cause of the weaker relationship between institutions and economic growth [Easterly, et. al (2006); Ann-Sofie (2007)]. However not enough literature is available on why the impact of similar set of institutions on growth varies across countries and regions. Given that inequality may weaken the impact of institutional quality on growth, this study seeks to examine the composite impact of institutional quality and inequality on growth in selected Asian economies