DEPP working paper

This Working Paper is part of the Development Economics and Public Policy series

Do We See Convergence in Institutions? A Cross-Country Analysis

Antonio Savoia and Kunal Sen.

Abstract

Are contemporary differences in institutional quality between countries transitory or permanent? The literature is ambivalent on whether we should expect convergence in the quality of institutions across countries over time. Since institutions are seen as a fundamental cause of economic growth, we present some stylised facts and, using cross-section and panel data methods, test for convergence in the quality of institutions in a large sample of countries since the 1980s. The evidence suggests that legal, bureaucratic and administrative institutional quality tended to (slowly) rise in countries with initially poor governance, while they have remained stable in countries with initially good institutions, from the mid 1980s to the mid 1990s. However, we also find that the convergence process has considerably weakened since the mid 1990s.

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