The Effects of Institutions on Economic Development: Developed and Post-Communist Nations

ABSTRACT

The comparative causal effects of democracy and democratization on economic development in developed and post-communist nations (PCN) are the subject of the present study. The research question is, “Would democratization and established democracy cause economic development through economic institutions?” The instrumental variable estimation indicates that economic institutions created by their political systems (instrumental variables) had strong negative effects on economic growth in PCN. Political institutions were not instrumental variables in developed countries with their economic development. This fact indicates that only democratization, not established democracy, serves as an instrumental variable in economic development.

KEYWORDS:

• democratization
• economic institutions
• political institutions
• economic development
• market transition
• post-communist nations

JEL:

• O11

Disclosure Statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Ismatilla Mardanov

Ismatilla Mardanov is affiliated with the Department of Management, Southeast Missouri State University, USA, Cape Girardeau, Missouri, USA. E-mail: [email protected]