Institutions and Economic Development: New Measurements and Evidence

We propose a new set of indices to capture the multidimensionality country’s institutional quality. Our are obtained by employing dimension reduction approach on variables provided Frazer Institute (2018). estimate impact that our measures quality have level and growth rate per capita GDP, using large sample countries over period 1980-2015. To identify causal effect GDP dynamics we employ Generalized Propensity Score method. Institutions matter especially in low- middle-income countries, not all institutions alike for economic development. For this group find: i) positive correlation between main index ii) improvement reliability fairness legal system leads higher long-run level. also document non-linearities effects different growth, presence threshold effects.