Functioning of Political Institutions, Markets’ Operating Freedom and Growth in Less Developed Countries, 2001-2006 : A Quantitative Analysis

This paper analyses a detailed dataset on various aspects of institutions relating to functioning of (a) political institutions and civil society, (b) market for goods and services, (c) capital market, and (d) labour market. Examining the correlations within and across these major aspects of institutions it identifies a set of independent institutional variables that can be regressed on income (GDP per capita) and growth of a large number of less developed countries over the period, 2001-06. We find a strong link (some positive and some negative) between all aspects of institutions considered here and GDP per capita but no link between institutions and growth