Institutional hierarchies and economic growth: A bundled approach

Theoretical and empirical evidence on the relationship between institutions and economic prosperity remains ambiguous, even though it has been part of scholarly discourse for decades. The present study adds to this discussion by introducing a bundled approach for measuring institutions. This approach takes into account interrelations in form of hierarchies between political, economic and the societal institutions and thereby adds to the literature that deals with the mechanisms of economic growth from an institutional perspective. Based on a panel of 153 countries from 1995 to 2016, we find that political institutions establish a deeprooted framework in which societal institutions, such as education and health care, act as main drivers of growth processes.