№ 1/2018

Fìnansi Ukr. 2018 (1): 62–71https://doi.org/10.33763/finukr2018.01.062

FINANCIAL AND ECONOMIC REGULATION

YASTREMSKYI Olexandr ¹

¹SESE “The Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0001-9900-3612

Institutions impact on nation’s welfare: cross-countries analysis

The European Bank for Reconstruction and Development (EBDR) offers data on transition economies for the period from 1989. Currently the data contain 34 countries. Particular attention is paid to the quality index of institutions The known approach is the use of specification “growth – index of progress in transition”. Among indexes are IRP (Index of Reforms Progress), TIC (Transition Index by Countries), TIS (Transition Index by Sectors), LIB (Index of Liberalization), and others. The presented paper provides an alternative approach. It uses specification “GDP per capita – Pillars of Global Index of Competitiveness (GCI)” performed by the World Economic Forum. The article presents GDP per capita evaluation through Pillars of GCI of the World Economic Forum. The essential role of the first pillar P1 (Quality of Institutions) is highlighted. Estimations of GDP per capita are performed through GCI, index of Institutions quality (Pillar 1 of GCI), pairs of Pillars, which contain Pillar 1. Among pairs are: Institutions, Technological Readiness; Institutions, Higher education and retraining. Also, logarithms of GDP per capita are estimated through pairs of Pillars and pairs of logarithms of Pillars. F-, t-statistics, p values, coefficients of determination imply satisfactory quality of estimations. The lowest coefficient of determination in series of scenarios of estimation exceeds 70 %. Computations prove the key role of institutions in nation’s wealth. One scenario of estimations reflects elasticity of GDP per capita with respect to institution quality.

Keywords:institutions, Global Index of Competiveness, Pillar 1 (Institutions), correlation, t-statistics, F-statistics, coefficient of determination

JEL: C21, C43, E61, F01, O10, P30

Yastremskyi O. . Institutions impact on nation’s welfare: cross-countries analysis / O. Yastremskyi // Фінанси України. - 2018. - № 1. - C. 62-71.

Article original in Ukrainian (pp. 62 - 71)

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