Theoretical and Applied Economics
No. 1 / 2019 (618), Spring
Are institutions a crucial determinant of cross country economic efficiency? A two-stage double bootstrap data envelopment analysis
Karachi University Business School, University of Karachi, Pakistan
Qazi Masood AHMED
Institute of Business Administration, Karachi, Pakistan
Abstract. This paper analyses the role of institutions in enhancing the economic efficiencies across countries in a two stage Double Bootstrap DEA framework based on nonparametric frontier analysis as proposed by Simar and Wilson (2007). In the first stage, cross country workers’ efficiency is estimated using a bootstrapped DEA approach over the period of 1990-2000 for 78 countries. In the second stage, the impact of institutions on these efficiency estimates is analyzed in a truncated bootstrapped regression. Twenty-nine institutional indicators from the same period have been utilized to extract three orthogonal factors based on principal component analysis. These factors namely institutional and policy rents, political rents and risk reducing technologies, along with their aggregated index are used as institutional variables. Findings suggest that inefficiencies in the economy are less where institutions are stronger. This study also shows that institutions that curb corruption, bureaucratic inefficiencies, lax regulations and unfriendly business policies, tend to have a larger effect on workers efficiency than other two indices that curb political rents and those that reduce transactional risks. Furthermore, when they are aggregated, the combined impact is more than the individual impact.
Contents
Why do high ability people also suffer from money illusion? Experimental evidence of behavioral contradiction
Macroeconomic stability of new member states of the European Union: Fifth enlargement
The global context of economic crises and cohesion funds in the EU
Is real depreciation or more government deficit expansionary? The case of Macedonia
Models and theories in a frictions and wage rigidities labor market
Human capital and the FDI-Income inequality nexus in African countries: Panel smooth transition regression approach
Are institutions a crucial determinant of cross country economic efficiency? A two-stage double bootstrap data envelopment analysis
The relationship between unemployment and some macroeconomic variables: Empirical evidence from India
Inequity in health care sector in India: A case study of district level in four Indian states
Performance in public administration: Doing outside the box under the rule of procedures
Trade effects based on general equilibrium
Empirically testing Keynesian defense burden hypothesis, nonlinear hypothesis, and spillover hypothesis: Evidence from Asian countries