| dc.description.abstract | Institutions are hot! The international development community has adopted this buzzword
in its discourses and policies. There is ample literature pointing to the importance of
institutions for economic development, and this paper is not to deny this irrefutable fact. In
fact, this paper provides evidence that institutions impact economic performance through
human capital, rather than directly. However, it questions the relevance of the empirical
literature for policymakers, and tries to take the next step by asking which institutions are
important to income and/or growth, by categorizing them into economic, political, legal and
social institutions. The analysis teaches us that it is difficult to answer this question, but not
because research would not be able to do so technically. Rather, the measures for institutions that are currently available are ambiguous outcome measures that all capture similar information and hardly contain any policy information. Disaggregating indices and using straightforward measures of institutional quality, which actually capture a norm instead of an outcome, can provide a small step towards more practical policy advice. | |
