Scandinavian Working Papers in Economics

Discussion Papers on Economics,
University of Southern Denmark, Department of Economics

No 7/2013: Institutions and growth accelerations

Thomas Barnebeck Andersen () and Peter Sandholt Jensen ()
Additional contact information
Thomas Barnebeck Andersen: Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark
Peter Sandholt Jensen: Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark

Abstract: This paper estimates the effect of institutions on economic growth in Sub-Saharan Africa over the period 1995-2007. We follow Henderson, Storeygard, and Weil (American Economic Review 102(2): 994-1028, 2012) in combining Penn World Tables GDP data with satellite-based data on nightlights in order to arrive at a more accurate measure of economic growth. We find that countries with good institutions grew faster than countries with poor institutions. Using external instruments, 2SLS regressions point to a causal impact. Our findings are consistent with the view that institutions are a root cause of economic development.

Keywords: Institutions; economic growth; 2SLS; Africa

JEL-codes: O11; O43; O47

9 pages, March 12, 2013

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