Institutional Environment and Growth in Brazil
1 Introduction 2
2 The deductive model 3
3 Literature review 4
4 Theoretical framework and generation of hypothesis 5
5 Scientific Research Design 8 5.1 Methods of empirical analysis 8 5.2 Construct measurement of independent variables 9
6 Presentation of results 9
7 Discussion of results 10
8 Conclusion 15
9 Bibliography 17
Introduction
The prosperity and wealth of nations are closely linked with economic growth. Accelerating the development of economic growth in a sustained way is therefore one of the most important issues in economics. Economists have long used a variety of approaches to shed light on why some countries experience faster growth than others. In the vast amount of literature on the subject there are three schools that stand out in particular. First, there is a group of scholars that places geographical factors such as climate, transport cost and natural resources as the main explanatory factors. Recent writings by Jared Diamond and Jeffery Sachs are important contributions in this paradigm (Diamond, 1997; Sachs, 2001). Second, there is a faction that emphasizes international trade as a key to economic growth. Important contributions to this market-integration view have been presented in the works of Frankel & Romer (1999) and Dollar & Kraay (2004). Finally, there is a third group focusing on the explanatory power that institutions veil in this matter. This paper will follow in this tradition, as there seems to bee an increasingly pervasive concurrence among economists studying the phenomena that the development and quality of the institutional environment holds the key to prevailing patterns of sustained growth and prosperity around the world. Rich countries are those with sustained rule of law and property rights, effective policies towards private enterprises and competition, the political system is stabile and effective, companies enjoys easy access to financing and superior tax regimes and there is a well functioning
2 The deductive model 3
3 Literature review 4
4 Theoretical framework and generation of hypothesis 5
5 Scientific Research Design 8 5.1 Methods of empirical analysis 8 5.2 Construct measurement of independent variables 9
6 Presentation of results 9
7 Discussion of results 10
8 Conclusion 15
9 Bibliography 17
Introduction
The prosperity and wealth of nations are closely linked with economic growth. Accelerating the development of economic growth in a sustained way is therefore one of the most important issues in economics. Economists have long used a variety of approaches to shed light on why some countries experience faster growth than others. In the vast amount of literature on the subject there are three schools that stand out in particular. First, there is a group of scholars that places geographical factors such as climate, transport cost and natural resources as the main explanatory factors. Recent writings by Jared Diamond and Jeffery Sachs are important contributions in this paradigm (Diamond, 1997; Sachs, 2001). Second, there is a faction that emphasizes international trade as a key to economic growth. Important contributions to this market-integration view have been presented in the works of Frankel & Romer (1999) and Dollar & Kraay (2004). Finally, there is a third group focusing on the explanatory power that institutions veil in this matter. This paper will follow in this tradition, as there seems to bee an increasingly pervasive concurrence among economists studying the phenomena that the development and quality of the institutional environment holds the key to prevailing patterns of sustained growth and prosperity around the world. Rich countries are those with sustained rule of law and property rights, effective policies towards private enterprises and competition, the political system is stabile and effective, companies enjoys easy access to financing and superior tax regimes and there is a well functioning
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