Investigating Effect of Market Creating Institutions and Other Institutions on Economic Growth (Cross Country Approach)

One of the most important issues in economics is to explain the considerable differences among nations in context of economic growth and well-being. In the recent decades، a consensus among economists suggests that institutions are the main reason for mentioned differences. If this is the case، immediately a question arises: which institutions are of the most importance in the growth and development process? So far، various classifications of institutions discuss on roles of them on economic performance. Rodrik (2005) classify institutions into four various categories; market creating institutions، market regulating institutions، market stabilizing institutions، and market legitimizing institutions. In this paper، we estimate the effect of these institutions on development by using dynamic GMM panel data method for the periods 1980-2009 and 1995-2009. The results suggest that market creating institutions and market stabilizing institutions are affecting per capita GDP، but the other institutions have no significant impact on global economic growth.