Institutional and Structural Determinants of Investment Worldwide
This paper considers institutional and structural factors associated with investment activity in a panel of up to 129 developed and developing countries. It introduces these factors to a standard neoclassical investment function for open economies,...
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| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/09/18194268/institutional-structural-determinants-investment-worldwide http://hdl.handle.net/10986/16042 |
| Summary: | This paper considers institutional and
structural factors associated with investment activity in a
panel of up to 129 developed and developing countries. It
introduces these factors to a standard neoclassical
investment function for open economies, and find that
financial development and institutional quality are
reasonably robust determinants of cross-country capital
formation, with latter displaying more stability in the sign
and significance of its coefficient. Indeed, when
endogeneity concerns are addressed more explicitly using
external instruments, and both interactions and subsamples
are considered, institutional quality tends to survive as
the causal determinant of investment. |
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