Does Institutions Effect Growth in Pakistan? An Empirical investigation

Danish Ahmed Siddiqui, Qazi Masood Ahmed


This paper presents an index of institutionalized social technologies for Pakistan, covering its two main dimensions namely Risk reducing technologies and Anti Rent seeking technologies and in turn covers several social, institutional, political and economic aspects. It is also analyzed empirically whether the overall index as well as sub-indexes constructed to measure the single dimensions affects economic growth. The results show that over all, institutions promote growth in long run for Pakistan. Therefore, for a policy implication, success of any policy could be influenced by the soundness of institutions.

Full Text:



Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The colonial origins of comparative development: An empirical investigation. American economic review, 91(5), 1369-1401.

Acemoglu, D., Johnson, S., & Robinson, J. A. (2005). Institutions as a fundamental cause of long-run growth. Handbook of economic growth, 1, 385-472.

Acemoglu, D., & Verdier, T. (1998). Property rights, corruption and the allocation of talent: a general equilibrium approach. The economic journal, 108(450), 1381-1403.

Acemoglu, D. (1995). Reward structures and the allocation of talent. European Economic Review, 39(1), 17-33.

Ahmed, S. (2001). Poverty reduction and governance in South Asia. Mahbub ul Haq Human Development Review, 1(1), 34-60.

Barro, R. J. (1991). Economic growth in a cross section of countries. The quarterly journal of economics, 106(2), 407-443.

Baumol, W. J. (1993). Entrepreneurship, Management, and the Structure of Payoffs. Cambridge, Mass, and London. In: The MIT Press.

Baumol, W. J. (1996). Entrepreneurship: Productive, unproductive, and destructive. Journal of business venturing, 11(1), 3-22.

Boserup, E. J. P., & Review, D. (1996). Development theory: An analytical framework and selected application. 505-515.

Carroll, C. D., & Weil, D. N. (1994). Saving and growth: a reinterpretation. Paper presented at the Carnegie-Rochester conference series on public policy.

Coase, R. H. (1960). The problem of social cost. In Classic papers in natural resource economics, 87-137. Springer.

Day, R. H., & Walter, J. L. (1989). Economic growth in the very long run: On the multiple-phase interaction of population, technology, and social infrastructure. Economic complexity, chaos, sunspots, bubbles, and nonlinearity. Cambridge University Press, Cambridge, 253-89.

De Long, J. B., & Shleifer, A. (1993). Princes and merchants: European city growth before the industrial revolution. The Journal of Law and Economics, 36(2), 671-702.

De Soto, H., & Taylor, J. (2011). The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. Crane Library at the University of British Columbia.

Easterly, W. (2003). The political economy of growth without development. In search of prosperity: Analytic narratives on economic growth, 439-469.

Fernandes, A., Kraay, C. J. S. A. G., & Bank, R. I. T. W. (2007). Property rights institutions, contracting institutions and growth in South Asia: Macro and Micro Evidence.

Frye, T., & Shleifer, A. (1996). The invisible hand and the grabbing hand.

Grier, K. B., & Tullock, G. (1989). An empirical analysis of cross-national economic growth, 1951–1980. Journal of monetary economics, 24(2), 259-276.

Grossman, S. J., & Hart, O. D. (1986). The costs and benefits of ownership: A theory of vertical and lateral integration. Journal of political economy, 94(4), 691-719.

Gwartney, J., Holcombe, R., & Lawson, R. (1998). The scope of government and the wealth of nations. Cato J., 18, 163.

Gwartney, J., Lawson, R., & Norton, S. (2008). Economic freedom of the world: 2008 annual report. The Fraser Institute.

Gwartney, J. D., & Lawson, R. (2001). Economic freedom of the world 2001 annual report. The Fraser Institute.

Hall, R. E., & Jones, C. I. (1999). Why do some countries produce so much more output per worker than others?. The quarterly journal of economics, 114(1), 83-116.

Hansen, L. P., & Singleton, K. J. (1982). Generalized instrumental variables estimation of nonlinear rational expectations models. Econometrica: Journal of the Econometric Society, 1269-1286.

Hart, O. (1995). Firms, contracts, and financial structure. Clarendon Press.

Hart, O., & Moore, J. (1990). Property Rights and the Nature of the Firm. Journal of political economy, 98(6), 1119-1158.

Heston, A., Summers, R., Aten, B. J. E. D., & Change, C. (2009). Penn World Table Version 6.3. Centre for international comparisons of production, income and prices, University of Pennsylvania.

Horwich, G. (2000). Economic lessons of the Kobe earthquake. Economic development and cultural change, 48(3), 521-542.

Ismail, Z. H., Rizvi, S., & Mahmood, A. (2000). Governance, Decentralisation, and Poverty: The Case of Pakistan [with Comments]. The Pakistan Development Review, 1013-1030.

Jalilian, H., Kirkpatrick, C., & Parker, D. (2007). The impact of regulation on economic growth in developing countries: A cross-country analysis. World development, 35(1), 87-103.

Javorcik, B. S., & Wei, S.-J. (2000). Corruption and composition of foreign direct investment: firm-level evidence.

Jin, J. C. (2000). Openness and growth: an interpretation of empirical evidence from East Asian countries. Journal of International Trade & Economic Development, 9(1), 5-17.

Johnson, S., Kaufmann, D., & Zoido-Lobaton, P. (1998). Regulatory discretion and the unofficial economy. The American Economic Review, 88(2), 387-392.

Johnson, S., McMillan, J., & Woodruff, C. (2000). Entrepreneurs and the ordering of institutional reform: Poland, Slovakia, Romania, Russia and Ukraine compared. Economics of Transition, 8(1), 1-36.

Jones, E. (2003). The European miracle: environments, economies and geopolitics in the history of Europe and Asia. Cambridge University Press.

Kaufman, D., Kraay, A., & Mastruzzi, M. (2005). Governance Matters IV: Governance Indicators for 1996-2004. World Bank, May. In.

Kirkpatrick, C., Parker, D., & Zhang, Y. F. (2006). Foreign direct investment in infrastructure in developing countries: does regulation make a difference?. Transnational corporations, 15(1), 143-172.

Kormendi, R. C., & Meguire, P. G. (1985). Macroeconomic determinants of growth: cross-country evidence. Journal of Monetary economics, 16(2), 141-163.

Lane, J.-E. (1984). Olson Mancur, The Rise and Decline of Nations, New Haven: Yale University Press, 1982, 4(3), 268-271.

Levine, R., & Renelt, D. (1992). A sensitivity analysis of cross-country growth regressions. The American economic review, 942-963.

Maddison, A. (1992). A long-run perspective on saving. The Scandinavian Journal of Economics, 181-196.

Magee, S. P., Brock, W. A., & Young, L. (1989). Black hole tariffs and endogenous policy theory: Political economy in general equilibrium. Cambridge University Press.

Mahbub-ul-Haque, K. (1999). Human Development in South Asia: The Crises of Governance. In: Oxford University Press, Karachi.

Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. The quarterly journal of economics, 107(2), 407-437.

Manly, B. J. C., & Hall, L. (1994). A primer of multivariate statistics.

Mehlum, H., Moene, K., & Torvik, R. (2003). Destructive creativity. Nordic Journal of Political Economy, 29(1), 77-83.

Méon, P. G., & Sekkat, K. (2004). Does the quality of institutions limit the MENA's integration in the world economy?. World Economy, 27(9), 1475-1498.

Miller, T., Kim, A. B., & Holmes, K. J. (2015). 2015 Index of economic Freedom.

Modigliani, F. (1990). Recent developments in saving rates: a life cycle perspective. Paper presented at the Frisch Lecture delivered at the 6th World Congress of the Econometric Society, September, Barcelona.

Modigliani, F. (1970). The life cycle hypothesis of saving and intercountry differences in the saving ratio. Induction, growth and trade, 197-225.

Murphy, K. M., Shleifer, A., & Vishny, R. W. (1991). The allocation of talent: Implications for growth. The quarterly journal of economics, 106(2), 503-530.

Nelson, R. (2007). Institutions,“Social technologies”, and economic progress. The Global Network for Economics of Learning, Innovation, and Competence Building System (GLOBELICS). Working Papers Series, (2007-03).

Nelson, R. R., & Sampat, B. N. (2001). Making sense of institutions as a factor shaping economic performance. Revista de Economía Institucional, 3(5), 17-51.

Nicoletti, G., Scarpetta, S., & Boylaud, O. (1999). Summary indicators of product market regulation with an extension to employment protection legislation.

North, D. C. (1981). Structure and change in economic history. Norton.

North, D. C., & Thomas, R. P. (1973). The rise of the western world: A new economic history. Cambridge University Press.

North, D. C., & Wallis, J. J. (1994). Integrating institutional change and technical change in economic history a transaction cost approach. Journal of Institutional and Theoretical Economics (JITE)/Zeitschrift für die gesamte Staatswissenschaft, 150(4), 609-624.

North, D. C. (1991). Institutions. Journal of economic perspectives, 5(1), 97-112.

Olson, M. (2000). Power and prosperity: Outgrowing communist and capitalist dictatorships. Basic Books.

Olson, M., Sarna, N., & Swamy, A. V. (2000). Governance and growth: A simple hypothesis explaining cross-country differences in productivity growth. Public Choice, 102(3-4), 341-364.

Pearson, K. (1894). Contributions to the mathematical theory of evolution. Philosophical Transactions of the Royal Society of London. A, 185, 71-110.

Pelikan, P. (2003). Bringing institutions into evolutionary economics: another view with links to changes in physical and social technologies. Journal of Evolutionary Economics, 13(3), 237-258.

Putnam, R. D., Leonardi, R., & Nanetti, R. Y. (1994). Making democracy work: Civic traditions in modern Italy. Princeton university press.

Ramakrishna, G. (2002). The effect of trade liberalization on economic growth: the case of Ethiopia. Finance India, 16(4), 1295.

Reiersøl, O. (1941). Confluence analysis by means of lag moments and other methods of confluence analysis. Econometrica: Journal of the Econometric Society, 1-24.

Reisen, H., & Soto, M. (2001). Which types of capital inflows foster developing‐country growth?. International finance, 4(1), 1-14.

Rodrik, D., Subramanian, A., & Trebbi, F. (2004). Institutions rule: the primacy of institutions over geography and integration in economic development. Journal of economic growth, 9(2), 131-165.

Romer, P. M. (1989). Human capital and growth: theory and evidence.

Sargan, J. D. (1958). The estimation of economic relationships using instrumental variables. Econometrica: Journal of the Econometric Society, 393-415.

Shafique, S., Haq, R., & Arif, G. M. (2006). Governance and Income Inequality [with Comments]. The Pakistan Development Review, 751-760.

Shleifer, A., & Vishney, R. J. M. W. (1993). Corruption’Quarterly Journal of Economics, 108, 599-617. 39.

Solow, R. M. (1956). A contribution to the theory of economic growth. The quarterly journal of economics, 70(1), 65-94.

Tabellini, G. (2010). Culture and institutions: economic development in the regions of Europe. Journal of the European Economic association, 8(4), 677-716.

Tollison, R. J. D. M., Cambridge. (1997). Rent seeking.‖ in―Perspectives on public choice.‖ ed.

Usher, D. (1987). Theft as a paradigm for departures from efficiency. Oxford Economic Papers, 39(2), 235-252.

Williamson, O. (1985). 1985 The economic institutions of capitalism. New York: Free Press.



  • There are currently no refbacks.

Journal of Asian Development  ISSN 2377-9594   E-mail:

Copyright © Macrothink Institute 

To make sure that you can receive messages from us, please add the '' domains to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', please check your 'spam' or 'junk' folder.