Ekonomik büyüme, kurumlar ve gelir eşitsizliği

Economists have long recognized that institutions are among the main determinants of economic growth and prosperity. However, the question of how institutional structures affect economic outcomes is still a matter of debate, as so far, neither theoretical nor empirical studies have elaborately revealed the possible mechanisms of interaction between institutions and economic variables. This thesis attempts to fill this gap in the literature by developing two theoretical models that incorporate institutions into the growth analysis. The first model proposed in the study reconfigures the original Solow growth model by establishing a direct link between institutions and capital formation. Relaxing the assumptions of the savings-investment equality and the frictionless capital markets, this model presumes that institutions of property rights along with other country-specific factors affect an economy's investment dynamics. The results derived from the model indicate that developing high-quality institutions that lower transaction costs and uncertainty in the capital market will foster capital accumulation, output production, and economic growth. Examining the causes of institutional development concurrently with its effects on economic progress, the second model reveals that government policies regarding institutions have notable impacts on income, capital formation, and economic growth. The results pointedly suggest that economies in which governments invest more in institutions would have a better institutional framework, more capital stock, and higher income levels and growth rates. The examination of cross-country data over various periods has revealed some evidence consistent with the above implications. Both the cross-sectional and panel data analyses demonstrate that institutional quality is correlated positively with income levels, growth rates, and capital formation. As hypothesized, it is found that institutions that secure property rights, maintain the rule of law, and support political freedom are conducive to economic growth and development. Moreover, the evidence indicates these results are robust to variations in control variables, the model specification, the method of analysis, and the definition of institutions. The empirical analyses also show that besides institutions, the investment/savings rate seems to be one of the fundamental determinants of long-run economic performance. The results indicate that countries devoting a larger share of their resources to capital expansion tend to record higher income levels and growth rates. These findings, considered together, reveal that institutional development and capital accumulation are two main pillars of economic progress over the long term. More importantly, they point out that a significant portion of observed differences in growth and prosperity appears to stem from cross-country variations in institutional quality and capital formation. Concordantly, the thesis at hand suggests that to prosper and develop, countries, especially those lagging behind in income ranking, should primarily focus on developing policies and strategies regarding how to improve the institutional framework and foster capital expansion. Keywords: Economic Growth, Institutions, Economic Development, Growth Models, Convergence