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This paper seeks to explore the relationship between economic growth and governance performance in Asian developing economies. This exploration yields some interesting conclusions. First, notwithstanding its tremendous economic achievements, the state of governance in Asia is not stellar by international comparison. Indeed, the majority of these countries seem to suffer from a governance deficit. Second, contrary to our expectations, data do not suggest any strong positive link between governance and growth: paradoxically, countries that exhibit surpluses in governance on average grew much slower than those with deficits. The paper ends with some conjecture about this apparent paradox. [ABSTRACT FROM AUTHOR]

While economic policy liberalization is a key to higher overall growth, reforms are often not implemented due to a fierce opposition from politically powerful prospective losers from reforms. In this respect, it is frequently claimed that economic crises can help overcome resistance to policy liberalization. Furthermore, political authorities not constrained by democratic checks and balances are supposed to be more decisive and are thus expected to carry out market-friendly policy change in times of crises more easily. Rules of democratic participation and checks and balances may however also be good for policy reform, as they can serve as an institutional mechanism for peaceful conflict resolution. The paper investigates empirically the interaction between economic growth performance and political institutions in producing free-market reform. We explore whether political regime types shape systematically government policy responses to good or bad growth performance, employing panel econometric techniques and using recently updated data for economic reform and political institutions. Contrary to conventional wisdom we find that a bad growth performance is conducive to reforms in democracies, but not in autocracies. Democracies not only carry out more liberal economic policies in general, but they are also more responsive to economic growth crises. Democratic rule seems to be favorable for policy liberalization, but a very good growth performance weakens liberalization incentives considerably. [ABSTRACT FROM AUTHOR]

There is evidence in the literature that corruption lowers the level of investment and the productivity of capital stock in an economy. This paper extends the literature by presenting evidence that investment allocation decisions are affected in a significant way by corruption. The most commonly used measure of the efficiency of overall investment in an economy is the incremental capital output ratio (ICOR), measured by the ratio of gross investment to the change in the gross domestic product. The inverse of the ICOR measures the productivity of investment in an economy. When the known explanatory factors for inter-country variation in the ICOR are taken into account, the incidence of corruption has a statistically significant negative effect on the efficiency of investment for a panel of 90–140 countries during 1995–2004. The strength of this effect increases with the incidence of corruption. The econometric model used is robust to unobserved and time-invariant country fixed effects, feedbacks from current stochastic shocks to subsequent values of the determinants of investment efficiency, and the persistence of efficiency. [ABSTRACT FROM AUTHOR]

This paper explores whether the probability of being punished after losing power leads dictators to restrain their level of predation and, thus, increase economic growth. To do so, a simple model of predatory rule is developed, and the consequences of an increasing probability of punishment after loosing power explored. New data on dictators' post-exit fate have permitted to estimate the predicted probability of punishment taking place by using multinomial logit. Outgoing dictators' strength and the international context are shown to be the main determinants of post-exit scenarios. The probability of punishment is proven to have a positive and significant effect on the rate of growth of GDP under alternative specifications of growth regressions. [ABSTRACT FROM AUTHOR]

Recent studies yield diverging outcomes on the governance-growth relationship. In this paper we construct a new index of governance using a latent variable approach and test whether this index is related to growth with varying samples of countries and different conditioning variables. The results show that our index has a positive and significant impact on economic growth. This conclusion is fairly robust for various samples and conditioning variables. [ABSTRACT FROM AUTHOR]

Using data from 74 industrial, developing and transition countries for the years 2000 to 2003, this paper empirically analyzes whether and to what extent credit market regulations affect the performance of the labor market. According to the regression results, anti-competitive credit market regulations have an adverse, though generally modest, impact on the labor market. Specifically, restrictions on credit extended to the private sector, on the private ownership of banks, on competition from foreign banks, and on the free determination of interest rates appear to lower the level of employment and increase unemployment, particularly among young people. [ABSTRACT FROM AUTHOR]

The existence of a quasi-periodic cycle in growth rates of major economic indicators has become one of the more popular stylized facts in interpreting postwar macro-dynamics. In this paper, we examine the statistical record of sixteen OECD countries over the 1950-1970 period to determine the degree of regularity in movements of annual growth rates in both GNP and several disaggregated components. The WALLIS-MOORE test is employed to establish the significance of the deviation of growth rate fluctuations from those of a purely random series. In only 13 of the 90 series investigated were these deviations statistically significant and in only two countries, Germany and Finland, were more than one growth series significantly non-random. These results suggest that there is little statistical significance to the growth cycle hypothesis from an annual perspective and that postwar macro-dynamics generally fail to reflect in the growth rate domain much of the regularity observed in the more traditional business cycle of the prewar period. [ABSTRACT FROM AUTHOR]