AN EVALATION OF THE EXPLANATORY POWER OF INDICATORS OF INSTITUTIONAL STRUCTURE ON ECONOMIC GROWTH: A COMPARATIVE ANALYSIS

Abstract

This paper investigates the relationship between institutional structure-economic growth in an economy. An important question which has been raised in literature is of which indicators represent the institutional structure. Therefore, the aim of this paper was to determine the performance of alternative indicators when adopted by different approaches to explain economic growth. The indexes used in the analyses of the study were those which have been calculated as indicators for the measurement of institutional structure. As the paper provides comparisons between 4 different indexes with separate analyses, the results can be considered to make an important contribution to the literature related to the relationships between institutions and economic growth. The findings of this paper demonstrated a significant and different result in respect of the relationship between organizational structure and economic growth and the significance of indexes.In comparison to the Heritage index,the relationship with economic growth of the organizational parameters represented in the Fraser index and the Freedom of the Press index were determined to be stronger in terms of both statistics and expected effect for all income groups. Within the context of these results, in the comparison of the Heritage and the Fraser Indexes, which measure economic freedom using different methods and parameters, it was established that the Fraser index stands out and provides more meaningful findings in terms of the relationship between developments.