Institutional clusters and economic performance

We ran principal component regressions of growth and income on existing measures of institutions to assess which are the most important for economic performance. We find that broadly defined institutions of checks and balances as well as a democratic and anti-authoritarian culture are the most robust institutional determinants of long-run growth in income.

► Principal component analysis of existing measures of political institutions, legal institutions and culture shows that a political factor representing checks and balances and a cultural factor representing anti-authoritarian values co-vary and have a joint effect on economic growth.
► Legal institutions do not affect growth.