در ثروت جامع، کیفیت نهادی و توسعه پایدار-تعیین کمیت اثر کیفیت نهادی بر پایداری

This paper shows a significant and causal positive relationship between good institutions and sustainability. While sustainability is measured with the adjusted net saving (ANS) indicator, institutional quality is measured using an average of six dimensions of governance. An instrumental variable is used to account for endogeneity. Rearranging the set-up and running the regression on the net national savings rate lead to results displaying a much smaller and weaker effect. This finding suggests that compared to the saving of physical capital, the saving of non-physical capital is influenced more strongly by institutional quality.

Decisions concerning the depletion rate of a natural resource or the harvesting rate of a renewable resource is based on long-term planning, and maximizing long-term utility may involve waiting, e.g. until stocks are re-grown or until resource prices reach a certain level. Thus, it is crucial to the decision making process of an individual that he can rely on the institutions around her to persist. An individual must be able to rely on the fact that his rights will continue to be enforced in the future. Institutions should therefore guarantee a stable framework in which the individual can decide on (sustainable) depletion rates. This example illustrates one way in which institutions may influence savings decisions not only for physical capital but also for natural capital. With this intention, this paper explores the impact of institutional quality on the change in comprehensive wealth in a cross-country framework. The goal of the paper is to quantify the effect that institutional quality has on adjusted net saving (hereafter referred to as ANS), an indicator that measures the change in wealth using a broad definition of capital. This effect is shown not only to be positive, but also statistically and economically significant. An instrumental variable is used to establish a one-directional impact of institutions on ANS, i.e. to rule out reverse causality. There exists a large and well-established literature on the effects of institutional quality on economic growth.1 Against the background of current research the contribution of this paper is to focus on the impact institutional quality has on the changes in comprehensive wealth rather than on individual parts of capital. It aims to present the overall effect, rather than explain the detailed mechanisms at work. Atkinson and Hamilton (2003) suggest that a country's institutions may play an important role for an economy's sustainability, particularly in resource-abundant countries. The importance of institutions and especially of secure property rights for savings decisions is outlined especially well in Acemoglu et al. (2001). The so-called resource curse – many resource-abundant countries suffer from low rates of economic growth – which has been explained among other things by the quality of institutions (e.g. Rodrik et al., 2002), makes it interesting to investigate how institutional quality affects ANS, e.g. by determining the ability to invest natural resource rents in long-lasting investments. Therefore, the paper first aims to answer if institutional quality has an impact on ANS rates. The nature of many aspects of natural and intangible capital provides another reason why institutions could be particularly important for the difference between ANS and the saving of physical capital (net national saving). Therefore, the paper tests in a second step if there is a difference between the impact institutions have on ANS and their impact on the saving of physical capital. The rest of the paper is organized as follows: after the theoretical framework is presented in the following section, the estimation method and the data sets are introduced. This is followed by a presentation of the regression results and a subsequent discussion of them in the third section. Finally, the paper presents a number of checks for the results’ robustness and ends with a brief conclusion.

In this paper, the effect of institutional quality on the change in comprehensive wealth has been closely analysed and quantified. The results point to a positive, statistically and economically significant effect. While the change in comprehensive wealth (hereby interpreted as sustainability), is measured by the indicator of adjusted net saving (ANS), institutional quality is measured by an average of six dimensions of governance. This positive effect was present in the IV approach, where institutional quality was instrumented by settler mortality, as well as in an OLS set-up. Furthermore, the effect appears to be robust against a number of checks. However, the reduction of the sample to ex-colonies – which is necessary due to the nature of the instrument – may cause a bias in the variable of institutional quality. Therefore, the OLS regression was conducted. Although both estimations produced comparable results, the results of the IV approach are preferred in this context as they account for endogeneity. In a second step, within the same methodological framework, the impact of institutional quality on the change in physical capital was estimated. Using the same set-up and running the regression on net national savings rate leads to results displaying a much smaller and weaker effect. Against these results, this work suggests that, compared to the saving of physical capital, the saving of non-physical capital is influenced more strongly by institutional quality. This further supports the use of the comprehensive measure of savings as a way to disentangle these effects. However, it remains to be seen if the detected relationship will be amplified in the course of the inclusion of more factors into the ANS indicator and in this way pronounce the difference between the saving of physical and non-physical capital. Furthermore, since institutions are a part of intangible capital, one could also imagine to include a factor of ‘investment in institutions’ in the indicator. Thirdly, having found this positive impact, the logical next step would be to examine in detail through which channels institutions affect ANS. Therefore, a thorough analysis of the existing savings literature and especially of the impact institutional quality has on traditional saving would have to be done, so that the results could then be applied to the comprehensive measure of saving, i.e. to ANS.