Ponencia: Fleitas, Rius, Román, Willebald
Sebastián Fleitas (IECON - UdelaR)
Andrés Rius (IECON - UdelaR)
Carolina Román (IECON - UdelaR)
Henry Willebald (IECON - UdelaR)
Institutional quality constitutes a central concept in the recent economic development and institutionalist literatures. Our hypothesis is that difficulties to promote and sustain the enforceability of contracts and the security of property rights conditioned investment and, in consequence, economic growth in Uruguay in the long run. We first review the concepts and the approaches to define and measure institutional quality. We then adopt a measure of “institutional quality” based on the use of ”contract intensive money” (the CIM indicator). Using our long series for the CIM indicator, we estimate a structural model to explore the plausibility of our hypothesis. In the estimation, based on the seemingly unrelated regression method (SUR), we find support for the thesis that institutional quality influences growth through its impact on investment. Put differently, our results suggest that poor contract enforcement played a significant role at the origins of the Uruguay’s failure and its experience of long-run decline.
