The Institutional Environment for Economic Growth


W. J. Henisz The Wharton School, University of Pennsylvania, 2021 Steinberg Hall—Dietrich Hall, Philadelphia, PA 19104-6370,


This article forges an explicit link between an objective measure of political constraints and variation in cross-national growth rates. It derives a new measure of political constraints from a simple spatial model of political interaction that incorporates information on the number of independent branches of government with veto power and the distribution of preferences across and within those branches. The derived variable is found to have a statistically and economically significant impact on growth rates using simple ordinary least squares, three-stage least squares and generalized method of moments estimation techniques.