Institutions and cross-country income disparities

This paper explores the influences of institutions on cross-country income levels. Rule of law and political stability and absence of violence are used to proxy for institutional quality for 133 countries over the time period 2002-2013. The results from ordinary least squares estimations reaffirm that countries with strong institutions have higher levels of income. These results held when countries were partitioned into high income and low-middle income brackets. The rule of law and its dimensions proved to be stronger than political stability and absence of violence