INSTITUTIONS, INVESTMENT AND ECONOMIC GROWTH: A CROSS-COUNTRY AND PANEL DATA STUDY

In this study, both cross-country and panel techniques have been used to analyze the long-term impact of institutions on investment and economic growth in the context of neoclassical model. The empirical results indicate that both physical and human capital investment have positive impact on economic growth. Economic freedom has a direct impact on economic growth by enhancing factor productivity and indirect by increasing investment. Political and civil liberties also exert positive impact on investment. Further, an important relationship exists between institutional freedom and human capital investment in both cross-country and panel data analysis.