Institutions, Legal Origins, and Government Size: Implications for Sustainable Economic Growth = Institutions, Legal Origins, and Government Size: Implications for Sustainable Economic Growth

다국어 초록 (Multilingual Abstract)

Total factor productivity (TFP) has long been recognized as the main engine of sustainable economic growth. Based on a sample of 24 OECD countries, the panel estimation finds cumulative R&D experience - both domestic and foreign - and human capital to be significant determinants of TFP consistent with theoretical predictions. Building upon these traditional determinants of TFP, this study finds that a strong rule of law helps to promote sustainable growth by inducing higher levels of TFP, larger returns to domestic R&D and human capital, and greater international R&D spillovers. Besides the quality of law and order, the historical origins of legal systems are also found to have a significant influence on the degree to which domestic and foreign R&D capital and a measure of human capital affect TFP. Finally, this study finds evidence that relatively large government tends to be detrimental to long-term growth by reducing the extent of benefits from domestic R&D, from international R&D spillovers, and from human capital formation.