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Institutions, inequality and well-being in Latin America and Caribbean Countries

Ahsan, Syed and Oberoi, Jaideep S (2003) Institutions, inequality and well-being in Latin America and Caribbean Countries. Working paper. CESifo, Munich, Germany Working Paper No. 846. (doi:Working Paper No. 846)

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Abstract

This paper focuses on the role of “institutions” in the fight against poverty and inequality. Our view of institutions encompasses formal rules designed by polity (including those in the legal and economics sphere such as rules of property rights, contracts and liabilities) as well as informal rules (usually labelled social capital) that have emerged over the history of one’s civilisation. The inclusion of health, nutrition, and literacy indicators in defining well-being (or, non-income poverty à la capability approach of Amartya Sen) allows a rich discussion of policy interventions. While both orientations as to the concepts of poverty, inequality and institutions are expounded on a priori reasoning, empirical analysis with LAC data prove rewarding. Quality of institutions (measured by a composite variable called institutional capital, IC) turns out to be a key factor explaining well-being. Further where the level of income is also important to the explanation, the quantitative role of the institutional factor dominates that of the income variable. Within IC, political stability (or lack of violence) appeared to provide the more precise estimates in every case. Consequently we argue that the foremost policy interventions ought to be in the areas of building both adequate formal institutions, as well as creating an enabling environment for the informal institutions (such as social capital) to flourish and find their own roots. The principal focus of the policy debate must centre on the mutual interaction of market as well as non-market institutions in reducing poverty broadly speaking.

Item Type: Monograph (Working paper)
DOI/Identification number: Working Paper No. 846
Subjects: H Social Sciences > HC Economic History and Conditions
Divisions: Faculties > Social Sciences > Kent Business School
Depositing User: Jaideep S Oberoi
Date Deposited: 04 Dec 2018 15:43 UTC
Last Modified: 30 May 2019 08:27 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/70616 (The current URI for this page, for reference purposes)
Oberoi, Jaideep S: https://orcid.org/0000-0002-1101-7612
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