Concept of institutional frontier and its analytical capacity in exploration of economic growth

Abstract

The goal of the paper is to explore the concept of institutional frontier and examine its analytical capacity in considerations of economic growth. There is no unequivocal answer to the question of the best economic institutions for economic growth as the answer depends on the level of development. The concept of institutional frontier cannot resolve the problem of control of influence of culture on economic outcomes, as it is evident that culture is, together with institutions, a significant factor of economic growth. It is demonstrated that specifying a single institutional frontier is not desirable; instead this should be done at the level of the economic institutions themselves or their groups. Measuring the institutional frontier is linked to substantial methodological challenges. The analytical capacity of the institutional frontier concept is rather limited, but its exploration provided numerous unintentional side benefits related to the understanding the mechanics of economic growth.

Keywords

• economic growth
• institutional frontier
• efficiency frontier
• technology frontier
• culture
• economic freedom