A Panel Data Analysis of Globalization and Institutional Quality: An Asian Perspective

Abstract

This paper studies the impact of globalization on institutional quality in the Asian countries. The factor those may be a cause of and improves institutions and their quality has been rarely and its impact on institutional quality. For this purpose it employs three different fixed effects models for panel data analysis from a diverse set of Asian countries over the period 1970 2009. Trade openness, capital flows and foreign direct investment is used as a measure of globalization while democracy, property rights and polity 2 is used for measuring institutional quality. Our finding shows that there is a significant but not a strong impact of trade or capital flows and FDI on democracy or property rights and polity 2. The study also employed fixed effect on the four panels of South, West, North and East Asian courtiers, and again find not very strong relationship among variables that globalization improves democracy but at the same time globalization is not a strong factor to affect institutional quality but there may be some other factors which can be tested in further research.