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NOVELTY OF PAPER

YES 2013- Oleh Havrylyshyn comment on KUNCIC “Institutional Quality Data Set” [ YESTERYEAR,INSTITUTIONS DETERMINED BY THE NOBLE BONA VUCIC --- TODAY.. BY HIS DESCENDANT ??? ]. NOVELTY OF PAPER. CONSTRUCTS COMPOSITE INST. INDEX: not first, but up to date and different- 

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NOVELTY OF PAPER

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  1. YES 2013- OlehHavrylyshyn comment onKUNCIC “Institutional Quality Data Set”[YESTERYEAR,INSTITUTIONS DETERMINED BY THE NOBLE BONAVUCIC--- TODAY.. BY HIS DESCENDANT ???]

  2. NOVELTY OF PAPER • CONSTRUCTS COMPOSITE INST. INDEX: not first, but up to date and different- • FACTOR ANALYSIS FOR WEIGHTING GIVES “LATENT INST. QUALITY”… more objective than others using simple average– (M.DeMelo early exception in DEC II paper 1996, factor analysis for transition countries • FREE ONLINE AVAILABILITY OF FULL DATA SET!! in July we all start testing KUNCIC INDEX– or maybe September ??

  3. KEY CONCLUSIONS • FIVE COUNTRY CLUSTERS , CORRELATED WITH LEVEL OF DEVELOPMENT -- not new, Kaufmann and Kraay showed same– which is good test of reasonableness of KUNCIC index • WHITHIN INST. GROUPS--LEGAL, POL, ECON –HOMOGENEITY VERY HIGH… suggesting methodology is good? • SELECTIVE (&ILLUSTRATIVE ?) EXPERIMENT OF CHANGE OVER TIME BY COUNTRY, “CONCLUDES” e.g. THAT GERMANY CATCHING UP TO USA ON LEGINST.– THAT TURKEY HAS FASTEST IMPROVEMENTS

  4. KEY ISSUES TO ADDRESS • FACTOR WEIGHTING CERTAINLY MORE OBJECTIVE BUT… SELECTIVE CHOICE OF INDICATORS CAN IMPART BIASES • COMPARATIVE EXAMPLES. (3 above) TOO LIMITED TO CONCLUDE SO MUCH • SEVERAL COUNTRY OR REGION CONCLUSIONS QUESTIONABLE OR STILL SPECULATIVE ( e.g.- p.9: cluster 3 largely Muslim )

  5. OBJECTIVITY AND SELECTION OF INDICATORS.1 p.7 says LIMITING INDICATOR LIST IS SUBJECTIVE ‘TO A DEGREE”-HE UNDERSTATES RISKS OF SERIOUS SUBJECTIVITY > WHAT TO DO ? • IN SPIRIT OF PAPER , FOR FULL OBJECTIVITY WHY NOT USE ALL AVAILABLE INDICES?? ( where is all of WB EDB? - govefficiency? Govstability ?; all of POLITYIV;l trade opennes in many? IMF’s fiscal management; • AT MIN. ABOVE SHOULD BE PART OF ROBUSTNESS TEST –DOES IT MAKE A DIFFERENCE ??

  6. OBJECTIVITY .2 • NOT USING ALL AVAILABLE INDICATORS REQUIRES BETTER EXPLANATION OF CHOICE AND FACING ENDLESS PROBLEM OF SOMEONE DISAGREEING WITH CHOICE: • LIBERTARIANS WILL INSIST REGULATORY ENVIRONMENT INCLUDE FRASER INSTITUTE’S MEASURES ; I WOULD WARN THAT FRASER USES SIZE OF GOV. AS NEGATIVE IN MARKET FREEDOM, WHICH ASSUMES ALL GOV IS A BAD.--- • BOTTOM LINE:USE ALL AVAILABLE OR FACE ENDLESS QUESTIONING

  7. COMPARATIVE EXAMPLES TOO LIMITED • CANNOT ANALYSE LARGE NUMBER OF COMAPRISONS , BUT SIMPLY SHOWING WHAT KUNCIC INDEX SHOWS IS NOT ILLUMUNATING • FOR A MORE ANALYTICAL PAPER,COMPARE TIME-PATH OF SME COUNTRIES USING OTHER INDICES • CAN EASILY ADD A LITTLE MORE ILLUSTRATION: e.g. 2-3 countries from each cluster • DOING THIS SHOULD NOT BE DIFFICULT AND WILL RAISE PAER TO MUCH MORE ANALYTICAL CATEGORY.

  8. SEVERAL QUESTIONABLE CONCLUSIONS • A VERY COMMON ERROR IN THIS FIELD IS TO FORGET INST. QUAL. CURVE IS ASYMPTOTIC– hence bottom groups countries can improve much faster; improving countries ( e.g. Central Europe) necessarily slowed down about 2005; and GERor US cannot possibly improve as rapidly as Turkey. – 2nd diff is proper measure here! • P.9 & Tab.2 discussion fairly speculative: is Being Muslim the REASON for low INST? Maybe historically , but paper does not substantiate, only implies.– France really NOT in 5?—HK & SING position so low, sugests too much weight on DEM values , as defined by NAEUR welfare function? …etc.etc.etc…..

  9. .. BUT IN THE END… WHAT ABOUT THE QUALITY OF DEC INSTITUTIONS ….

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