There are many different indicators of institutional quality that measure one aspect or set of aspects of the social, economic, and political environment. The degree of correlation among these measures leads to a concern that some other more fundamental underlying aspect of the good society is really behind claims that institutions matter. This study examines six indicators of institutional quality to see whether their statistical performance against a common benchmark, GDP per capita, is similar or not. The answer, based on our evidence, is somewhere in the middle. The concepts embedded in the various measures of institutional quality clearly overlap in many ways but in other ways they are very different.
Robert Lawson and Ryan Murphy
Joshua C. Hall, Robert A. Lawson and Saurav Roychoudhury
In this chapter we argue that the ability of people to freely trade, enter into contracts, and start businesses in a system of private property, and the rule of law are crucial for productive entrepreneurship. One measure of how freely individuals can engage in economic activity is the Economic Freedom of the World (EFW) index. After examining the economic policies that harm economic freedom and possibly entrepreneurship, we highlight the correspondence between economic freedom and a number of measures of entrepreneurship. We conclude with some thoughts regarding future research involving economic freedom and entrepreneurship. Keywords: Institutions, entrepreneurship, economic freedom