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
1. CONSTRUCTS COMPOSITE INST. INDEX:
not first, but up to date and different-
2. 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
3. FREE ONLINE AVAILABILITY OF FULL
DATA SET!! in July we all start testing
KUNCIC INDEX– or maybe September ??
KEY CONCLUSIONS
1. FIVE COUNTRY CLUSTERS , CORRELATED WITH LEVEL OF
DEVELOPMENT -- not new, Kaufmann and Kraay
showed same– which is good test of reasonableness of
KUNCIC index
2. WHITHIN INST. GROUPS--LEGAL, POL, ECON –
HOMOGENEITY VERY HIGH… suggesting methodology
is good?
3. 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
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 )
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 ??
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
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 TIMEPATH 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.
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…..
.. BUT IN THE END… WHAT ABOUT THE
QUALITY OF DEC INSTITUTIONS ….