Abhatoo - Centre Nationale de Documentation

The objective of this paper is to explore whether institutions provide a missing link between economic growth and reduction in poverty. Institutions are definedas“therulesofthegameina society or, more formally, are the humanly devised constraints that shape human interaction”. The paper uses the Millennium Development Goals (MDGs) of the United Nations system as the appropriate analytical framework. Using a fairly large sample the paper provides evidence that confirms that improvements ininstitutions are expected to reduce poverty inastatistically significant fashion. The explanatory power of the estimated models, however, is very low. Taking account of the interaction between institutions and the level of development increases power of explanation. Moreover, the results show that the relationship between improvement in institutions and poverty depends on the stage of development.