Institutional Quality and Education Quality in Developing Countries: Effects and Transmission Channels

ABSTRACT

The main objective of this study is to analyze the effect of institutional quality on education quality in developing countries. The literature review explores the channels through which institutional quality transits to affect education quality. The empirical analyses cover a sample of 82 developing countries. The main results obtained using ordinary least squares and two-stage least squares estimators show that institutional quality has a positive effect on student achievement and school completion, and a negative effect on educational failure. Concerning the role of transmission channels, the results show that a deterioration in institutional quality, characterized in particular by the presence of corruption, political instability, or the deterioration of government effectiveness, reduces the effectiveness of public spending on education and the quality of teaching through unethical behavior of teachers and the recruitment of untrained or less trained persons to carry out teaching tasks.