Institutional Quality Index

The Institutional Quality Index (IQI) is a composite indicator that assesses Institutional Quality in Italy. IQI is based on five groups of elementary indexes (evaluating corruption, governance, regulation, law enforcement and social participation) and measures institutional quality at the provincial and regional levels for the period 2004-2019.

The items of IQI concern 5 major pillars of institutional quality at provincial level: (1) Voice and accountability capturing the citizens degree of participation in public elections, civic and social associations, the number of social cooperatives, the INVALSI test and the cultural liveliness measured in terms of books published; (2) Government effectiveness measuring the endowment of social and economic structures in Italian provinces and the administrative capability of provincial and regional governments in terms of health policies, waste management and environment; (3) Regulatory quality concerning the degree of openness of the economy, the rate of firms mortality, indicators of business environment and business density; (4) Rule of law summarizing data on crime against persons or property, magistrate productivity, trial times, tax evasion and shadow economy; (5) Corruption collecting data on crimes against the Public Administration, the number of local administrations overruled by the federal authorities and the Golden-Picci Index.

The IQI idea of Institutional Quality is inspired by the work of Douglass North. According to North “institutions are the rules of the game in a society”. Institutions shape the set of incentives guiding individual choices and behaviour. In so doing, they significantly affect the development path followed by an economic system, its capacity for growth, the extent of inequalities it allows, etc. In recent years, a large research literature has investigated the links between institutional quality and economic outcomes. IQI is a contribution to that burgeoning field.