Do institutions affect sustainability?

This paper shows a significant and causal positive relationship between good institutions and sustainability. Sustainability is measured by the indicator of adjusted net saving (ANS) and institutional quality by an average of six dimensions of governance. An instrumental variable is used to rule out reverse causality. Conducting the regression accordingly on the national savings rate yields a much weaker and smaller effect. This suggests that the saving of non-physical capital is influenced more strongly by institutional quality than that of physical capital. This further supports the explanation of the 'resource curse' by institutions.