A Proposal for a Standard With Innovation Management System

Oscar Cristi, José Ernesto Amorós and Juan Pablo Couyoumdjian
Leaving the methodological questions aside, our results indicate that informality has a positive effect
on economic development. When we use NEC as a proxy for informality this relationship is positive
only up to a given level of NEC. This would seem to suggest that the entrepreneurial spirit rules over
the effects of a lower institutional quality that is associated with informality. Our work thus implies that
there may well be costs and benefits associated to informality. This is, however, an issue that’s worth
further examination.
Appendix A
From an empirical point of view the Non-Income Human Development Index (NIHDI) can be
measured at a country level by calculating the deviation of its Human Development Index (HDI) from
the predicted value for HDI given its GDP per capita. For this we propose the following equation for
HDI:
χ 0 + χ g(GDP ) + ε
1 it it (1)
where, is an intercept term, is a slope coefficient, g(GDP) is some transformation of the GDP
per capita and is an error term. The transformation of income is based on the recognition that the
relationship between HDI and GDP per capita may be non-linear. We use the Box-Cox transformation
for letting the data determine what functional form is more appropriate. This Box –Cox transformation
is:
where λ is an unknown parameter.
Then we replace (2) in (1) and we obtain the maximum likelihood estimates for χ 0 , χ1 and λ
( 0 ˆχ , ˆχ 1and
). Results for these estimates are available upon request.
λˆ
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