The Growing Role of Institutions under Global Uncertainty: Implications for Economic Growth in Emerging Markets

Abstract

For emerging market economies, rising global uncertainty poses a critical challenge to design credible and effective policy responses. This study examines how institutional quality affects economic growth under different global uncertainty regimes, using data from 18 emerging market economies over the period 2002–2022. By employing a panel threshold regression approach, the analysis captures the nonlinear nature of this relationship and provides new empirical evidence on its regime-dependent dynamics. The results reveal that institutional quality exerts a positive and statistically significant impact on economic growth. Moreover, this positive effect becomes substantially stronger once global uncertainty exceeds a specific threshold level, suggesting that institutions play an increasingly vital role in periods of heightened instability. The analysis also incorporates control variables derived from the Mankiw–Romer–Weil (MRW) growth model, confirming the model’s relevance in explaining growth dynamics for emerging economies. Overall, the study underscores that structural reforms aimed at strengthening institutional quality are essential for sustaining growth in emerging market economies, particularly during times of elevated global uncertainty.

Keywords

• Institutional quality
• rule of law
• global uncertainty

Küresel Belirsizlik Altında Kurumların Büyüyen Rolü: Gelişmekte Olan Piyasalar için Ekonomik Büyüme Üzerine Çıkarımlar

Abstract

Gelişmekte olan piyasa ekonomileri açısından artan küresel belirsizlik, güvenilir ve etkili politika tepkileri tasarlamak için kritik bir zorluk oluşturmaktadır. Bu çalışma, 2002–2022 döneminde 18 gelişen piyasa ekonomisine ait verileri kullanarak, kurumsal kalitenin ekonomik büyümeyi farklı küresel belirsizlik rejimleri altında nasıl etkilediğini incelemektedir. Panel eşik regresyon yaklaşımı kullanılarak, bu ilişkinin doğrusal olmayan doğası yakalanmakta ve rejime bağlı dinamiklerine ilişkin yeni ampirik kanıtlar sunulmaktadır. Bulgular, kurumsal kalitenin ekonomik büyüme üzerinde pozitif ve istatistiksel olarak anlamlı bir etki yarattığını göstermektedir. Dahası, küresel belirsizlik belirli bir eşik düzeyini aştığında bu pozitif etkinin belirgin biçimde güçlendiği görülmektedir; bu da kurumların artan istikrarsızlık dönemlerinde giderek daha hayati bir rol oynadığını göstermektedir. Analizde ayrıca Mankiw–Romer–Weil (MRW) büyüme modelinden türetilen kontrol değişkenleri kullanılmış ve bu modelin gelişen ekonomilerdeki büyüme dinamiklerini açıklamada geçerli olduğu doğrulanmıştır. Genel olarak çalışma, özellikle küresel belirsizliğin yüksek olduğu dönemlerde, kurumsal kaliteyi güçlendirmeye yönelik yapısal reformların gelişen piyasa ekonomilerinde sürdürülebilir büyüme için kritik önem taşıdığını vurgulamaktadır.

Keywords

• Kurumsal kalite
• hukukun üstünlüğü
• küresel belirsizlik

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