INSTITUTIONAL QUALITY AND ECONOMIC GROWTH

Yıl 2024, , 13 - 31, 15.05.2024

Niroj Duwal , Sunil Suwal

https://doi.org/10.46959/jeess.1466383

Öz

Growth and development require a framework of institutions which reduces transaction costs and thereby their effectiveness, and this will reduce the poverty problem in developing countries. The paper investigated the relationship between institutional quality and economic growth in 18 Asian developing countries from 2013 to 2020 using fixed effect model. The results revealed that sound money has a positive and significant impact on economic growth whereas size of government, legal systems and property rights, foreign trade internation, and regulations were statistically insignificant. To achieve the Sustainable Development Goals, the framework provided by the General Assembly of United Nations also given higher priority of institutional quality of the countries.

Anahtar Kelimeler

Economic Growth, Institutional Quality, Fixed Effect Model, Developing Countries

Etik Beyan

We, Niroj Duwal and Sunil Suwal, the lead author and co-author of the manucript, hereby disclose any ethical conflict. The manuscript do not hamper anyone.

Kaynakça

• Acemoglu, D., Johnson, S. & Robinson, J. A. (2001). Reversal of fortune: Geography and institutions in the making of the modern world income distribution. The Quarterly Journal of Economics, 117(4), 1231-1294.
• Acemoglu, D., Johnson, S. & Robinson, J. A. (2001). The colonial origins of comparative development: An empirical investigation. American Economic Review,91(5), 1369-1401.
• Afonso, A. & Jalles, J. T. (2016). Economic performance, government size, and institutional quality. Empirica, 43(1), 83-109.
• Ahmed, F., Kousar, S., Pervaiz, A., & Shabbir, A. (2022). Do institutional quality and financial development affect sustainable economic growth? Evidence from South Asian countries. Borsa Istanbul Review, 22(1), 189-196.
• Aiyar, S. & Ebeke, C. (2016). The Impact of Workforce Aging on European Productivity. IMF Working Paper 16(238):1, IMF.
• Asadullah, M. N. & Savoia, A. (2018). Poverty reduction during 1990-2013: Did millennium development goals adoption and state capacity matter? World Development, 105, 70-82.
• Asante, G. N., Takyi, P. O., & Mensah, G. (2023). The impact of financial development on economic growth in sub-Saharan Africa. Does institutional quality matter?. Development Studies Research, 10(1), 2156904.
• Baltagi, B. H. (2013). Econometric Analysis of Panel Data. Third Edition. John Wiley & Sons, Ltd.
• Barbier, E. B. & Burgess, J. C. (2019). Sustainable development goals indicators: Analyzing trade-offs and complementarities, World Development, 122, 295-30.
• Barro, R. (1997). Determinants of Economic Growth: A Cross-country Empirical Study. The MIT Press.
• Benhabib, J. & Spiegel, M. M. (2002). Human capital and technology diffusion. SSRN Electronic Journal.
• Butkiewicz, J. L., & Yanikkaya, H. (2006). Institutional quality and economic growth: Maintenance of the rule of law or democratic institutions, or both? Economic Modelling, 23(4), 648-661.
• Chong, A. & Calderon, C. (2000). Institutional quality and income distribution. Economic Development and Cultural Change, 48(4), 761-786.
• Dollar, D. & Kraay, A. (2003). Institutions, trade, and growth. Journal of Monetary Economics, 50(1), 133-162.
• Domar, E. (1946). Capital expansion, rate of growth and employment. Econometrica, 14, 137-147.
• Doyle, E. & Martinez-Zarzoso, I. (2011) Productivity, trade, and institutional quality: A panel analysis. Southern Economic Journal, 77(3), 726-752.
• Drury, A. C., Krieckhaus, J. & Lusztig, M. (2006). Corruption, democracy, and economic growth. International Political Science Review, 27(2), 121-136.
• Fraser Institute (2022). Economic Freedom [Data set].
• Gani, A., & Prasad, B. C. (2006). Institutional quality and trade in Pacific Island Countries. ARTNet Working Paper Series No. 20, ARTNet.
• Hall, R. E. & Jones, C. I. (1999). Why do some countries produce so much more output per worker than others? The Quarterly Journal of Economics, 114(1), 8-116.
• Harrod, R. F. (1939) An essay in dynamic theory. Economic Journal, 49(193), 14-33.
• Hassan, S., Affandi, H. & Jawad, K. (2023). Financial inclusion institutional quality and economic growth in Asia. Qlantic Journal of Social Sciences, 4(3), 87-98.
• Josheski, D., Lazarov, D., Fotov, R. & Koteski, C. (2011). Institutions and growth revisited: OLS, 2SLS, G2SLS random effects IV regression and panel fixed (within) IV regression with cross-country data. MPRA Paper No. 33842, University Library of Munich, Germany.
• Kandil, M. (2009). Determinants of institutional quality and their impact on economic growth in the MENA region. International Journal of Development Issues, 8(2), 134-167.
• Knack, S. & Keefer, P. (1995). Institutions and economic performance: Cross-country tests using alternative institutional indicators. Economics and Politics, 7(3), 207-227.
• Lee, K. & Kim, B. Y. (2009). Both institutions and policies matter but differently for different income groups of countries: Determinants of long-run economic growth. World Development, 37(3), 533-549.
• Lin, J. V. & Nugent, J. B. (1995). Handbook of Development Economics. Elsevier. 1995.
• Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22, 3-43. Mansfield, Z. (2014). The Indices Trap in the Global System.
• Marx, K. (1889). Capital: A Critical Analysis of Capitalist Production, Appleton & Company.
• Mehmood, W., Din, S. M. U., Aman-Ullah, A., Khan, A. B. & Fareed, M. (2022). Institutional quality and economic growth: Evidence from South-Asian countries. Journal of Public Affairs, 23(1), 1-13.
• Nawaz, S. (2015). Growth effects of institutions: A disaggregated analysis. Economic Modelling, 45, 118-126.
• Nawaz, S., Iqbal, N., & Khan, M. A. (2014). The impact of institutional quality on economic growth: Panel evidence. The Pakistan Development Review, 53(1), 15-31.
• Nguyen, C. P., Su, T. D., & Nguyen, T. V. H. (2018). Institutional quality and economic growth: The case of emerging economies. Theoretical Economics Letters, 8(11), 1943-1956.
• North, D. C. (1990). Institutions, Institutional Change, and Economic Performance. Cambridge University Press. Rodrik, D. & Subramanian, A. (2008). Why did financial globalization disappoint? IMF Staff Papers 56. International Monetary Fund.
• Rodrik, D. (2000). Institutions for high-quality growth: What they are and how to acquire them. Studies in Comparative International Development, 35, 3-31.
• Romer, P. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94, 1002-1037. Schumpeter, J. A. (1942). Capitalism, socialism, and democracy. Harper & Row, 36, 132-145.
• Shah, Q., Zubair, S. and Hussain, S. (2020). The impact of institutions on economic growth in selected developing countries: An analysis based on Bayesian panel estimation. Journal of Applied Economics and Business Studies, Vol. 4(4), 251-272.
• Smith, A. (1776). An Inquiry into the Nature and Causes of Wealth of Nation. W. Strahan and T. Cadell.
• Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65-94.
• Swan, T. W. (1956). Economic growth and capital accumulation. Economic Record, 32(2), 334-361.
• The World Bank. (2023). World Development Indicators [Data set].
• Thirlwall, A. P. & Lopez, P. P. (2017). Economics of Development: Theory and evidence. Tenth Edition, Bloomsbury Academic.
• Tran, O. K. T., Dinh Le, H., & Nguyen, A. H. V. (2021). Role of institutional quality in economic quality in economic development: A case study of Asian countries. Problems and Perspectives in Management, 19(2), 357-369.
• Valeriani, E. & Peluso, S. (2011). The impact of institutional quality on economic growth and development: An empirical study. Journal of Knowledge Management, Economics, and Information Technology, 16, 1-25.
• Yildirim, A., & Gokalp, M. F. (2016). Institutions and economic performance: A review on the developing Countries. Procedia Economics and Finance, 38, 347-359.