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

Öz

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.

Anahtar Kelimeler

• Institutional quality
• rule of law
• global uncertainty

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

Öz

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.

Anahtar Kelimeler

• Kurumsal kalite
• hukukun üstünlüğü
• küresel belirsizlik

Kaynakça

1. Acemoglu, D., & Johnson, S. (2005). Unbundling institutions. Journal of political Economy, 113(5), 949-995.
2. Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The colonial origins of comparative development: An empirical investigation. American economic review, 91(5), 1369-1401.
3. Acemoglu, D., Johnson, S., & Robinson, J. A. (2005). Institutions as a fundamental cause of long-run growth. Handbook of economic growth, 1, 385-472.
4. Acemoglu, D., Johnson, S., Robinson, J., & Thaicharoen, Y. (2003). Institutional causes, macroeconomic symptoms: volatility, crises and growth. Journal of monetary economics, 50(1), 49-123.
5. Acs, Z. J., Estrin, S., Mickiewicz, T., & Szerb, L. (2018). Entrepreneurship, institutional economics, and economic growth: an ecosystem perspective. Small Business Economics, 51, 501-514.
6. Ahir, H., Bloom, N., & Furceri, D. (2022). The world uncertainty index (No. w29763). National Bureau of Economic Research.
7. Aidt, T., Dutta, J., & Sena, V. (2008). Governance regimes, corruption and growth: Theory and evidence. Journal of comparative economics, 36(2), 195-220.
8. Aizenman, J., Park, D., Qureshi, I. A., Saadaoui, J., & Uddin, G. S. (2024). The performance of emerging markets during the Fed’s easing and tightening cycles: a cross-country resilience analysis. Journal of International Money and Finance, 148, 103169.

9. Akpilic, F. (2025). Global uncertainty, institutional quality, financial development, and foreign direct investment inflows. The Journal of International Trade & Economic Development, 1-27.
10. Alam, M. R., Kiterage, E., & Bizuayehu, B. (2017). Government effectiveness and economic growth. Economic Bulletin, 37(1), 222-227.
11. Alfaro, L., Kalemli-Ozcan, S., & Volosovych, V. (2008). Why doesn't capital flow from rich to poor countries? An empirical investigation. The review of economics and statistics, 90(2), 347-368.
12. Aparicio, S., Urbano, D., & Audretsch, D. (2016). Institutional factors, opportunity entrepreneurship and economic growth: Panel data evidence. Technological forecasting and social change, 102, 45-61.
13. Baker, S. R., Bloom, N., & Davis, S. J. (2016). Measuring economic policy uncertainty. The quarterly journal of economics, 131(4), 1593- 1636.
14. Barro, R. J. (1996). Determinants of economic growth: A cross-country empirical study. NBER Working Paper, 5698.
15. Bernanke, B. S. (1983). Irreversibility, uncertainty, and cyclical investment. The quarterly journal of economics, 98(1), 85-106.
16. Bloom, N., Bond, S., & Van Reenen, J. (2007). Uncertainty and investment dynamics. The review of economic studies, 74(2), 391-415.
17. Bonanno, G., Errico, L., Fiorino, N., & Ricciuti, R. (2024). The impact of government size on corruption: A meta‐regression analysis. Journal of Economic Surveys, 1-31.
18. Bosma, N., Content, J., Sanders, M., & Stam, E. (2018). Institutions, entrepreneurship, and economic growth in Europe. Small Business Economics, 51, 483-499.
19. Briguglio, L. P. (2016). Exposure to external shocks and economic resilience of countries: evidence from global indicators. Journal of Economic Studies, 43(6), 1057-1078.
20. Briguglio, L., Cordina, G., Farrugia, N., & Vella, S. (2009). Economic Vulnerability and Resilience: Concepts and Measurements. Oxford Development Studies, 37(3), 229-247.
21. 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.
22. Cavusoglu, T., & Teoman, O. (2024). Government Size and Corruption in Turkey. Public Finance Review, 52(6), 910-927.
23. Chen, H. Y., Chen, S. S., & Chang, C. C. (2024). How do institutions affect output recovery after financial crises?. Journal of International Money and Finance, 146, 103120.
24. Chen, H. Y., Chen, S. S., & Chang, C. C. (2024). How do institutions affect output recovery after financial crises?. Journal of International Money and Finance, 146, 103120.
25. Cieślik, A., & Goczek, Ł. (2018). Control of corruption, international investment, and economic growth–Evidence from panel data. World development, 103, 323-335.
26. Cornell, A., Knutsen, C. H., & Teorell, J. (2020). Bureaucracy and growth. Comparative Political Studies, 53(14), 2246-2282.
27. Dabla-Norris, M. E., Ho, G., & Kyobe, M. A. (2016). Structural reforms and productivity growth in emerging market and developing economies. IMF Working Paper, 16/15.
28. Dixit, A. K., & Pindyck, R. S. (1994). Investment under uncertainty. Princeton university press. Drury, A. C., Krieckhaus, J., & Lusztig, M. (2006). Corruption, democracy, and economic growth. International political science review, 27(2), 121-136.
29. Ekeocha, D. O., Ogbuabor, J. E., Ogbonna, O. E., & Orji, A. (2023). Economic policy uncertainty, governance institutions and economic performance in Africa: are there regional differences?. Economic Change and Restructuring, 56(3), 1367-1431.
30. Evans, P., & Rauch, J. E. (1999). Bureaucracy and growth: a cross-national analysis of the effects of “Weberian” state structures on economic growth. American sociological review, 64(5), 748-765.
31. Fayissa, B., & Nsiah, C. (2013). The impact of governance on economic growth in Africa. The Journal of Developing Areas, 47(1), 91-108.
32. Gomado, K. M. (2025). Impact of uncertainty on economic growth: The role of pro‐market institutions in developing countries. Kyklos, 78(1), 3-44.
33. Gründler, K., & Potrafke, N. (2019). Corruption and economic growth: New empirical evidence. European Journal of Political Economy, 60, 101810.
34. 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), 83-116.
35. Handley, K. (2014). Exporting under trade policy uncertainty: Theory and evidence. Journal of international Economics, 94(1), 50-66.
36. Handley, K., & Limao, N. (2015). Trade and investment under policy uncertainty: theory and firm evidence. American Economic Journal: Economic Policy, 7(4), 189-222.
37. Hansen, B. E. (1999). Threshold effects in non-dynamic panels: Estimation, testing, and inference. Journal of econometrics, 93(2), 345- 368.
38. Kalhoro, M. R., Kumar, A., Kyaw, K., & Memon, P. A. (2026). Enhancing Economic Activity by Mitigating Uncertainty: Exploring the Roles of the Financial System and Institutional Quality. Journal of Public Affairs, 26(1), e70108.
39. Kaufmann, D. & Kraay, A. (2024). The Worldwide Governance Indicators: Methodology and 2024 Update. Policy Research Working Paper, 10952.
40. Knack, S., & Keefer, P. (1995). Institutions and economic performance: cross‐country tests using alternative institutional measures. Economics & politics, 7(3), 207-227.
41. Leduc, S., & Liu, Z. (2016). Uncertainty shocks are aggregate demand shocks. Journal of monetary economics, 82, 20-35.
42. Libman, A. (2012). Democracy, size of bureaucracy, and economic growth: evidence from Russian regions. Empirical economics, 43, 1321-1352.
43. Lugilde, A., Bande, R., & Riveiro, D. (2019). Precautionary saving: a review of the empirical literature. Journal of Economic Surveys, 33(2), 481-515.
44. Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. The quarterly journal of economics, 107(2), 407-437.
45. Mauro, P. (1995). Corruption and growth. The quarterly journal of economics, 110(3), 681-712.
46. Méon, P. G., & Sekkat, K. (2005). Does corruption grease or sand the wheels of growth?. Public choice, 122, 69-97.
47. Miao, J. (2004). A note on consumption and savings under Knightian uncertainty. Annals of Economics and Finance, 5(2), 299-311.
48. Minsky, H. P. (1986). Stabilizing an unstable economy. New Haven, CT: Yale University Press.
49. Mo, P. H. (2001). Corruption and economic growth. Journal of comparative economics, 29(1), 66-79.
50. MSCI (2025). Market Classification. Available at https://www.msci.com/our-solutions/indexes/market-classification (Access date:
51. Murphy, K. M., Shleifer, A., & Vishny, R. W. (1993). Why is rent-seeking so costly to growth?. The American Economic Review, 83, 409- 10.04.2025). 414.
52. Nawaz, S., Iqbal, N., & Khan, M. A. (2014). The impact of institutional quality on economic growth: Panel evidence. The Pakistan Development Review, 15-31.
53. North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge University.
54. Nur-tegin, K., & Jakee, K. (2020). Does corruption grease or sand the wheels of development? New results based on disaggregated data. The Quarterly Review of Economics and Finance, 75, 19-30.
55. Ogbonna, O. E., Ogbuabor, J. E., Manasseh, C. O., & Ekeocha, D. O. (2022). Global uncertainty, economic governance institutions and foreign direct investment inflow in Africa. Economic Change and Restructuring, 55(4), 2111-2136.
56. PRS Group (2025). The International Country Risk Guide (ICRG). https://www.prsgroup.com/explore-our-products/icrg/.
57. Rivera‐Batiz, F. L. (2002). Democracy, governance, and economic growth: theory and evidence. Review of Development Economics, 6(2), 225-247.
58. Rodrik, D. (1998). Why do more open economies have bigger governments?. Journal of political economy, 106(5), 997-1032.
59. Rodrik, D. (1999). Where did all the growth go? External shocks, social conflict, and growth collapses. Journal of economic growth, 4, 385-412.
60. Rodrik, D., Subramanian, A., & Trebbi, F. (2004). Institutions rule: the primacy of institutions over geography and integration in economic development. Journal of economic growth, 9, 131-165.
61. Rojas-Suarez, L. (2023). Identifying macroeconomic resilience to external shocks in emerging and developing countries (Vol. 655, pp. 1-34). Working Paper, Center for Global Development.
62. Rose-Ackerman, S. (1999). Corruption and Government: Causes, Consequences, and Reform. Cambridge University Press.
63. Saha, S., & Sen, K. (2021). The corruption–growth relationship: does the political regime matter?. Journal of Institutional Economics, 17(2), 243-266.
64. Saha, S., Mallik, G., & Vortelinos, D. (2017). Does corruption facilitate growth? A cross-national study in a non-linear framework. South Asian Journal of Macroeconomics and Public Finance, 6(2), 178-193.
65. Sonenshine, R., & Erickson, B. O. (2022). Institutional determinants of emerging market returns and flows. Emerging Markets Review, 51, 100888.
66. Uberti, L. J. (2022). Corruption and growth: Historical evidence, 1790–2010. Journal of Comparative Economics, 50(2), 321-349.
67. UNDP (2025). Human Development Index. https://hdr.undp.org/data-center/human-development-index#/indicies/HDI (Access date: 10.04.2025).
68. World Bank (2025a). Worldwide Governance Indicators. https://www.worldbank.org/en/publication/worldwide-governance- indicators (Access date: 10.04.2025).
69. World Bank (2025b). World Development Indicators. https://databank.worldbank.org/source/world-development-indicators (Access date: 10.04.2025).