Economic growth: do institutions matter?

Abstract

The aim of this paper is determining the importance of institutional quality on economic growth. Using a panel data estimated by Fixed Effects, the relation and impact of neoclassical control variables and institutional indicators on economic growth is analysed for 92 countries between 1996 and 2017. It is found that neoclassical predictions are fulfilled. According to institutional factor, it is found strong evidences about significance of government effectiveness, control of corruption and political stability to improve growth of countries. On contrary, it is found that voice and accountability, regulatory quality and political regime were not significant in this study but rule of law is predicted to have a significant negative impact.