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Do market-supporting institutions promote sustainable development? Evidence from developing economies

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  • Azam, Muhammad
  • Ftiti, Zied
  • Hunjra, Ahmed Imran
  • Louhichi, Wael
  • Verhoeven, Peter

Abstract

An institutional structure may affect traditional drivers of development, such as foreign direct investment and economic growth, and emerging economies’ ability to achieve sustainable development. This study expands on this literature by assessing the role of market-supporting institutions in achieving sustainable development goals in 42 developing economies. Using various measures of market-supporting institutions and a dynamic panel data approach, we find that all institutions play an important role in achieving sustainable development. Furthermore, we show that foreign direct investment and economic growth have a positive indirect effect on sustainable development by promoting the quality of market-supporting institutions and adopting renewable power generation. Our results suggest that policymakers in developing countries should focus on the robustness of their market-supporting institutions to achieve sustainable development.

Suggested Citation

  • Azam, Muhammad & Ftiti, Zied & Hunjra, Ahmed Imran & Louhichi, Wael & Verhoeven, Peter, 2022. "Do market-supporting institutions promote sustainable development? Evidence from developing economies," Economic Modelling, Elsevier, vol. 116(C).
    • Handle: RePEc:eee:ecmode:v:116:y:2022:i:c:s0264999322002620
    DOI: 10.1016/j.econmod.2022.106023
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    More about this item

    Keywords

    Market institutions; Renewable energy generation; Sustainable development;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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