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Institutions and Economic Growth Nexus: A Cross Country Analysis

Author

Listed:
  • Rabia Liaqat

    (Quaid-e-Azam University Islamabad, Pakistan)

  • Hafiz Muhammad Abubakar Siddique

    (Federal Urdu University of Arts, Science and Technology Islamabad, Pakistan)

  • Iram Shehzadi

    (Govt. Degree College for Women, Gujranwala, Pakistan)

Abstract

Differences in economic growth among countries are likely to arise because of differences in capacity of regulatory institutions. It is believed that good quality institutions lead towards higher economic growth. This study is designed to investigate the impact of institutional quality on economic growth for 50 developing and developed countries over 1996-2013, using OLS and 2SLS methods. The major determinants of growth include institutions along with physical capital, human capital and inflation. The results obtained revealed that institutions have significant and positive influence on economic growth for the whole sample. The results are highly significant for developed countries. In developing countries human capital and a reduction in corruption are the most powerful institutional measures for boosting growth. This study recommends that governments of developing and developed countries should focus on development of quality institutions.

Suggested Citation

  • Rabia Liaqat & Hafiz Muhammad Abubakar Siddique & Iram Shehzadi, 2018. "Institutions and Economic Growth Nexus: A Cross Country Analysis," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 7(2), pages 72-80, June.
    • Handle: RePEc:rfh:bbejor:v:7:y:2018:i:2:p:72-80
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    References listed on IDEAS

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    Cited by:

    1. Adusei, Elizabeth, 2020. "The impact of Foreign Aid on Economic Growth in Sub-Sahara Africa: The mediating role of Institutions," MPRA Paper 104561, University Library of Munich, Germany.

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    More about this item

    Keywords

    Institutions; Economic growth; 2SLS; Developed and Developing countries;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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