Economic Growth Unleashed: The Power of Institutional Quality

Abstract

This paper examines the relationship between economic growth and institutional quality in the context of the Moroccan economy. Using annual data from 1970 to 2020 and an Autoregressive Distributed Lag (ARDL) cointegration approach, we analyze the long-run and short-run nexus between these two variables. The statistical tests performed, including the ADF and Phillips Perron tests, indicate integration at different orders, and the bounds cointegration test proposed by Pesaran was also conducted. The study finds that institutional quality has a positive short-term impact on economic growth. Furthermore, in the long term, the study reveals that institutional quality continues to positively influence economic growth in Morocco (P-value=0.01<5%). These results contribute valuable insights to the existing empirical literature and can guide policymakers and stakeholders in implementing institutional reforms to promote economic development.