The impact of institutional quality on economic growth: Evidence from post-soviet countries

Abstract

The paper investigates the long-run impact of the institutional environment on economic growth for the sample of post-Soviet countries in 1996-2021. Using the Autoregressive Distributive Lag Model, we found that a U-shaped link exists between institutional quality and economic growth. Regarding the institutional quality dimensions, a similar link was observed for four out of six factors (POLSTAB, GOVEFF, RULELAW, CONTCORR). In contrast, the other two dimensions (REGQUAL, VOACC) exhibited inverted U-shaped impact on the dependent variable. Moreover, findings provide insight into the impact of control variables such as inflation (INF), openness (OPE), and population growth rate (POPGROWTH) on economic growth. More precisely, openness was found to have positive impact on the dependent variable, while inflation and population growth rate both had negative effect on economic growth. Based on these results, the paper suggests some policy implications for post-Soviet countries in terms of achieving economic growth by improving the institutional quality environment.

Institutional quality and economic growth in the non-EU post-Soviet countries: Does energy abundance matter?

“…As this research estimates the impact of institutional quality on economic growth, we take institutional quality as the main independent variable. Since the authors, such as Chong (2020), Tran et al (2021), andGasimov et al (2023) found a nonlinear link between institutional environment and economic growth rate, we include square of institutional quality. Where i and t subscript the country and time.…”

“…This study uses panel data covering 12 post-Soviet countries from 1996 to 2021. We use GDP per capita growth rate as an outcome variable following Butkiewicz and Yanikkaya (2006), Náplava (2018), as well as Gasimov et al (2023). Institutional quality employed as the main independent variable is obtained by calculating arithmetic mean of the following factors:…”

“…In terms of control variables, we take consumer price index as a proxy for inflation, share of trade in GDP as an openness variable and annual growth rate of population following Kandil (2009), Nguyen et al (2018), Tran et al (2021), Wandeda et al (2021), Gasimov et al (2023), etc. All data is obtained from the World Bank database.…”

Institutional quality and renewable energy transition: Empirical evidence from Poland

“…Collectively, these elements create the overall environment and climate in which businesses and organizations operate (Chowdhury et al, 2019). Institutional quality can be considered from several viewpoints that determine effectiveness, efficiency, transparency, and legitimacy (Gasimov et al, 2023b). The concept of effectiveness involves evaluating whether institutions successfully reach their predetermined objectives and if the results are achieved with efficiency and proficiency (Poniatowicz et al, 2020).…”

“…When discussing issues related to renewable energy sources, attention should be given to regulations and their impact on the economy. This includes examining competitiveness, efficiency, and the protection of consumers' and investors' interests (Gasimov et al, 2023b).…”