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The Role Of Institutional Conditions In The Impact Of Economic Growth On Poverty

Author

Listed:
  • Saeedeh Behnezhad

    (Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Iran)

  • Seyed Mohammad Javad Razmi

    (Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Iran)

  • Seyed Saeed Malek Sadati

    (Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Iran)

Abstract

Purpose: According to the New Institutional View, the main reason for the great difference between countries in terms of growth, development and economic welfare is their institutional structures and foundations. Creating a stable structure in human relationships, institutions reduce insecurity, transaction costs and increase people's motivation. In this regard, the present study examined the role of institutional conditions in the impact of economic growth on poverty in middle and high per capita income countries from 2004 to 2017. Design/methodology/approach: This study was conducted by the panel threshold approach and the general index of good governance was used to measure the institutional quality, calculated using the weighted average of the six governance indices of the World Bank. Findings: The threshold value in this model is -1.0583, indicating that when the good governance index crosses this threshold and the institutional quality improves, economic growth will reduce poverty to a greater extent. Research limitations/implications: In this study, we faced data limitations on poverty, and many countries did not have continuous annual data. Originality/value: To my knowledge, no study has been conducted yet on the role of institutional quality in the impact of economic growth on poverty. Therefore, this study enhances our understanding of the importance of institutions and their effect on the relationship between economic growth and poverty.

Suggested Citation

  • Saeedeh Behnezhad & Seyed Mohammad Javad Razmi & Seyed Saeed Malek Sadati, 2021. "The Role Of Institutional Conditions In The Impact Of Economic Growth On Poverty," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 14(2), pages 78-85, September.
    • Handle: RePEc:tei:journl:v:14:y:2021:i:2:p:78-85
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    References listed on IDEAS

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    Cited by:

    1. Khalid Sekkat, 2023. "Does economic growth benefit the poor? The role of institutions and religions," Economics and Politics, Wiley Blackwell, vol. 35(3), pages 892-918, November.

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    More about this item

    Keywords

    Economic Growth; Institutional Conditions Panel Threshold; Poverty;
    All these keywords.

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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