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The Impact Of Institutional Quality On Economic Growth: A Comparative Analysis Of The Eu And Non-Eu Countries Of Southeast Europe

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  • Marija Radulović

Abstract

The quality of institutions and its impact on economic growth has become more important in recent years, especially in transition countries that must reform their institutions to create a mar-ket economy and meet the preconditions for joining the EU. This is the case with the countries of Southeastern Europe, some of which are already EU members, while oth-ers are in the process of joining the EU. This paper examines the effects of institutional quality on the economic growth of South-East Europe and compares these effects in EU and non-EU countries for the period 1996–2017, using Worldwide Governance Indicators (WGI) to measure the quality of institutions and the GDP growth rate. The panel autoregressive distributed lag (ARDL) approach is used to analyse the relationship between institutional quality and economic growth. The results show that in EU countries there is a long-run relation-ship between institutional quality and eco-nomic growth for all significant variables, while in the non-EU countries only govern-ment effectiveness, political stability and absence of violence, regulatory quality, and voice and accountability are statistically significant. Furthermore, in EU countries there is no short-run relationship between institutional quality and economic growth, while in the non-EU countries of SEE, regu-latory quality and voice and accountability are significant.

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  • Marija Radulović, 2020. "The Impact Of Institutional Quality On Economic Growth: A Comparative Analysis Of The Eu And Non-Eu Countries Of Southeast Europe," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(225), pages 163-182, April – J.
    • Handle: RePEc:beo:journl:v:65:y:2020:i:225:p:163-182
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    2. Liu, Dongwang & Yang, Ziqi, 2024. "Asymmetric linkages among fintech, oil prices, governance, and growth in Southeast Asian economies," Resources Policy, Elsevier, vol. 88(C).
    3. Azimi, Mohammad Naim & Rahman, Mohammad Mafizur & Maraseni, Tek, 2025. "Powering progress: The interplay of energy security and institutional quality in driving economic growth," Applied Energy, Elsevier, vol. 378(PA).
    4. Mladen Stamenković, 2023. "Where Did All The Papers Go? A Bibliometric Overview Of Publications In Economics From Serbia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 68(236), pages 29-50, January –.
    5. Filip, Marinela-Daniela & Setzer, Ralph, 2025. "The impact of regional institutional quality on economic growth and resilience in the EU," Working Paper Series 3045, European Central Bank.
    6. Aleksandar B. Todorov, 2023. "Rule of Law and Large Firms Concentration in Southeast Europe," Bulgarian Economic Papers bep-2023-06, Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski, revised Oct 2023.
    7. Md. Golam Kibria & M. M. K. Toufique, 2023. "Institutional governance and quality of life: evidence from developing countries," SN Business & Economics, Springer, vol. 3(3), pages 1-20, March.
    8. Camelia Negri & Gheorghița Dincă, 2023. "Public sector’s efficiency as a reflection of governance quality, an European Union study," PLOS ONE, Public Library of Science, vol. 18(9), pages 1-23, September.

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    Keywords

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    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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