Determinants of institutional quality and their impact on economic growth in the MENA region
Purpose - The purpose of this paper is to analyze determinants of institutional quality based on six separate indicators of governance: voice and accountability, political stability, government effectiveness, regulatory quality, rule of law, and control of corruption. Design/methodology/approach - The determinants under consideration include measures of economic freedom by the Cato Institute and the Heritage Foundation, indicators of policy quality, real per capita gross domestic product (GDP), risk rating, and the degree of openness. Findings - Five measures of institutional quality increase real GDP growth significantly across Middle East and North Africa (MENA) countries. In contrast, institutional quality has a negative impact on the growth of private credit and private investment. Further, the combined evidence does not suggest that improvement in institutional quality is a major factor in attracting foreign direct investment flows to MENA countries. Research limitations/implications - The research provides startling evidence that illustrates how institutions have impacted macroeconomic performance and the underlying roots of institutional quality. Addressing shortcomings in institutions should top the policy agenda in an effort to drive the growth process. Practical implications - Improving institutional quality will distribute the benefits of growth and enhance macroeconomic performance in the MENA region, which is rich in endowed resources. Nonetheless, the region lacks fundamentals of economic management and quality governance to utilize resources in the most efficient and productive fashion in order to maximize the welfare for a growing population that is constantly seeking productive opportunities to secure employment and a higher real standard of living. Originality/value - The MENA region is understudied and worthy of much more empirical work. Many cross-country studies of the determinants of growth omit oil-producing nations. Focusing on this oil-rich region is an attempt to fill this void. Unlike previous literature on the relationship between institutions and growth, the paper's approach to the issue analyzes micro foundations in the transmission channel between institutions and economic growth.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 8 (2009)
Issue (Month): 2 (October)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://www.emeraldinsight.com/ijdi.htm Email:
When requesting a correction, please mention this item's handle: RePEc:eme:ijdipp:v:8:y:2009:i:2:p:134-167. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.