The Impact of Institutional Governance on Economic Growth: A Panel Data Analysis

Abstract

This study is an attempt to analyse the nexus between institutional governance and economic growth for the panel of 91 countries over 1999-2014, using Random Effect Model and System GMM. We have examined the direct impact of governance by index of institutional governance. In addition, our analysis includes complementary role of institutions through the channel of population which is calculated by interaction variable of population and governance index. The results indicate that institutional governance has direct and significant impact on economic growth for selected panel of countries. Moreover, it has also indirect impact on economic growth through the channel of population; as direct impact of population is found to be negative and significant, whereas when institutional governance interacts with the population, sign turns positive and significant.