The Role of Institutions in Economic Development and Their Impact on Economic Growth in Different Countries

Abstract

Using panel data regression analysis, this study examines the connection between institutional quality and economic development for six nations: the US, UK, Germany, Turkey, Russia, and China. The analysis makes use of information from the 1996–2019 Global Development Indicators and Worldwide Governance Indicators from the World Bank. The findings imply that institutional quality, as determined by the presence of the rule of law, the ability of the government to combat corruption, and the efficacy of its regulatory framework, positively affects economic development in all six nations. The effect of each indicator, however, differs between nations. According to the study, economic growth is positively impacted by investment and population expansion, but only to a lesser extent by trade openness and human capital. These findings suggest that countries should focus on improving institutional quality to foster economic growth, and that policies aimed at promoting population growth and investment may also be effective in driving economic growth.