Role of institutional quality in economic development: A case study of Asian countries

  • Received April 21, 2021;
    Accepted June 14, 2021;
    Published June 24, 2021
  • Author(s)
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  • Article Info
    Volume 19 2021, Issue #2, pp. 357-369
  • Cited by
    16 articles

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This work is licensed under a Creative Commons Attribution 4.0 International License

The paper investigates the impact of institutional quality on economic growth by taking 48 countries in Asia between 2005 and 2018. By using the quantile regression methods with panel data, institutional quality is found to be a key factor of economic development. However, in the lower-income Asian countries, the institution with better quality appears to promote the growth more effectively than in the higher-income ones. Moreover, the paper also finds out a nonlinear relationship between institutions and economic growth. The results show that there is an institutional threshold for economic growth to reach its highest level. If the institution indicator exceeds the threshold, it causes the reverse effect on the growth. Moreover, the economic growth of Asian countries is also affected by inflation (INF), labor force (LABO), trade openness (OPEN), and infrastructure (TELE). From that, the study suggests some policy implications for Asian countries and Vietnam, in particular, in order to improve institutions contributing to economic growth.

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    • Figure 1. Regression coefficients of the institutional variables based on the FGLS regression and quantile regression methods
    • Figure 2. Institutional quality of Vietnam compared to the average of Asian countries presented as INS in the period 2005–2018
    • Table 1. Synthesis of variables in the model
    • Table 2. Synthesis of results on the impact of institutions on economic growth in Asian countries
    • Table 3. Results of FGLS method for models (6), (7), (8), (9) and (10)
    • Table 4. Institutional thresholds affecting economic growth in Asia
    • Table 5. Comparison of economic growth between Vietnam and Asian countries
    • Table 6. CPIA index of Vietnam during the period 2005–2018
    • Project administration
      Oanh Kim Thi Tran
    • Supervision
      Oanh Kim Thi Tran, Anh Hong Viet Nguyen
    • Writing – review & editing
      Oanh Kim Thi Tran, Hac Dinh Le, Anh Hong Viet Nguyen
    • Data curation
      Hac Dinh Le
    • Formal Analysis
      Hac Dinh Le
    • Resources
      Hac Dinh Le, Anh Hong Viet Nguyen
    • Writing – original draft
      Hac Dinh Le
    • Conceptualization
      Anh Hong Viet Nguyen
    • Methodology
      Anh Hong Viet Nguyen
    • Software
      Anh Hong Viet Nguyen