An Empirical Nexus Between Institutions Quality and Economic Performance: A Case Study of Developing Asia

Abstract

This study investigates the relationship between the quality of institutions and the economic performance of developing Asian countries that have a lower middle-income status. The study encompasses Bangladesh, Cambodia, India, Indonesia, Kyrgyz Republic, Mongolia, Pakistan, Philippines, Myanmar, and Vietnam. The selected panel data covers the period from 1996 to 2018. The panel regression was computed utilizing a Random Effect Model, as evidenced by the outcomes of the Hausman specification test. The findings revealed a significant positive impact of inflation, overall trade, and the quality of institutions on the economic performance of developing countries. Evidence suggests that it is imperative to establish Anti-corruption bodies in the designated countries to foster maximum economic performance. The findings of this study indicate that it is crucial to implement anti-corruption measures by their respective legal frameworks of the countries while ensuring that such measures do not hinder economic progress. The legislative bodies should assume the obligation of establishing the necessary regulations. Efforts should be made to ensure the proper functioning of institutional entities, as well as their corresponding economic and administrative units. It is advisable to promote greater autonomy among the institutes to enhance transparency, expansion, and effectiveness.