Level Of Institutional Quality Research Articles

The impact of globalisation on industrial development in South Africa: the mediating role of institutional quality

BackgroundGlobalisation has brought significant benefits to countries’ industrialisation, but its impact has not been uniform. Policymakers in developing countries have increasingly focused on sound institutions’ role in offsetting the potential negative effects of an integrated economic structure. However, evidence of the mediating role of institutional quality in South Africa’s unique economic globalisation and industrial development relationship has been limited.ObjectiveThis study had the primary objective to assess the mediating role of institutional quality within the globalisation and industrialisation nexus in South Africa.MethodThe analysis used a quantitative research approach through a time series analysis, based on secondary data from 1980 to 2021. The long-run relationships between the variables were assessed through novel cointegration tests, while three different cointegration regression estimation techniques were employed to estimate the elasticities. Moreover, Toda-Yamamoto causality tests were utilised to evaluate the causal linkages between the variables.ResultsThe findings suggest that South Africa’s unique integration path has benefited industrial output significantly since its move to a more liberal and democratic structure. However, the level of institutional quality has contributed to a diminishing effect in this regard. This emanates primarily from a misalignment between institutional frameworks and the demands of globalisation, including increased competition and regulatory challenges.ConclusionBased on this, the study recommends that policymakers prioritise developing a comprehensive industrial policy to promote key strategic sectors, regional integration, and public–private partnerships. Moreover, they should improve the business environment and infrastructure by means of reducing the costs of doing business, enhance the rule of law, ensure a stable financial system to attract foreign investment and foster sound regional partnerships.

Trade and the Sustainable Energy Transition: Exploring the Impact of Trade on Total Factor Renewable Energy Efficiency

Improving total factor renewable energy efficiency (TFREE) is crucial for developed countries to achieve a sustainable energy transformation. International trade is an important source of technological progress and may significantly promote TFREE. However, previous studies have largely overlooked the impact of trade on TFREE. To this end, this study attempts to examine the impact of trade on TFREE of 28 major, developed countries. The main findings are as follows: trade significantly improves TFREE; in terms of the magnitude of the effect, export is greater than import, and trade in goods is greater than trade in services. Trade in most industries promotes TFREE, but trade in the ores and metals industry inhibits TFREE. Trade can only promote TFREE in countries with a high human capital level, high renewable energy infrastructure level, and high institutional quality level. The lag effect of trade on TFREE shows an inverted U shape over time; the nonlinear impact of trade on TFREE shows an N shape as TFREE increases. Biased technological progress and technological improvement effects are the main paths for trade to enhance TFREE. This paper can provide a reference for developed countries to formulate appropriate trade policies to improve TFREE.

Do educated politicians facilitate better public health? Evidence from India.

Do educated politicians facilitate better public health? Evidence from India.

The nonlinear relationship between institutional quality and bank liquidity creation: evidence from a panel threshold model

PurposeThe purpose of this study is to examine the nonlinear relationship between institutional quality and bank liquidity creation and to analyze whether the impact of institutional quality on liquidity creation depends on the level of institutional quality or not.Design/methodology/approachThis study is based on a sample of 126 Middle East/North Africa (MENA) region banks for the period extending from 2006 to 2020. To deal with the nonlinearity, we apply a dynamic panel threshold method.FindingsUsing six different indicators of institutional quality, the results reveal that the impact of the institutional quality on liquidity creation depends on the level and the indicator of institutional quality. While control of corruption, government effectiveness and regulatory quality have positive (negative) effects below (above) the threshold value, political stability has a positive impact below and above the threshold value. Regarding the role of law and voice and accounting, only significant negative impact above the threshold value is found.Research limitations/implicationsThe research findings have important implications for policymaking. It suggests that institutional quality may have the potential to reduce liquidity creation rather than increase it. As a result, policymakers should work on providing an optimal level of institutional quality that promotes bank liquidity creation as a means to stimulate economic growth.Originality/valueThis paper is among the first studies, to the best of the authors’ knowledge, to examine the nonlinear relationship between institutional quality and bank liquidity creation using a dynamic panel threshold model.

Effect of IFRS Adoption and Institutional Quality in FDI Attraction in MENA Countries

This study investigates how the adoption of International Financial Reporting Standards (IFRS) affects FDI Attraction in MENA economies and investigates the moderating role that institutional quality plays in the relationship between IFRS accreditation and FDI attraction. Using panel data from 22 MENA countries from the period 2002 to 2022, the study presents and discusses regressions Diagnostics: The study reviews the empirical results of the variables using the panel Ordinary Least Squares (OLS), DOLS, and FMOLS and employs the generalized methods of moment (GMM) and a bias-corrected Least Square Dummy Variable (LSDVC). The study found that IFRS adoption is positively related to increasing FDI flows, but there are other factors that must be taken into consideration in conjunction with the adoption of IFRS, including institutional quality indicators. This study enhances knowledge of the IFRS-FDI nexus by analyzing the influence of institutional quality on the relationship. It offers a deeper understanding of how global accounting standards influence economic outcomes across various governance contexts, providing fresh insights into policy and economic growth. The results of this study indicate to decision makers that adopting IFRS should not be done as a stand-alone strategy aimed at increasing FDI flows. Rather, it should be taken as a specific measure for institutional reforms aimed at improving institutional quality levels. MENA countries that have adopted or are planning to adopt International Financial Reporting Standards (IFRS) should focus on implementing comprehensive institutional reforms to enhance the effectiveness of the adoption decision.

Policy uncertainty and earnings quality in banks: the role of institutional quality in emerging markets

PurposeThis paper aims to explore the relationship between economic policy uncertainty (EPU) and earnings quality in banks in the context of Brazil, Russia, India and China (BRIC) as an emerging economic bloc. The study further explores the role of institutional quality in moderating the impact of EPU on bank earnings quality.Design/methodology/approachThe study has used earnings management (EM) as a proxy for earnings quality, measured using discretionary loan loss provisions. The higher the EM, the lower the quality of earnings. The study has collected data from 74 banks spanning the years 2014 to 2020 and used fixed effects (FE) and generalized methods of moments (GMM) estimators to test the hypotheses.FindingsThe study has found a positive impact of EPU on EM, suggesting that banks in the BRIC region react to EPU by increasing earnings opacity. However, the study found that better institutional quality can reduce the EM in the presence of EPU.Originality/valueThe study has made an early attempt to establish the relationship between bank EM and EPU in a cross-country setting. In addition, the study shows that the level of institutional quality in emerging markets moderates the impact of EPU on bank EM, which remains unexplored in prior research.

Institutional Quality and Sustainable Firm Growth: Evidence From North African Countries

ABSTRACTThis study investigates the relationship between institutional quality (IQ) and sustainable firm growth (SFG) in North African countries, focusing on Egypt, Morocco, and Tunisia. Utilizing panel data from 155 non‐financial firms over the period 2007–2020, we employ a system generalized method of moments (GMM) approach to analyze this relationship. Our findings reveal a significant U‐shaped relationship between IQ and SFG, indicating that both very low and very high levels of IQ are associated with limited firm growth, while an optimal level of IQ promotes substantial growth. This suggests that firms in low‐IQ environments struggle due to weak regulatory frameworks and corruption, whereas those in high‐IQ environments benefit from better governance and transparency, leading to enhanced growth. The study makes several contributions by providing empirical evidence from an underexplored region, highlighting the complex dynamics between institutional quality and firm growth, and offering robust methodological insights. Policy implications underscore the need for balanced regulation and long‐term investment in institutional quality, education, and infrastructure.

Participative Leadership as an Approach to Achieving Local Excellence in Secondary Schools at Hail City

This study aims to assess participative leadership levels in Hail City's secondary schools. A secondary objective is to measure the level of institutional quality in these schools. In addition, the research explores the effect of participative leadership on achieving institutional excellence in secondary schools in Hail City, exploring differences in institutional quality and participative leadership between public and private schools, as well as considering whether or not they are affected by the academic background of secondary school employees. The study utilized electronic research methods to analyze data from 245 secondary schools in Hail City between November and December 2023. The findings highlight how important authority, decision-making, and interpersonal connections are in creating an excellent learning environment and raising academic achievement. The significance of good leadership practices in raising overall school performance is highlighted by the positive and statistically significant association between participative leadership elements and institutional excellence. The results highlight how important it is to promote collaboration, teamwork, and positive interpersonal interactions within school communities to improve institutional performance. Additionally, the research highlights the influence of leadership practices in determining school performance by demonstrating the impact of participative leadership aspects on institutional excellence.

Financial Development, Institutions, and Technological Innovation in Africa

ABSTRACTMost African countries are notably confronted with inefficient financial systems, weak institutional arrangements, and low technological innovations. This motivates this study to examine if financial development has any implications on technological innovation in the region, while putting the direct and nonlinear role of institutional quality into consideration. We find that, excluding institutional quality, financial development has a negative impact on technological innovation. The findings are not altered when the influence of institutional quality is linearly examined. The threshold results, however, show that financial development positively affects technological innovation at the low institutional quality level, whereas financial development has no significant impact on technological innovation at higher institutional quality levels. This paradox, although in contrast to expectation, explains the reality of the institutional arrangements in the African countries. They are not just weak, but very restrictive, thereby concentrating the financial means into the hands of few elites who then discretionarily engage in innovative activities. The direct impact of institutional quality on technological innovation is heterogeneous, as it depends on the specific institutional quality indicators and their threshold levels. These findings have crucial policy implications for the governments of the African countries.

An empirical study on the relationship between urbanization, transportation infrastructure, industrialization and environmental degradation in China, India and Indonesia

AbstractIn certain densely populated Asian countries (China, India, and Indonesia), unsustainable urban development may be directly or indirectly related to the environment and may cause environmental problems due to low industrial structure and poor transportation infrastructure. Thus, this study uses AMG, CCEMG and MG estimators to reveal the relationship between urbanization, transportation infrastructure, industrial structure, renewable energy use, economic growth and per capita carbon dioxide emissions in densely populated Asian countries from 1995 to 2020. Relying on the AMG estimator, the results show that urbanization, industrial structure, and transportation infrastructure investment significantly accelerate per capita carbon dioxide emissions in the long run. However, the use of renewable energy has a significant adverse impact on per capita CO2 emissions in the long run. The second model based on urbanization structure clearly shows that, except for the insignificant impact of renewable energy consumption, other explanatory factors (transportation infrastructure, industrial structure and GDP) have significant progressive effects on urbanization. Considering the moderating role of institutional quality, the analysis succinctly argues that in the long run, institutional quality intensifies the negative impact of renewable energy utilization on environmental pollution. Institutional quality turns the strong positive effects of urbanization, industrial structure, and transportation infrastructure on per capita carbon emissions into negative effects. Furthermore, the quality of existing institutions in specific country panel can even interact with industrial structure and transportation infrastructure to improve urban structure and thereby reduce environmental harm. Finally, the specific threshold level is examined to determine that the impact of baseline regression variables (urbanization, transportation infrastructure, renewable energy utilization, industrial structure) on per capita carbon dioxide emissions has fully penetrated into the institutional quality level. Strategic empirical evidence shows that sustainable urban growth goals that contribute to a sustainable environment can be achieved by upgrading two major components of cities—industrial structures and transport infrastructure. The good performance of industrial structure and transportation infrastructure can be improved through institutional quality. Compared with weak institutional quality, a sound institution can expand the ability of transportation infrastructure and industrial structure to improve the urbanization structure, thereby slowing down environmental degradation. Furthermore, in this pursuit, the role of institutional quality in developing policies to support renewable energy is also becoming increasingly important.

Institutional Complementarity and Substitution in Indian Multinational Enterprises’ Cross-Border Investment Decisions

The assumption that better institutions are favoured in multinational enterprises’ (MNEs) location choices has been questioned in terms of whether emerging market MNEs might have different capabilities associated with the institutional conditions in their home country that they may exploit when internationalizing. They might seek to expand both to better institutional environments (institutional substitution) and to other emerging market environments (institutional complementarity). We examine if elements of institutional complementarity and substitution are evident in the internationalization decisions of Indian MNEs, and whether there are boundary conditions or limits attached to the benefits of these two effects. Our arguments are tested on a sample of Indian MNEs’ cross-border acquisitions between 2002 and 2021. The study differentiates between institutional distance effects in terms of both magnitude and direction, and institutional quality. We raise the notion of “institutional ranges or thresholds” (different points on the institutional profile distribution representing varying levels of institutional quality) and explicitly seek to identify such thresholds where the effects of institutional complementarity and substitution may set in and/or disappear, and why that may be the case.

Linkages between industry, agriculture, growth, renewable energy and the environment and the role of institutional quality, evidence from selected South and East Asian economies

This study aims to reveal the influence of industrial progress and agricultural value addition on environmental harm and explores how the unique moderating role of institutional quality handles this association; using the panel ARDL approach on a panel of South and East Asian economies from 1980 to 2020. The baseline model proposes that for each 1% increase in agricultural added value and industrial progress, carbon dioxide emissions may fluctuate considerably positively by 0.563% and 0.758% respectively. In the long term, the plausibility of the upturned U-shaped association between economic growth and carbon dioxide emissions in South and East Asian economies has been confirmed in the analysis. The use of renewable energy considerably condenses long-term emission levels. Institutional quality is found to have a strong moderating effect on the link between the main model regressors (renewable energy use, industrial growth, GDP per capita, and agricultural value addition) and CO2 emissions. Institutional quality supports the enhancement of industrial and agricultural capabilities and the improvement of environmental worth. Finally, the threshold results indicate that the influence of the main regression variables of the model (renewable energy utilization, industrial growth, per capita GDP, and agricultural added value) on carbon dioxide emissions has fully penetrated the institutional quality level. Strong, high-quality institutions, rather than weak institutions, can improve the aptitude of industry and agriculture to mitigate environmental degradation. In this pursuit, it becomes increasingly important to develop policies that support renewable energy based on institutional values.

The role of local institutional quality for the digital and environmental transitions in Italy

The role of local institutional quality for the digital and environmental transitions in Italy

Economic Growth through Rent Streams, Financial Development and Institutional Quality in Mena

This study examines the relationships between natural rent streams, financial development, institutional quality, and economic growth in the Middle East and North Africa (MENA) region and is the development of fixed effects panel models during 1990–2020. The analysis of the MENA region sheds light on the complex, dynamic nature of the region’s economies and societies, as this region is an interesting case study where economic, political and cultural dynamics are diverse. The region faces economic diversification needs, conflicts, migration, and climate change, making this study timely and relevant. To this end, fixed effects regressions and scenario approaches were applied to the collected panel data. The findings reveal natural resource rents as the primary driver of economic growth, their effectiveness dependent on financial development and institutional quality levels. A well-developed financial sector facilitates efficient channeling of rents into productive investments, while strong institutions mitigate resource curse effects. In contrast, while remittances and foreign aid do not directly impact growth, their effectiveness is enhanced by financial development and institutional frameworks. The results highlight the critical roles of financial sector development, institutional quality, and robust governance in shaping the impacts of resource rents in this resource-rich region. The policy recommendations emphasize strategies for managing resource wealth, strengthening financial systems, promoting inclusion, improving institutions, and fostering an enabling environment for remittances and foreign aid to promote sustainable economic growth.

Navigating the impact of remittances on environmental quality in Africa: The crucial role of institutional quality

Navigating the impact of remittances on environmental quality in Africa: The crucial role of institutional quality

Tourism-led growth hypothesis (TLGH) in Africa: does institutional quality matter?

ObjetivoAunque el nexo entre turismo y crecimiento es uno de los temas mejor investigados tanto en la literatura turística como en la económica, existen pocas pruebas sobre cómo afecta la calidad institucional a este vínculo, especialmente en el contexto del mundo en desarrollo. Para abordar esta laguna, el presente estudio investiga la hipótesis del crecimiento impulsado por el turismo a través de la perspectiva de la calidad institucional, basándose en evidencias de las economías Africanas.MetodologíaEl estudio adopta un diseño longitudinal, con datos de panel sobre 43 países a lo largo de un periodo de 18 años, y los datos se analizaron utilizando el modelo de diferencias del Método generalizado de momentos.ResultadosLos resultados indicaron que los ingresos del turismo internacional contribuyeron al crecimiento económico de las economías seleccionadas. Sin embargo, la calidad institucional moderó negativamente la relación turismo-crecimiento en el continente, particularmente en las economías de renta baja, mientras que reforzó este vínculo en los países de renta media.OriginalidadEl estudio brinda nuevos conocimientos sobre cómo la hipótesis de crecimiento impulsado por el turismo (TLGH) varía en diferentes niveles de calidad institucional y desarrollo.

Green Innovation and Energy Efficiency: Moderating Effect of Institutional Quality Based on the Threshold Model

Recent studies demonstrated that green innovation and environment-related technologies reduce energy intensity and improve energy efficiency, contributing to the reduction of carbon emissions. However, the existing studies employ linear estimation methods to examine the relationship between green innovation and energy intensity and do not consider the indirect implications of institutional quality for the effect of green technology on energy intensity. Institutional quality is found to be an essential driver of innovation, and countries may need to achieve at least a minimum level of institutional quality to promote green innovation and improve their energy intensity. To test this hypothesis, this paper examines the relationship between energy intensity and green innovation using a panel dataset from 72 countries between 1996 and 2017 and a panel threshold model when institutional quality is considered a threshold variable. The findings highlight that green innovation reduces the energy intensity if and only if countries surpass a certain threshold of institutional quality. Therefore, countries need to improve their institutional quality to promote green innovation and benefit from green technologies in improving their energy intensity.

INCOME INEQUALITY, ECONOMIC GROWTH, AND INSTITUTIONAL FACTORS: A COMPARATIVE ANALYSIS AT THE EUROPEAN UNION (EU) LEVEL

The rising income inequality around the world and its persistence represent a social phenomenon raising concerns at all levels (global, regional and country) for governments and pose huge challenges to master it and to identify effective solutions. The aim of the paper is to provide a comparative insight at the European Union (EU) level involving 25 Member States regarding the interplay between income inequality, economic growth, and institutional quality. Gini Index sourced from World Income Inequality Database, GDP per capita series extracted from the World Bank database, and institutional indicators collected from the World Governance Indicators database represent the examined variables over the period 1990-2022. Their dynamic is comparatively analysed and discussed. The clustering method is applied to identify similarities and differences between European Union countries in terms of the interplay between income inequality, economic growth and institutional factors and to draw relevant conclusions for future effective policy measures meant to reduce inequality and to boost economic growth. The clustering analysis based on the average growth rate of income inequality and per capita GDP revealed that European Union countries are differently facing the challenge of income inequality rising. Six groups of countries with similar paths regarding the income inequality and economic growth were identified. High-income countries face low levels of income inequality but with an upward trend. Economic growth is accompanied with high levels and increasing levels of income inequality. The institutional quality level may strength the capacity of a country to address the problem of rising income inequality, but it remains unclear the interplay of institutional quality dynamic in reducing income inequality. The implications of the paper’s findings are framed in the context of the European policies.

Bilateral agricultural aid to Ghana and Uganda: donor practices under different institutional quality

Agriculture has been the backbone of African economies, and agricultural development has the potential to drive overall economic growth. Considering the importance of agriculture in Africa, foreign aid donors have supported the sector to help push economic growth and reduce poverty. Studies indicate governance quality of a recipient country is an important factor for agricultural aid. Building upon this, the paper explores how bilateral donors provided agricultural aid to two African countries that have different institutional quality, Ghana and Uganda. The analysis of agricultural aid in those two countries was carried out with bilateral aid-profile data from 2011 to 2022. Despite the similar economic importance of agriculture in Ghana and Uganda, donors to Ghana invested the largest amount in agriculture among aid sectors, followed by health. On the other hand, donors to Uganda supported mainly health-relevant sectors with agriculture being ranked only fifth. Donors in both countries implemented agricultural aid mostly as project types. Yet, donors disbursed their aid funds through different aid channels. Donors to Ghana disbursed 48% of agricultural aid funds through the public sector institutions channel (or the state channel). By contrast, donors to Uganda disbursed only 24% of agricultural aid funds through the state channel, essentially bypassing Ugandan public agencies. They instead provided 76% of agricultural aid through the non-state channels such as non-governmental organizations, multilateral organizations, and private entities. Similar donor preferences of the aid disbursement channels were observed with total aid across all aid sectors. Overall, the donor aid profiles suggested donors provided Ghana with more flexible agricultural aid, while in Uganda they controlled agricultural aid more tightly. There could exist multiple underlying reasons for this, but the different level of institutional quality is highly likely one of the possible reasons. For foreign aid, governance quality is an important issue equally to both donors and recipients. Key words: Africa, agriculture, aid channel, bilateral aid, foreign aid, Ghana, governance, Uganda

Trade, gender equality and institutional quality: Evidence from the gravitational approach

PurposeThe contributions of gender equality to trade and the moderating impact of institutional quality on the trade-gender link have been understudied in contemporary literature. Therefore, this paper aims to use the augmented gravity model to investigate the impacts of gender equality and institutional quality on trade, and the moderating impact of institutional quality on the trade-gender link.Design/methodology/approachThe panel data is comprised of bilateral trade flows of Vietnam and 40 major trading partners in the 2002–2021 period. Estimation methods include combined fixed effect, random effect, system generalized method of moments two-step (SGMM-II) and Poisson-pseudo maximum likelihood (PPML) which allow the treatment of heterogeneity, endogeneity and heteroskedasticity in the research models.FindingsThe exporting country’s gender equality has an inconclusive impact on trade in SGMM-II and PPML estimations. However, female labor force participation in the exporting country increases trade. Importing country’s gender equality and female labor force participation increase trade. The direct impact of institutional quality on trade is inconclusive, which is dependent on estimation methods. Most noticeably, the institutional quality of exporting and importing countries facilitates the hampering effects of gender equality and female labor force participation on trade.Research limitations/implicationsFuture research should apply the framework of this paper to sectoral trade, which allows more sector-specific policy implications to be delivered. Moreover, gender development, gender inequality and institutional quality should be included in the SGMM estimations as endogenous variables for robustness checking purposes in future research.Practical implicationsThe paper has justified the integration of gender-specific issues in trade policies, which aligns trade with sustainable development agenda. The explored moderating impact of institutional quality of the exporting country has implied the trade-off relationship between gender equality and export growth in the effort to improve institutional quality. Reversely, in the case of importing countries with higher institutional quality, improved gender equality may mitigate the trade deficit by hampering import growth.Originality/valueInvestigating the impact of gender equality on trade is the prominent contribution of this paper. Gender equality is considered by three component indicators which include gender development, gender inequality and female labor force participation. New measurement approach to the institutional quality level is also introduced. Furthermore, the explored moderating impacts of institutional quality on the trade-gender link are novel in the literature on sustainable development.