Pamukkale Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, no.42, pp.141-154, 2021 (Peer-Reviewed Journal)
There is an increasing emphasis on the role of institutions in explaining the economic growth of DLC. However, there is no consensus on which institutions and governance indicators are essential for growth. This study aims to examine the effects of institutions on economic growth in DLC empirically. In this study, for the 62 Developing countries are examined and analyzed by the GMM in the 2002F2017 periods. Data obtained from the World Bank. Among the institutional quality indicators, regulatory quality seems to be an essential factor. Political stability and absence of violence, on the contrary, affect economic growth negatively and significantly in DLC. It has a positive but meaningless effect in the upper-middle income group. Moreover, according to the findings obtained from the two indices, all institutions positively affect economic growth. However, it is essential to note that only the quality of institutions cannot be sufficient for economic growth. The findings of the study show that institutions are essential in economic growth. Therefore, for stable and permanent growth, DLC should give priority to institutional strengthening policies.