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Analysis of the Threshold Effects of Market Institutional Quality on Economic Growth with an Emphasis on Government Integrity (Selected Developing Countries with Lower Middle Income)
Atefeh Navah1 , Sara Ghobadi * 2, Hossein Sharifi renani3
1- Ph.D. student in Economics, Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran.
2- Assistant Professor of Economics, Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran. , sghobadi@iau.ac.ir
3- Associate Professor of Economics, Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran.
Abstract:   (594 Views)
According to institutional growth models, having efficient institutions has a positive effect on economic growth. Among the existing institutions in each country, market institutions can support economic growth by preventing market failures and creating resistance to shocks. In the meantime, the government integrity, which is like reducing corruption in the government body, can help the institutions to have a better effect on economic growth. The purpose of this article is to analyze the threshold effects of the institutional quality of the market on the economic growth of 19 selected developing countries with lower middle income, emphasizing the government integrity, during the years 2014-2022. For this purpose, the institutional quality of the market was calculated from the average indicators of the market regulator (the average of the two indicators of the regulations and controls applied in the credit market and the regulations and controls applied in the labor market) and the market stabilizer (index of access to healthy money). To analyze the threshold effects of the institutional quality of the market on the economic growth, the Panel Smooth Transition Regression (PSTR) method was used. The results showed that the government integrity is the transition variable of the economic growth function with a threshold equal to 0.017% and two regimes that had a positive effect on economic growth in both regimes. The institutional quality index of the market did not have a significant effect on growth in the first regime, but when the government integrity index reached the threshold and entered the second regime, the effect of institutional quality on economic growth was positive. The control variables in the model including human capital, capital per capita, technology and foreign trade have also had a positive effect on economic growth
Keywords: Economic Growth, Market Stabilizing Institutions, Market Regulating Institutions, Government Integrity, Sound Money.
     
Type of Study: Research | Subject: economic development, regional economics and growth
Received: Apr 27 2024 | Accepted: Jul 02 2024 | ePublished: Jul 02 2024
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