The Impact of Institutional Governance on Economic Growth, Differences and Similarities between Developed and Developing Countries

Abstract

This study aims to highlight the crucial impact of institutional quality on economic growth at the macroeconomic level, based on a diverse sample of developed and developing countries. More specifically, the analysis seeks to examine how different aspects of governance and institutional capacity—measured through key indicators such as control of corruption, government effectiveness, and regulatory quality—influence the overall economic performance of nations. Policy-oriented statistical evidence suggests that strong and viable institutions significantly facilitate the creation of an open economic environment capable of exploiting the benefits of economies of scale and sustained economic growth. The empirical analysis highlights the underlying mechanisms through which robust institutions generate these external economic benefits by comparing the experiences of countries with different levels of development and institutional frameworks. The findings of this study provide important insights for policymakers seeking to design effective governance policies aimed at promoting sustainable and long-term economic growth.

Keywords: Institutions, Governance, Economic Growth, Generalised Method of Moments (GMM), Developed Countries, Developing Countries, analysis.

Received Date: December 20, 2025

Accepted Date: January 12, 2026

Published Date: February 01, 2026

Available Online at: https://www.ijsrisjournal.com/index.php/ojsfiles/article/view/583