The impact of institutions on economic growth and income in Southeast Asian countries

Abstract

The role of institutions has generated considerable interest among researchers and practitioners recently, with the various result approaches and proposals. The studies often investigate the direct impact of institutions on growth; moreover, there are few researches on this topic in Southeast Asian area and Vietnam. This thesis investigates both direct and indirect impact of institutions on economic growth and income in the context of Southeast Asian countries over the period 2000-2013 by using six measures of institutional indicators, all of which are developed by the World Bank in 2014. The model is estimated using an Ordinary Least Squares, a Fixed Effect as well as a Random Effect estimation strategy. Estimation results show that the direct impact of the institutions on growth is insignificant; however, the direct impact on the income and indirect impact on growth through trade policies are high significant. In addition, the results also show that the influence of corruption on income is stronger in low-income countries. From that, respective policies are suggested to stimulate growth and income in Southeast Asian countries.