POLITICAL INSTITUTIONS AND ECONOMIC GROWTH: A Case Study of Selected South Asian Nations

Noman AHMAD* and Muhammad Tariq MAJEED**

This study contributes to the empirical literature on regional economic performance by analyzing the role of political institutions in explaining economic growth of selected South Asian economies. The empirical analysis is based on panel co-integration techniques and the model used is an extended version of Solow-type model including an additional variable of human capital. The empirical findings broadly suggest that political institutions have a critical role in explaining the economic performance of the region as they significantly impede regional growth at lower levels. Nevertheless, political institutions significantly promote regional growth at higher levels. Thus, it is the high quality of political institutions which can ensure long-run regional performance. This finding remains robust to different specifications and additional controls.

Keywords: Economic Performance, Political Institutions, South Asia.