Influence of Quality of Political and Economic Institutions on GDP Growth

This article investigates the relationship between the quality of political and economic institutions and economic growth. The study aims to empirically test the hypothesis of an interdependence between institutional quality and GDP growth rates following the global economic crisis of 2008 2009. The analysis focuses on the period of stable global economic growth from 2010 to 2018, with the upper boundary set at the onset of the COVID 19 crisis. To assess the quality of political institutions, each country’s average ’’Democracy Index’’ ranking over the nine-year period is used. Economic institutional quality is measured via the country’s average position in the ‘’Ease of Doing Business Index’’ over the same timeframe. Economic growth rates are determined by calculating the average ranking of countries over nine years according to World Bank data. Correlation analysis reveals that, in the post-crisis period, countries with lower positions in both indexes experienced the highest growth rates, while those leading in these rankings displayed comparatively lower economic growth. These observed differences may be attributable to the low-base effect in some rapidly growing countries and the effective economic policies of their elites. In contrast, the case of Russia highlights a unique pattern, where a low «Democracy Index» position correlates with a low economic growth rate, and a relatively favorable «Ease of Doing Business Index» position corresponds to lower growth – a paradox that may be explained by the severe negative impacts of the global economic crisis, anti-Russian sanctions, and ineffective economic policy. The findings underscore the need to further develop research methodologies at the intersection of political science and economics to deepen our understanding of the relationship between institutional quality across different sectors and macroeconomic performance dynamics.

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