Quality of Institutions and Economic Growth in Mali

Adama Ouayiribé Traoré¹ and Breïma Traoré^1,

¹Department of economics, University of Social Sciences and Management of Bamako (USSGB/FSEG), Mali

Cite this paper:
Adama Ouayiribé Traoré and Breïma Traoré. Quality of Institutions and Economic Growth in Mali. Journal of Finance and Economics. 2024; 12(3):73-82. doi: 10.12691/jfe-12-3-4

Abstract

The aim of this article is to analyze the effect of institutions on Mali's per capita economic growth rate over the period 1996-2022, based on data from the World Bank, Freedom House and Polity IV, using a general linear model. With regard to this objective, the results reveal that, apart from government effectiveness, which negatively affects growth, the other five WB governance indicators, namely "voice and accountability", "political stability", "regulatory quality", "rule of law" and "corruption control", positively influence economic growth in GDP per capita. Furthermore, among these five indicators, the Voice and Accountability and Political Stability variables have a positive and significant influence on growth. As for the other governance variables, there is a significant negative influence between political freedom and civil liberty and the rate of economic growth, while the democracy variable affects economic growth positively and non-significantly. Overall, these results provide ample evidence that institutions are necessary for promoting economic growth in Mali. The use of a quadratic model highlights the possibility of a non-linear relationship through the existence of a threshold effect at the level of certain governance indicators, in relation to the economic growth rate of GDP per capita. Thus, of the six WB indicators, only political stability has a threshold effect, i.e., a non-linear relationship with growth. There is also a non-linear relationship between political freedom, civil liberty, democracy and the GDP per capita growth rate in Mali. This result confirms that for a number of these governance indicators, their influence on growth changes when they reach a certain threshold.

Keywords:
The quality of institutions Economic growth Linear and quadratic model Mali

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