Deep determinants of economic growth: The case of middle income

The main purpose of the models developed to explain economic growth is to identify the causes of income differences between countries. In the economics literature, the approaches explaining the determinants of economic growth are examined in two main groups as direct and deep determinants. Direct determinants of growth are labor, physical capital and technology levels. In this study, the importance and place of deep determinants in economic growth process such as instutions, integration, geography and culture are examined. The aim of this study is to investigate the hypothesis that institutional quality is the cause of differences in economic performance between countries. In this study prepared for this purpose, the causality relationship between institutional quality and economic growth, were analyzed by panel data method using the period of 2005-2017 for annual data researched for 29 middle-income countries. For the panel data set used in the study, firstly the cross-sectional dependence was tested and the necessary unit root test was performed according to the result. Then, in order to determine the causality relationship between institutional quality and economic growth, Dumitrescu-Hurlin (2012) panel causality test was applied. According to the results of the analysis, from economic growth to judicial independence and the rule of law the right one; two-way towards the protection of property rights causality relationship. Keywords: Economic Growth, Institutions, Geography, Integration