The role of ınstitutional structure in the process of economic growth: Literature and empirical evidence

The view that has stepped forward lately in growth literature is that the economical growth differences among the countries can be explained with the differences of institutional structure. In this respect, the school of institutional economics, which accepts the organizations as the center of the systems of economic thought, points out that economic life cannot be considered to be independent from institutions? effects. According to view of this school; some prominent factors such as physical and human capital, investments and technology, which are regarded as the determiners of growth, can be described as the factors identified by institutions? incentive. In other words, these factors should be taken into consideration not as the causes of growth but as the results of it.The aim of this study is to research how much the institutional structure can explain the economic performance among the countries. In this study prepared for that purpose, the effects of institutional structure on economic growth were analyzed via panel data method using the period of 2000-2009 annual data for 110 countries. Then, the effects of institutional structure on economic growth were studied for Turkey via time series analysis using the period of 1972-2009 annual data.The findings obtained in the end of the analysis revealed that institutional structure is an important factor in explaining the economic growth of the countries except for the developing ones. However, in respect of country groups, the institutional variables have different effects on economic growth. In this sense; it was concluded that the variable of economic freedom on economic growth was affirmative and meaningful for all country groups except developing ones, and the variable of politic freedom was affirmative and meaningful for less developed and all other country samples. The findings for Turkey showed that institutional structure was effective on economic growth in the long term.