Dynamics of Sustainable Economic Growth in Emerging Middle Power Economies: Does Institutional Quality Matter?

The present study investigates the relevance of Institutional structures’ quality as a determinant of the GDP of the Emerging Middle Power Economies (MIKTA) which constitute predominantly middle-income countries, namely Mexico, South Korea, Indonesia, Turkey, and Australia over the timeframe of 1985–2016. In addition to institutional variables such as Government Stability, Bureaucratic Quality and Socioeconomic Conditions, the study uses productive factors (per worker capital, human capital) and a macroeconomic indicator (inflation) to show the GDP of the above-mentioned countries. The impact that institutional variables taken have on Efficient Environmental resources, Sustainability and their management has shown to have an impact on the rate of growth of the middle-income economies. To estimate a long-run relation, the study employs the Autoregressive Distributed Lag model, also known as the ARDL model, bringing in controls for cointegration, nonstationary, heterogeneity and cross-sectional dependency and accounts for a mixed order of integration of variables. The model indicates that capital per worker, socio-economic conditions, bureaucratic quality, human capital and inflation have a long-run effect on the GDP of a country. The paper concludes with a positive impact of institutional variables during both, the short-run and the long-run, for the de-pendent variable.