Institutional performance and its impact on economic growth in ASEAN countries: trend and panel data analysis

This study is conducted to expect how deep the institutional impact is on economic growth in ASEAN and recommend it as a reference for enchanting policies that can strengthen economic growth. This research will investigate and determine the institutional indicators that are significant to economic growth. The study also put additional variables expected contribute to economic development, such as import and export as predictive variables. The study implies trend analysis used to reveal the performance of institutions and panel data analysis applied to determine the most significant WGI indicators for ASEAN economic growth. Trend visualization indicates Singapore and Brunei Darussalam performed the best score in almost entire institutional indicators. Thus, panel analysis discloses that export, import, and regulatory quality are selected as the most significant variables in economic growth. The regulatory quality is an indicator of institutional strength reflecting the observation of the government’s capacity to advance inclusive policies to encourage the enlargement of the private sector. The decision is made by considering p-­value is less than alpha value and rejecting null hypothesis. The alpha value representing an error probability is selected to make a decision. In brief, it recommends policymakers in developing regulations and executing more effective policies to promote private sector development. The result provides the comparatively modest R-squared value of 0.25247. In upcoming research, the R-squared value can be enhanced by including more independent variables. That additional variables expected can support regulatory quality such as interest rates and investment. Lastly, this study provides the latest insight of the economic development picture in ASEAN after challenging time of the Covid-19.