Assessing The Role of Institutional Quality Components on GDP Per Capita by ARDL Approach: Evidence from Oman

Abstract

Economic sustainability is a vital concern for many policymakers worldwide. However, the current status of institutional quality in Oman serves as a wake-up call to assess the nexus between Institutional quality components and GDP per capita in Oman critically. Institutional quality has a significant impact on economic growth and also affects investor confidence, governance effectiveness, and policy efficacy. The Autoregressive Distributed Lag (ARDL) model investigates the short-term and long-term associations between GDP per capita and the quality of institutions, thereby addressing concerns regarding the disparate degrees of variable integration. The existence of a long-term relationship between economic development and institutional quality is substantiated by the Bounds Test for Cointegration. The empirical results suggest that the rule of law and political stability have a long-run relationship with GDP per capita, while control of corruption shows a negative relationship. Whereas government effectiveness, regulatory quality, voice, and accountability don’t show a statistically significant influence on GDP per capita. These findings underscore the importance of robust governance and institutional reforms for the sustainable economic growth of Oman. The report proffers policy recommendations that emphasize the enhancement of public sector efficiency, the fortification of legal frameworks, and the augmentation of transparency, all of which are imperative for ensuring long-term economic stability and growth.