The impact of institutional quality on economic growth in Botswana

The quality of institutions continues to be a pertinent issue due to its potential direct and indirect effects on economic growth. The research examined the correlation between institutional quality and economic growth in Botswana from 1990 to 2022. The research utilised the Autoregressive Distributed Lag (ARDL) Bounds model to assess cointegration and the Toda and Yamamoto and Dolado and Lütkepohl (TYDL) model to investigate the direction of causality. The ARDL methodology is favoured for this research because to its applicability to small sample sizes. This method is not constrained by the sequence of integration among the variables. The results demonstrate that corruption adversely impacts economic growth in both the short term and the long term. Regulatory frameworks and governmental stability exert a substantial favourable influence on economic growth in both the short and long term. The analysis identified a bidirectional causative relationship between government stability and economic growth, as well as a unidirectional causal relationship from regulatory rules to economic growth. This study revealed a negative impact of labour on economic vitality. The cointegrating link indicates that the Botswana government ought to prioritise investments in institutional quality, targeted procedures, and policies due to their direct influence on economic growth. The report advocates for the Botswana government to formulate and implement legislation that fosters and advances the development of the citizen sector. The Botswana government should improve and sustain the factors that contribute to institutional quality, as they facilitate development.