Is it an institution, digital or social inclusion that matters for inclusive growth? A panel data analysis

Abstract

This study empirically examines the impact of institutional quality, social inclusion and digital inclusion on inclusive growth across diferent economies characterized by difer ent income groups. Particularly, the study examines the impact of institutions on inclusive growth by using the panel data for 83 countries over the period 2010–2017. For empirical specifcation, we used two-steps system-GMM estimation technique to tackle endogeneity and min–max normalized indexing technique to construct the indices for inclusive growth, social inclusion, digital inclusion and institutional quality. The results of this study show that there is a direct link between institutional quality and inclusive growth for a higher income group of countries but not in the rest of the income groups. Contribution of social and digital inclusivity is signifcant in all three income groups, except for social inclusion in middle-income countries. From the policy point of view, these fndings suggest that establishing and strengthening the institutional structure in low- and middle-income coun tries can contribute towards better and higher inclusive growth.