Institutional Quality and Economic Growth in Morocco: Unveiling a Nonlinear Nexus

Abstract

Institutional quality plays a pivotal role in driving economic development, particularly in emerging economies such as Morocco. Institutional weaknesses, including corruption and government inefficiency, obstruct economic progress and deepen social inequalities. This study explores the impact of institutional quality—measured through the World Governance Indicators (WGI)—on Morocco's economic growth from 1996 to 2022, shedding light on the nonlinear dynamics between governance and economic performance.

The analysis employs an econometric approach, integrating both linear and quadratic regressions to assess the influence of institutional indicators on economic growth. The findings reveal a negative short-term relationship between institutional quality and economic performance. However, this relationship follows a nonlinear pattern: initial institutional improvements yield temporary economic gains, while sustained reforms create the conditions for long-term, more substantial growth effects. These results highlight the critical need to deepen institutional reforms, ensuring a more robust governance framework that can unlock sustained economic development and dismantle structural barriers to growth in Morocco.