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Macroeconomic model of instituional reforms' influence on economic growth of the new EU members and the Republic of Croatia

The aim of this paper is to research, theoretically and empirically, the impact of institutional reforms on the economic growth in transition countries (new EU members) and Croatia, in the period from 1996 to 2012. In order to prove the hypothesis, we will use panel analysis of transition economies and Croatia, namely the Arellano-Bond dynamic panel analysis. The analysis includes two dependent variables (GDP/pc and the share of export in GDP) and five independent variables (total Heritage Index of Economic Freedom, WGI government effectiveness indicator, WGI rule of law indicator, corruption perception index and the index of institutional reforms in transition countries). The results show that there is a significant positive impact of institutional reforms on the economic growth of transition countries and Croatia, which creates preconditions that are essential for the future growth rate of Croatian economy.

institutions, institutional reforms, economic growth, transition countries, Croatia, Arellano-Bond dynamic panel analysis

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