Dorota Ciołek

Faculty of Economics, University of Gdańsk,

Poland

dorota.ciolek@ug.edu.pl 

ORCID 0000-0001-7042-6638

Institutions and economic growth: Comparative evidence from CEE and EU-16 countries

Anita Szymańska

Faculty of Economics, University of Gdańsk,

Poland

anita.szymanska@ug.edu.pl 

ORCID 0000-0002-1042-6924

Andrzej Paczoski

Faculty of Economics, University of Gdańsk,

Poland

andrzej.paczoski@ug.edu.pl 

ORCID 0000-0001-9298-6687

Abstract. The study investigates the relationship between institutional quality and economic growth in 27 European Union countries over the period 2004–2022, with particular attention to the distinction between Central and Eastern European (CEE) countries and the EU-16. The analysis is guided by the premise that institutional development is deeply rooted in historical and socio-cultural conditions, which differentiates the trajectory of post-communist economies from that of Western Europe. Panel data econometric models were applied, using data from the World Bank and the Fraser Institute database. The modeling was performed with varying parameters for both groups of countries. Five different types of institutions that may influence growth rates were considered. Overall, the results indicate a positive impact of institutional quality on economic growth across the EU, although the effect is markedly stronger in Western Europe. Government size, regulatory quality, and trade freedom were identified as the most influential institutional dimensions in both groups of countries, while the legal system proved to be statistically insignificant – most likely due to EU-wide harmonization. The most notable divergence concerned monetary stability, which strongly supported growth in the EU-16 but did not yield significant effects in the CEE countries. These findings suggest that the rapid growth in the CEE region was primarily driven by the catching-up process rather than by institutional improvements, although the role of institutions is expected to strengthen with further convergence.

Received: July, 2024

1st Revision: May, 2025

Accepted: August, 2025

DOI: 10.14254/2071-8330.2025/18-3/4

JEL Classification: O43, P20, C23

Keywords: economic growth, institutions, CEE countries, panel data models