Legal Determinants That Impact Economic Growth: Panel Data Evidence

Abstract

Economic growth, as a leading macroeconomic objective, is supposed to be determined by different types of variables and indicators, including legal ones. Therefore, through panel data analysis of the 20 EU countries for 2013-2021 years, this research article came across legal determinants that impact economic growth. Data covered in the examination were from secondary sources, i.e. from two credible international institutions, the World Justice Project and the World Bank. This study, conducted through a quantitative scientific approach, i.e. the robust Fixed Effects model of regression analysis, found the following six legal determinants that impact economic growth: no. 1) Effectiveness of keeping crime under control; no. 2) Effectiveness of enforcement of civil justice; no. 3) People do not use violence to redress personal grievances; no. 4) Laws and government data are publicized properly (transparency); no. 5) Government officials in the judicial branch do not utilize their office for personal gain. no. 6) Civil justice is accessed and afforded by people. Of course, the robust Fixed Effects model was not a subjective choice, but a decision made through the respective tests of Pooled OLS, Random Effects and Fixed Effects.