ABSTRACT
Institutions are the fundamental determinants of economic growth. Therefore, a high institutional quality of among the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) countries will be important to ensure continuing economic performance after the withdrawal of the United States from the TPP Agreement. This study aimed to investigate how institutional quality can improve the economic performance of member countries within the CPTPP. Unbalanced panel data for 10 members of CPTPP (without Brunei) covering the years 2002–2015 were analyzed using the Least Square Dummy Variable (LSDV) model. An inverted-U shape of the relationship was detected, implying a nonlinear impact of institutional quality on economic performance. Better overall quality of institutions helps to boost economic performance. However, a reverse relationship was found when institutional quality surpasses the level of 0.638. Therefore, CPTPP countries can enhance their economic performance if their institutional quality is kept below the threshold value.
