Abstract:
Nowadays, studies argued that international difference in prosperity across a country is the
matter institutional quality. Thus, the poor economic performance of African’s is linked to their
weak institutional quality. The aim of this study is to examine the extent to which institutional
quality affect economic performance of 14 selected East African Countries; Burundi, Comoros,
Djibouti, Ethiopia, Kenya, Madagascar, Malawi, Mozambique, Mauritius, Rwanda, Tanzania,
Uganda, Zambia and Zimbabwe, over the period 2005-2016, using fixed effect and System GMM
methods. The finding of this study confirms with the existing empirical study that economic
institutions matter for economic performance. Among the four measures of quality of economic
institutions examined, control of corruption and government effectiveness are the most driving
factors of economic performance, while rule of law has adverse effect on economic performance.
The finding of this study shows that that Eastern Africa with better institutions has a higher
economic performance. Therefore, the Eastern Africa countries should improve those institutions
that have positive impact, and promote and change those institutions that have adverse effect in
way that it can promote economic development.
