The role of institutional quality in advancing sustainable development goals: A mixed-methods panel data analysis of ASEAN member states (2016–2023)

Abstract

This study explores the causal relationship between institutional quality and achieving Sustainable Development Goals (SDGs) among the ten ASEAN member states for the years 2016-2023. With the presence of severe multicollinearity among all individual institutional quality indices, with Variance Inflation Factor values lying between 18.041 to 56.021, the study applies the Principal Component Analysis method to reduce the number of predictors and group them into two functional categories—Administrative Quality and Voice and Accountability. By using a balanced panel data set along with the application of Pooled Ordinary Least Squares estimation technique with a one-year lag in independent variables to tackle the endogeneity issue, the findings show that Administrative Quality has an overwhelming impact on sustainability, especially about lower-middle-income countries, having an important positive impact (B = 10.928). On the contrary, the upper-income economies face institutional saturation where the effect of standard administrative variables diminishes considerably. One of the interesting findings from the current research is the positive coefficient on strategic public borrowing (B = 0.066, p < 0.01). This finding should be understood in terms of a conservative approach to economic growth rather than an expansionary approach aimed at stimulating growth. Moreover, qualitative cross-case analysis of Singapore, Thailand, Vietnam and Cambodia shows that the paradox in this region is mainly driven by command stability and performance legitimacy.