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In the endogenous growth theory, the accumulation of knowledge is the main driver of growth. However, the mechanism for transforming knowledge into new goods and services depends on institutions. Using a growth accounting framework, we conclude that institutions contributed more than 0.3 percentage points to the estimated average annual growth rate of real output in 28 OECD countries between 2011 and 2017.

The impact of institutions on economic growth in OECD countries