Governance Quality and the Institutional Limits of Sustainable Markets: Evidence from Türkiye
Chapter from the book: Atalay Şimşek, S. & Karhan, G. (eds.) 2025. Current Paradigms and Practical Applications in Social Sciences.

Hamdullah Dönmez
Ministry of National Education
Zeynep Karhan
Van Yüzüncü Yıl University

Synopsis

This book chapter examines the impact of governance quality on Türkiye’s sustainable economic performance from a data analytics–based perspective, using real GDP per capita as the key indicator. Based on the premise that institutional structures provide a critical foundation for the applicability of sustainable marketing strategies, the analysis employs the Worldwide Governance Indicators (WGI) published by the World Bank. The effect of good governance on income is analyzed using the Nonlinear Autoregressive Distributed Lag (NARDL) model. The results of the F-bounds test indicate the existence of a long-run relationship among the variables. According to the long-run NARDL estimates, positive governance shocks reduce real GDP per capita by approximately 3.15 percent, while negative governance shocks lead to a decrease of about 0.30 percent. This finding suggests that improvements in governance quality do not necessarily generate sustainable market outcomes under all conditions and may impose short-term adjustment costs on firms, investments, and market dynamics. In addition, a 1 percent change in the export volume index increases real GDP per capita by 0.60 percent, while a 1 percent change in foreign direct investment and gross capital formation leads to increases of 0.11 percent and 0.10 percent, respectively. Overall, the findings reveal an asymmetric relationship between good governance and economic growth in Türkiye, indicating that both improvements and deteriorations in governance indicators exert contractionary effects on economic performance. The study confirms the presence of a governance–growth nexus and demonstrates that this relationship is inherently asymmetric.

How to cite this book

Dönmez, H. & Karhan, Z. (2025). Governance Quality and the Institutional Limits of Sustainable Markets: Evidence from Türkiye. In: Atalay Şimşek, S. & Karhan, G. (eds.), Current Paradigms and Practical Applications in Social Sciences. Özgür Publications. DOI: https://doi.org/10.58830/ozgur.pub1130.c4620

License

Published

December 30, 2025

DOI