Institutional Quality, Digital Readiness, and Economic Growth: Constructing and Testing a Government Project Maturity Index

Abstract

This paper investigates the impact of government project management maturity (GPMI) on gdp per capita growth across 159 countries using panel data for 2016, 2018, 2020, 2022, and 2024. The study constructs a novel gpmi by combining six worldwide governance indicators and the e-government development index to capture institutional quality and digital readiness essential for effective public project management. The study tests the hypotheses that higher gpmi contributes to economic growth, with a particular focus on the potential delayed effects of improvements in project management maturity on economic performance. Panel fixed effects regression models were employed to analyze the relationship while controlling for inflation, trade openness, urban population share, and the log of gdp per capita. The results indicate that gpmi has a positive and statistically significant effect on gdp per capita growth when measured with a time lag, confirming that the benefits of institutional and project management reforms require time to materialize. Additionally, inflation was found to negatively impact growth, while trade openness showed a positive association. Urban population share exhibited a significant negative relationship with gdp growth, highlighting the potential infrastructure pressures associated with urbanization. These findings contribute to the literature on public sector management and economic development by emphasizing the importance of investing in government project management capacity as part of long-term development strategies.