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This study examines the relationship between institutional quality and economic growth in Sudan using a Vector Error Correction Model (VECM) and annual data for 1970–2022. It is set within Sudan’s persistent economic challenges, driven by fragile governance and recurring conflict. The main contribution is the construction of a Composite Institutional Quality Index (CIQI) from the V-Dem database, integrating political corruption, rule of law, and liberal democracy dimensions using factor analysis and a context-sensitive weighting scheme. Methodologically, the VECM framework captures both short-run dynamics and long-run equilibrium relationships between institutional quality and economic growth. The results indicate a strong long-run relationship, confirming institutional quality as a key determinant of Sudan’s economic performance. However, its effects are not immediate and emerge gradually over time, reflecting the structural nature of institutional change. In the short run, growth is more responsive to capital accumulation, exports, and credit availability, indicating that conventional macroeconomic factors dominate short-term dynamics. The model identifies a stable long-run equilibrium with a slow speed of adjustment, highlighting persistent structural rigidities and institutional inefficiencies. The findings highlight the need for institutional reforms, including anti-corruption measures, stronger rule of law, and more inclusive governance to support long-term growth in Sudan.
Ali et al. (Fri,) studied this question.