ABSTRACT Despite substantial progress in gender‐equal legislation across the Global South, advances in social inclusion and inclusive growth have remained uneven. This paper argues that this disconnect reflects a deeper institutional failure in the transmission of formal legal reforms into real development outcomes. We conceptualize this failure as an SDG Transmission Gap—the systematic attenuation of the development returns to legal equality caused by discriminatory informal institutions and social norms. Focusing on SDG 5 (Gender Equality) and SDG 8 (Decent Work and Economic Growth), we examine whether and how informal institutions condition the effectiveness of formal legal reforms. Using a novel panel of 80 Global South countries over 2010–2023, we combine the World Bank's Women, Business and the Law index with the OECD's Social Institutions and Gender Index and estimate interaction‐based models using second‐generation panel methods that account for cross‐sectional dependence and heterogeneous institutional responses. The results show that legal equality is positively associated with women's economic participation and economic performance on average, but these gains decline sharply as discriminatory informal institutions intensify. Marginal‐effects analysis reveals that identical legal reforms yield vastly different outcomes depending on social norms. Environmental outcomes respond only indirectly, reflecting downstream effects of inclusive growth rather than direct institutional transmission. These findings demonstrate that legal reform alone is insufficient for SDG progress and underscore the need for SDG strategies that address informal institutions alongside statutory change.
Wang et al. (Tue,) studied this question.