Ecuador is a developing country with great economicheterogeneity at the regional level. e objective of thestudy is to analyze the importance of institutional quality asdeterminants of subnational per capita income in Ecuador.e positive effect of institutions on economic growth atthe national level has been demonstrated. However, studiesthat analyze institutions as determinants of regional growthfor developing countries are still scarce. e study uses theLatinobarómetro surveys for 2007-2018 to obtain informationon the perception of institutional quality and follows themethodology of the World Governance Indicators of the World Bank to analyze three dimensions of governance: voice andaccountability, effectiveness of the government and rule of law.e empirical analysis is done with a panel data regressionmodel and counterfactual exercises. e results indicate that theimprovement of institutional quality is associated with increasesin the regional income level, aer controlling for factors suchas human capital, infrastructure and capital stock. However, theanalysis reveals that institutions only explain a moderate part ofthe regional differences in per capita income. From a policy pointof view, the analysis suggests the need to consider strengtheninginstitutional quality as a strategy that can complement andenhance the effects of other instruments that seek to promoteregional economic growth.
