This article deals with economic growth in Iraq when formal institutions are subject to abrupt institutional change. The article follows a quantitative mode of enquiry to determine the impacts of institutional changes on economic performance. I built an expanded and updated version of Rowat’s model for the Iraq war of 2003. Thus, I estimate the effects of oil price, oil production, and abrupt institutional change in terms of war on Iraq’s gross domestic product (GDP) for 1971–2012. Likewise, I estimate the effects of the new institutional arrangements on the country’s economic performance for the sub-period 1998–2012. The results demonstrate that the 2003 war and institutional arrangements have had a negative and significant effect on GDP growth, while the effects of both oil production and oil prices are positive but the latter is not statistically significant. In line with these findings, a static comparative analysis was also carried out for before and after the 2003 war. On one hand, the results show the destructive realities of the wars at the macro level and on the standard of living for common citizens and, on the other, the findings illustrate the 106 difficulties and challenges related to creating institutional arrangements in the post-2003 war period that can enhance or promote sustained economic growth.
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