It has been shown that long-term growth and development across countries is driven to a large extent by productivity growth. Several studies exist that have attempted to examine the effect of different factors influencing productivity growth using industries or firms as units of analysis. Most of these studies highlight the role of trade open-ness, research and development and market structure as major determinants of industry or firm productivity growth. While trade, technology and market structure are important determinants of productivity growth, there has been less recognition in this literature of the importance of institutions. This paper examines the role of a specific set of institutions