The main objective of this study is to analyze the direct effects of institutional quality indicators on fiscal policies and economic growth in Iran and other emerging economies, namely China, India, Brazil, Turkey, and Indonesia, over the period 2003–2022. The main variables of this research include institutional quality indicators (such as control of corruption, rule of law, government effectiveness, regulatory quality, transparency, and political stability), fiscal policy measures (including tax rate and government expenditures), and economic growth (measured by the growth rate of GDP per capita). Data were collected from reputable international sources, such as the World Bank and Worldwide Governance Indicators, to ensure accuracy and reliability in the analysis. This study is applied and causal in design, employing panel data and the generalized method of moments (GMM) econometric technique for precise data analysis and model estimation. The findings reveal that institutional quality indicators have a significant and positive effect on fiscal policy effectiveness. Specifically, in countries with stronger institutions, fiscal policies are implemented more efficiently, resulting in higher and more sustainable economic growth. Conversely, weak institutions lead to less effective fiscal policies. As a result, their impact on economic growth is diminished. The results further demonstrate that improvements in institutional quality—through enhanced transparency, improved governance, and reduced corruption—create a favorable environment for optimal resource allocation, increased investment attraction, and higher economic productivity. This study underscores the importance of interaction and alignment between institutional reforms and fiscal policy measures and shows that the success of fiscal strategies depends on the establishment of robust and transparent institutional frameworks. Therefore, strengthening institutional quality plays a crucial role in achieving sustainable economic growth and fostering long-term development in emerging economies