Governance and growth in developing countries

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28 Citations (Scopus)

Abstract

This paper examines whether governance matters for the economic growth of developing countries, empirically captured within the institutional economics theoretical framework using the panel data estimation procedure. In doing so, it tests the effect of several dimensions of governance on the growth of 84 low and middle-income economies using regression specifications common in the growth literature. The empirical results show that political stability and government effectiveness is significantly positively correlated with growth. Voice and accountability and corruption are statistically significantly negatively correlated with growth. The regulatory quality and rule of law dimensions of governance are negatively but statistically insignificantly correlated with growth. The findings of this study imply that the dynamics of the current modern economy makes it necessary for developing countries to act now and within their own country, improve the dimensions of governance and establish good governance practices that are domestically relevant and internationally comparable and consistent.

Original languageEnglish
Pages (from-to)19-39
Number of pages21
JournalJournal of Economic Issues
Volume45
Issue number1
DOIs
Publication statusPublished - Mar 1 2011

Keywords

  • developing countries
  • governance
  • growth
  • institutionalism

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics

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