National Governance Index, Corruption Index and Growth Rate—International Evidence from Sub-Saharan and MENA Countries

Abstract

In an international setting of developing countries, applying advanced statistical estimation approaches such as the system generalized method of moments (GMM), two-stage least square (2SLS) regressions, and cluster analysis, this paper revisits the impact of macro-level governance quality and the corruption index on the economic growth rate. We use cross-country panel data for 40 sub-Saharan and the Middle Eastern and North African (MENA) countries over the period of 2009–2020. The empirical results document the positive and negative effects of the national governance index and the corruption index on the economic growth rate. Additionally, foreign direct investment and population have a positive impact on the economic growth rate and trade openness has a negative impact. The study evaluates the robustness of these associations through a series of tests. These findings have important policy implications for policymakers and regulators in developing countries. In particular, the study recommends the implementation of an anti-corruption campaign and improving country-level governance quality that could encourage increased foreign direct investment for an accelerated economic growth rate. These will further enhance accountability, transparency, the rule of law, social responsibility, the public voice, and government effectiveness.

Rethinking of Government Institutions and Governance Quality Indicators on Economic Growth in Sub-Saharan African Countries

“…Our results are in line with like of Keefer and Knack (2007), Rajkumar and Swaroop (2008), Yasu (2021), Beyene (2022), Farooque et al (2022), andBekana (2023). However, the results are opposite to the findings of Thanh (2014), Wilson (2016), andPrakoso (2020).…”

“…Here, one unit improvement in the total governance index leads to a 3.05% increase in GDP. Farooque et al (2022) used cross-country panel data for 40 Sub-Saharan and Middle East and North Africa (MENA) countries for the period 2009-2020. Empirical results document the positive effects of the national governance index on the economic growth rate.…”

RETRACTED: Research on the path to improve the efficiency of government social governance based on data mining technology under the background of carbon neutrality

“…The worldwide governance indicators (WGI) divide governance into seven dimensions: climate change response, voice and accountability, political stability and violence avoidance, government effectiveness, control quality, legal system, and corruption prevention (Kaufmann et al, 2011). The China social governance index (CSGI) proposed by Farooque includes seven secondary indicators: environmental pollution control, human development, social equity, public services, social security, public security and social participation, as well as 35 tertiary indicators (Farooque et al, 2022). Governments or scholars in different countries have studied the government performance evaluation index system.…”

Macroeconomic Effects on Economic Growth in Muslim Countries: Political System as A Moderating Variable

“…The political system and economic growth have received special attention from academics and policymakers around the world. (Al Farooque et al, 2022) Institutional policies often focus on the macro sector as an alternative measure of development. This is proven by some macro literature that examines the role of the political system on economic growth, such as Bedane in America (Bedane et al, 2017) which proves that the effectiveness of the political system has an important role in economic growth.…”