The Impact of Institutional Governance on Economic Growth in Developing Countries: An Econometric Analysis in Panel Data.
Journal Title: International Journal of Humanities and Social Science Invention - Year 2018, Vol 6, Issue 12
Abstract
The relationship between governance and economic growth is the subject of several controversial theoretical developments. The purpose of this paper is to test some basic assumptions in a group of developing countries. First, we develop a theoretical and empirical analysis grid around the issue in the light of different currents of economic thought. Then, we approach our problematic in its empirical dimension. Using statistical and econometric tools, we propose, using the Arrelano and Bond [1991] model in a dynamic framework on panel data, using the generalized moment’s method (GMM) to the direct impact of institutional governance on macroeconomic variables, as well as the indirect impact of interactions between governance components and foreign direct investment in relation to economic growth. From this model, we can deduce that the direct impact of the indicators of governance is statistically significant and positively affect economic growth. But once these indicators, especially political stability and the quality of regulation, interact with the foreign direct investment of the countries in our sample, the indirect effect becomes significant and acts negatively on the level of economic growth. This confirms that institutional governance has an isolated effect rather than complementarity with foreign direct investment in stimulating economic growth.
Authors and Affiliations
Ktit Jalal, Macharfi Mustapha
Keywords
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