Analysis of the relationship between countries' governence levels and economic growths

Abstract

The effects of governance variables such as voice and accountability, political stability and absence of violence/terrorism, government effectiveness, regulatory quality, rule of law, and control of corruption on economic growth are investigated in this study. The relation between the selected variables was evaluated using panel data regression analysis. In addition, data from 2002 to 2020 was used to assess the 170 countries. According to the findings, the presence of political stability, the absence of violence/terrorism, providing the efficiency of the government, the high regulatory quality, the rule of law, and the control of corruption, all have a positive impact on economic growth. When data on countries is analysed, it is discovered that countries that do poorly in terms of governance variables in general also have low GDP per capita. As a result, good governance standards in institutions have a favourable impact on the welfare of the country. The countries having political instability, widespread corrupt institutions, ignored the rule of law by the administration in certain groups, under the dominant rule of certain elites are in deep poverty compared to democratically elected and effective governments willing to hand over power through democratic means.