Governance and Institutional Quality and the Links with Economic Growth and Income Inequality: With Special Reference to Developing Asia

Zhuang, Juzhong; Dios, Emmanuel de; Lagman-Martin, Anneli

doi:10.2139/ssrn.1619116

Cited by 54 publications

(47 citation statements)

References 52 publications

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“…Having analyzed the effect of the composite index of institutional quality on economic progress, the focus is now to quantify the impact of disaggregated institutional variables. Zhuang, de Dios and Martin (2010) argue that different institutional components exert different impact on economic performance for countries at various levels of development. Results of this analysis are in Table 6.…”

Section: Methodology and Datamentioning

confidence: 99%

The Impact of Institutional Quality on Economic Performance: An Empirical Study of Turkey and 28 Countries in the European Union.

Siyakiya

2017

EconWorld

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Using a panel set of 28 European Union member states and 8 prospective members to the bloc over a period of 1996-2014, this paper examines to what extent institutional quality (governance index) and its sub-indicators (control over corruption, government effectiveness, political stability, regulatory quality, rule of law and voice and accountability) can influence overall economic performance measured by gross value added per capita. The paper expands on existing literature by disaggregating the growth impact of institutions for all countries in the sample, developed and less developing countries. The independent variables included in the model are gross fixed capital formation as a percentage of GDP, net barter terms of trade, government size (expenditure), quality of institution and inflation while gross value added per capita is the dependent variable. Because of the weakness of the fixed effects model, system GMM is used to estimate the coefficients. Generally, the results show a positive and significant relationship between economic performance and the quality of institution. Precisely holding other things constant, a 10 units improvement in the quality of overall institution is predicted to increase gross value added per capita by 1.33 units. Also, the impact of institutional improvements on economic performance is higher and more predominant in developed countries than in less developed. A disintegrated analysis of institutions reveals that government effectiveness and voice and accountability have positive and significant impacts on economic performance of the 36 countries. However, control over corruption and political stability and absence of violence have negative signs. Also, there is no evidence of influence of regulatory quality and rule of law on economic growth.

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Section: Methodology and Datamentioning

confidence: 99%

The Impact of Institutional Quality on Economic Performance: An Empirical Study of Turkey and 28 Countries in the European Union.

Siyakiya

2017

EconWorld

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“…Zhuang, Dios, and Lagman-Martin (2010) argue that the concept of "quality" of governance institutions is multidimensional and it is possible that certain aspects of institutional quality are more relevant or critical than others in determining economic performance for speci…c countries during speci…c periods. Institutions and their implied governance results may well be "supply-side" factors that drive economic growth; they are also attendant products of growth itself -partly because rising incomes and education levels create a "demand" for them (Zhuang, Dios and Lagman-Martin, 2010). Qian (2012) revealed that countries default more often when they lack rules and strong institutions to curb the in ‡uence of powerful groups on government policies.…”

Section: Introductionmentioning

confidence: 99%

Assessment of Institutional Quality in Resource-Rich Caspian Basin Countries

Ahmadov

Mammadov

Aslanli³

2013

SSRN Journal

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Natural resource dependence is believed to have potential impact on institutional development, and there is growing consensus in the academic literature that institutional weakness is central to the explanation of the negative e¤ects of resource booms. Generally, the quality of institutional framework and natural resource dependence interact mutually. Natural resources rents can damage institutions by removing incentives to conduct reforms and even to establish a well-functioning bureaucracy. Also, weak institutional quality is the ultimate cause for a disadvantageous management framework of natural resources and process of converting revenue ‡ows into economic development. This paper examines the connection between institutional quality and resource dependence in resource-rich Caspian Basin countries (Azerbaijan, Kazakhstan, Russia, Turkmenistan) with transition economies. The analysis for the total natural resources rents suggests that, in aggregate, revenues on total natural resources have a negative impact on government e¤ectiveness.

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“…In exploring the paradox highlighted by Quibria (2006), Zhuang et al (2010) note that the paradox disappears for the indices of government effectiveness, regulatory quality and the rule of law by excluding oil and gas rich countries and Macao (China). Zhuang et al (2010) use 2 years cross-sectional data from (1998 and 2008) and calculate the average change in growth to show that three of the six governance indicators have a positive, but statistically insignificant relationship with growth.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Zhuang et al (2010) use 2 years cross-sectional data from (1998 and 2008) and calculate the average change in growth to show that three of the six governance indicators have a positive, but statistically insignificant relationship with growth. They do not, however, find a positive relationship for voice and accountability, political stability, and control of corruption.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Knowles (2005) discusses the link between social capital and economic performance of a country while noting that informal institution and social capital are similar concepts. Zhuang et al (2010) argue that these concepts can explain the cross country growth performance of different countries. The unobservable nature of these concepts, however, does not allow researchers to include them in their empirical analyses.…”

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confidence: 99%

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Revisiting the growth-governance relationship in developing Asian and Oceanic economies

Fayissa

Gill

2015

J Econ Finan

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In recent decades, aid agencies, international financial institutions, and developed countries have placed an increased focus on institutional quality (governance) as a criterion for the allocation of financial assistance to the developing countries. Such foreign aid conditionality is based on the general consensus that better governance leads to better economic outcomes. For Asian and Oceanic economies, however, previous studies have reported a negative relationship between economic growth and governance terming it the 'growth-governance paradox'. We revisit the role of governance and economic growth using panel data for 37 Asian and Oceanic countries over the period of 1996-2013. Unlike previous studies, we employ panel analytic methodologies that account for different sources of biases and find that governance has, in fact, a positive relationship with growth in developing Asian and Oceanic economies.

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Governance and Institutional Quality and the Links with Economic Growth and Income Inequality: With Special Reference to Developing Asia

Cited by 54 publications

References 52 publications

The Impact of Institutional Quality on Economic Performance: An Empirical Study of Turkey and 28 Countries in the European Union.

The Impact of Institutional Quality on Economic Performance: An Empirical Study of Turkey and 28 Countries in the European Union.

Assessment of Institutional Quality in Resource-Rich Caspian Basin Countries

Revisiting the growth-governance relationship in developing Asian and Oceanic economies

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