“…Gough et al (2004) found the deficiency of effective and efficient government in many emerging markets is the major hindrance in the progress of nations. Dima, Dima, and Lobont (2013) found the quality of favorable government and positive impact on economic outcomes in 27 members of European Union countries. Similar studies were conducted by Sarwar, Afzal, Shafiq, and Rehman (2013) and Bhattacharjee (2017) on the impact of institutional quality on the economic performance of South Asia countries.…”
The study empirically examines the impact of institutional quality on economic performance in South Asia for the period 2002 to 2016. The study employed six World Bank Governance indicators and constructed a composite governance index to measure institutional quality. Per capita real GDP is taken as a measure of economic performance. The study uses conventional determinants of growth such as labor supply and physical capital stocks. Fixed effects regression and Fully Modified Ordinary Least Square (FMOLS) methods are employed to examine the long-run equilibrium relationship. Dumitrescu-Hurlin (2012) panel causality test is used as a short-run diagnostics test for the long-run relationship. The empirical results reveal institutional quality has a positive impact on economic performance in the long-run whereas, governance indicators such as control of corruption, government effectiveness and political stability are vital for better economic performance in South Asian countries. The short-run diagnostics results reveal that institutional quality has no impact on economic performance. On the other side, economic performance helps to improve intuitional quality in the short-run. Hence, in the short-run South Asian countries should focus on non-good governance indicators such as effective taxation, health, education, infrastructure and skill development to achieve good governance and better economic outcome in the long-run.
“…Gough et al (2004) found the deficiency of effective and efficient government in many emerging markets is the major hindrance in the progress of nations. Dima, Dima, and Lobont (2013) found the quality of favorable government and positive impact on economic outcomes in 27 members of European Union countries. Similar studies were conducted by Sarwar, Afzal, Shafiq, and Rehman (2013) and Bhattacharjee (2017) on the impact of institutional quality on the economic performance of South Asia countries.…”
The study empirically examines the impact of institutional quality on economic performance in South Asia for the period 2002 to 2016. The study employed six World Bank Governance indicators and constructed a composite governance index to measure institutional quality. Per capita real GDP is taken as a measure of economic performance. The study uses conventional determinants of growth such as labor supply and physical capital stocks. Fixed effects regression and Fully Modified Ordinary Least Square (FMOLS) methods are employed to examine the long-run equilibrium relationship. Dumitrescu-Hurlin (2012) panel causality test is used as a short-run diagnostics test for the long-run relationship. The empirical results reveal institutional quality has a positive impact on economic performance in the long-run whereas, governance indicators such as control of corruption, government effectiveness and political stability are vital for better economic performance in South Asian countries. The short-run diagnostics results reveal that institutional quality has no impact on economic performance. On the other side, economic performance helps to improve intuitional quality in the short-run. Hence, in the short-run South Asian countries should focus on non-good governance indicators such as effective taxation, health, education, infrastructure and skill development to achieve good governance and better economic outcome in the long-run.
“…Mukherjee and Chakrabotry [15] show the positive relation between environmental performance and socioeconomic and sociopolitical factors. Finally, there is an admittedly positive effect of institutional quality [19,20] and an open political system [21] on economic growth. The quality of the institution, the level of democracy, and good governance are what make a country economically advance or decline.…”
Abstract:As the subject of how economic development affects the quality of the natural environment has gained great momentum, this paper focuses on examining the extent to which the openness of a market economy and the quality of the institution affect environmental performance. The majority of the current studies focus on the Environmental Kuznets Curve and the level of economic growth. This paper addresses this question by relating environmental ("Environmental Performance Index") to macroeconomic (Gross Domestic Product per capita, "Open Markets Index") and governance indicators ("Worldwide Governance Indicators"). The sample consists of 75 countries, including all G20 and EU members, comprising "more than 90% of global trade and investment". Findings show that the Environmental Performance Index is positively correlated to each of the (institutional) indicators, so as to confirm that the selected indices are consistent with previous studies, suggesting that environmental performance increases in line with economic development and that good governance increases a country's levels of environmental protection. By applying factor analysis, an empirical model of the Environmental Performance Index is estimated, suggesting that there is a significant positive correlation between a country's economic growth, the openness of an economy, high levels of effective governance, and its environmental performance.
“…As Ahlborn et al [39] mentioned in their study, CEECs have not yet played a prominent role in the analysis of their economic and financial systems, although their convergence or non-convergence toward Western prototypes is a highly interesting question, as all these countries are EU members and thus are vulnerable to the same problems [40]. However, these countries present common characteristics influenced mainly by their political history, such as the level of financial development and the level of income per capita, government spending, or regulation [41]. After CEECs experimented with a rapid and radical transformation causing the exponential growth of disequilibria, the gap between rich and poor grew, both socially and spatially [42].…”
Section: Financial Development Index and Gini Coefficient In Ceecsmentioning
Financial development is often associated with significant economic growth, but studies have shown that a high level of financial development can be the cause of deepening income inequality in many countries. The main objective of the proposed study is to identify to what extent financial development influences income inequality in Central and Eastern European Countries (CEEC). Thus, for the model specification we used as dependent variable the Gini coefficient and as independent variable the financial development index. The sample period for the analysis was from 2004 to 2019, restricted by the lack of data on the Gini coefficient in CEECs. Data on the financial development index were collected from International Monetary Fund, and data on the Gini coefficient were extracted from the World Bank’s Poverty and Inequality Platform. The study unravels several contributions. First of all, the use of quantile regression allowed for the examination of the effects of financial development across the entire distribution of income inequality. Second of all, the use of a comprehensive financial development index offered a more robust and comprehensive measure of financial development compared to single indicators. Taking into account that the Gini coefficient must be close to zero, this result was a positive one with, in essence, financial development reducing income inequality in CEECs. Thirdly, the specific focus on CEECs fills a gap in the literature. Finally, the findings of this study have important policy implications. The obtained results indicate a negative causal relationship between financial development and income inequality, emphasizing the fact that the relationship between these two components cannot be generalized for all regions. These might include measures to promote financial inclusion, improve financial literacy, and enhance the stability and efficiency of financial systems. Supporting financial development in CEECs and similar transition economies can be an effective strategy for tackling income inequality.
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