Investigating Factors Affecting on Per Capita GDP Growth in Different Groups of Countries with Emphasis on Governance Indicators

Mohammadi, Hosein; Mohammadi, Morteza; Tirgari-Seraji, Mohammad

doi:10.29252/jemr.8.30.109

Volume 8, Issue 30 (12-2017) jemr 2017, 8(30): 109-145 | Back to browse issues page

‎ 10.29252/jemr.8.30.109

‎ 20.1001.1.22286454.1396.8.30.1.2

Mendeley

Zotero

RefWorks

Mohammadi H, Mohammadi M, Tirgari-Seraji M. Investigating Factors Affecting on Per Capita GDP Growth in Different Groups of Countries with Emphasis on Governance Indicators. jemr 2017; 8 (30) :109-145
URL: http://jemr.khu.ac.ir/article-1-1159-en.html

Investigating Factors Affecting on Per Capita GDP Growth in Different Groups of Countries with Emphasis on Governance Indicators

Hosein Mohammadi ^*

¹, Morteza Mohammadi²

, Mohammad Tirgari-Seraji³

1- Ferdowsi University of Mashhad , hoseinmohammadi@um.ac.ir
2- Islamic Azad University, Sabzevar Branch
3- Ferdowsi University of Mashhad

Abstract: (8531 Views)

Proposed by the World Bank, in which the emphasis is on the participation of all sectors in order to achieve comprehensive development in economic, political, social and cultural fields. In this research, by using data of governance quality in 97 countries in 2000-2012, using panel data method, the effect of governance quality index and its sub-indices on the growth rate of per capita GDP is studied. To achieve the comparable results, countries have divided into five groups with low income (first group), with lower than average income (second group), with higher than average income (third group), high income and non-OECD (Group 4) and high-income and OECD (Group 5) countries. Then the effects of some explanatory variables such as governance indicator and its sub-indices on the per capita GDP is estimated for each group of countries separately. The results of the research indicate that in the studied period and for the countries under study, the governance indicator and its sub-indices do not have the same effects on GDP per capita in different groups of countries. Voice and accountability index has a positive significant effect on per capita GDP growth only in three groups of countries (third, fourth and fifth groups). Political stability index only has a positive significant effect on per capita GDP growth in the third group. The government efficiency indicator only has a positive significant effect on per capita GDP growth in the third, fourth and fifth groups. In the first group, only the regulatory quality index has a positive significant effect on per capita GDP growth. This difference in the way indicators are used implies a difference in regulatory policies in order to influence the per capita GDP growth in different groups of countries.

Keywords: Quality of Governance, Economic Growth, Institution, Society Infrastructures, Panel Data.

Full-Text [PDF 484 kb] (3889 Downloads)

Type of Study: Applicable | Subject: رشد و توسعه و سیاست های کلان
Received: 2016/12/1 | Accepted: 2017/12/20 | Published: 2018/03/6

References

1.  Acemoglu, D., Johnson, S., & Robinson, J.A. (2001). The colonial origins of comparative development: An empirical investigation. American economic review, 91(5), 1369-1410. [DOI:10.1257/aer.91.5.1369]

2.  Aghion, P., & Durlauf, S. (2005). Handbook of Economic Growth. NORTH-HOLLAND. [DOI:10.1016/S1574-0684(05)01107-X]

3.  Barro, J.R (1991). Economic Growth in a Cross-Section of Countries. Quarterly Journal of Economics, 106, 407-443. [DOI:10.2307/2937943]

4.  Barro, J. R. (1997). Determinants of Economic Growth. Cambridge, MA: MIT Press.

5.  Barro, J. R., & Sala-i-Martin, X. (1995). Economic Growth. New York: McGraw-Hill.

6.  Bloom, E., David, D., Jeffrey, S., Paul, C., & Udry, C. (1998). Geography, Demography, and Economic Growth in Africa. Brookings Papers on Economic Activity, 2, 207-295. [DOI:10.2307/2534695]

7.  Bose, N., Haque, M.E., & Osborn, D.R. (2003). Public expenditure and growth in developing countries: Education is the key. Center for Growth and Business Cycle Research Discusion Paper Series, 30.

8.  Butkiewicz, J.L., & Yanikkaya, H. (2006). Institutional quality and economic growth: Maintenance of the rule of law or democratic institutions, or both? Economic Modelling, 23(4), 648-661. [DOI:10.1016/j.econmod.2006.03.004]

9.  Campos, F., & Nugent, J. (1999). Development performance and Institutions of Governance: Evidence from East Asia and Latin America. World Development 27(3), 439-452. [DOI:10.1016/S0305-750X(98)00149-1]

10.  Chong, A., & Cesar, C. (2000). Causality and Feedback between Institutional Measures and Economic Growth. Economics and Politics, 12, 1. [DOI:10.1111/1468-0343.00069]

11.  D'Agostino, G., Dunne, J.P., & Pieroni, L. (2016). Government spending, corruption and economic growth. World Development, 84, 190-205. [DOI:10.1016/j.worlddev.2016.03.011]

12.  Dethier, J.J. (1999). Governance and Economic Performance: A Survey. Discussion Papers on Development Policy. ZEF Discussion Papers on Development Policy, 5, Bonn. [DOI:10.2139/ssrn.3318551]

13.  Devarajan, S., Vinaya, S., & Heng-fu, Z. (1996). The Composition of Public Expenditures and Economic Growth. Journal of Monetary Economics, 37(2), 313-344. [DOI:10.1016/S0304-3932(96)90039-2]

15.  Dzhumashev, R. (2014). Corruption and growth: The role of governance, public spending and economic development. Economic Modelling, 37, 202-215. [DOI:10.1016/j.econmod.2013.11.007]

16.  Eisa Zadeh, S., and Ahmadzadeh, A. (2009). Investigating the Institutional Influence on Economic Growth with Emphasis on Governance Institutions (Case Study of the Intercountry for the period 2005-1996). Iranian Journal of Economic Research Quarterly, 13 (40), 1-28.

17.  Faust, J. (2008). Are more democratic donor countries more development oriented? Domestic institutions and external development promotion in OECD countries. World Development, 36(3), 383-398. [DOI:10.1016/j.worlddev.2007.03.006]

18.  Jafari Samimi, A., and Azarmand, H. (2005). Investigating the Relationship Between Economic Freedom and Macroeconomic Performance in the World Countries(1980-2001). Quarterly journal of commercial research, 37, 41-61.

19.  Isham, J., Kaufmann, D., & Pritchett, L.H. (1997). Civil liberties, democracy, and the performance of government projects. The World Bank Economic Review, 11(2), 219-242. [DOI:10.1093/wber/11.2.219]

20.  Gholipour, R. (2004). Good governance and feasibility in Iran. Tehran: Institute for Management and Planning Education and Research.

21.  Gyimah-Brempong, K. (2002). Corruption, economic growth and income inequality in Africa. Economics of Governance, 3(3), 183-209. [DOI:10.1007/s101010200045]

22.  Hall, R.E., & Charles, I.J. (1999). Why do Some Countries Produce so Much More Output per Worker Than Others?. Quarterly Journal of Economics 114, 1: 83-116. [DOI:10.3386/w6564]

23.  Haggard, S., & Tiede, L. (2011). The rule of law and economic growth: where are we?. World Development, 39(5), 673-685. [DOI:10.1016/j.worlddev.2010.10.007]

24.  Huynh, K.P., & Jacho-chavez, D.T. (2009). Growth and governance: A nonparametric analysis. Journal of Comparative Economics, 37(1), 121-143. [DOI:10.1016/j.jce.2008.08.003]

25.  Kaufmann, D. & Kraay, A. (2002). Governance Indicators, Aid Allocation, and the Millennium Challenge Account. World Bank,Washington, D.C.

26.  Keefer, P. (2004). A Review of the Political Economy of Governance: From Property Rights to voice. World Bank Policy Research Working Paper, 3315, World Bank, Washington, D.C. [DOI:10.1596/1813-9450-3315]

27.  Knack, S., & Keefer, P. (1995). Institutions and economic performance: cross country tests using alternative institutional measures. Economics & Politics, 7(3), 207-227. [DOI:10.1111/j.1468-0343.1995.tb00111.x]

28.  Knack, S. (2000). Aid Dependence and the Quality of Governance: A Cross-country Empirical Study. Policy Research Working Paper, 2396, World Bank, Washington, D.C. [DOI:10.1596/1813-9450-2396]

29.  Leftwich, A. (2000) Translation by Ahmad Alighillian and Afshin Khakbaz. Democracy and Development. Tehran: New Design Publications.

30.  La Porta, R., Lopez-de-silanes, F., Shleifer, A., & Vishny, R. (1999). The quality of government. The Journal of Law, Economics, and Organization, 15(1), 222-279. [DOI:10.1093/jleo/15.1.222]

31.  Mankiw, N.G., Romer, D., & Weil, D.N. (1992). A contribution to the empirics of economic growth. The quarterly journal of economics, 107(2), 407-437. [DOI:10.2307/2118477]

32.  Martinez-Vazquez, J., & McNab, R.M. (2006). Fiscal decentralization, macrostability and growth. Hacienda Publica Espanola/Revista de Economia Publica, 179(4/2006), 25-49.

33.  Mauro, P. (1998). Corruption and the composition of government expenditure. Journal of Public economics, 69(2), 263-279. [DOI:10.1016/S0047-2727(98)00025-5]

34.  Meidari, A., and Kheir Khahan, J. (2004). Good governance. Tehran: Research Center of the Islamic Consultative Assembly.

35.  Mohammadi, H. and Mahmoudi, M. (2017). Investigating the Interaction of Interest Rates with Selected Macroeconomic Variables in Islamic and Non-Islamic Countries, Quarterly Journal of Economic Modeling Research, 7(28): 103-138.

36.  Nawaz, S. (2015). Growth effects of institutions: A disaggregated analysis. Economic Modeling, 45, 118-126. [DOI:10.1016/j.econmod.2014.11.017]

37.  North, D.C. (1990). A transaction cost theory of politics. Journal of theoretical politics, 2(4), 355-367. [DOI:10.1177/0951692890002004001]

38.  Panizza, U. (1999). On the determinants of fiscal centralization: Theory and evidence. Journal of public economics, 74(1), 97-139. [DOI:10.1016/S0047-2727(99)00020-1]

39.  Romer D. (2011). Advanced macroeconomics. Fourth edition, Mc-graw hill pub.

40.  Radu, M. (2015). Political stability-a condition for sustainable growth in Romania? Procedia Economics and Finance, 30, 751-757. [DOI:10.1016/S2212-5671(15)01324-6]

41.  Sala-i-Martin, X. (1997). I just run four million regressions (No, w6252). National Bureau of Economic Research. [DOI:10.3386/w6252]

42.  Sala-i-Martin, X., Doppelhofer, G., & Miller, R.I. (2004). Determinants of long-run growth: A Bayesian averaging of classical estimates (BACE) approach. The American Economic Review, 94(4), 813-835. [DOI:10.1257/0002828042002570]

43.  Shakeri M., Jafari Samimi, A., and Karimi Moghari, Z. (2014). Relationship between institutional variables and economic growth: Introducing a new institutional index for the Middle East and North Africa. Quarterly Journal of Research on Economic Growth and Development, 21, 93-106.

44.  Sylwester, K. (2000). Income inequality, education expenditures and growth. Journal of Development Economics, 63(2), 379-398. [DOI:10.1016/S0304-3878(00)00113-9]

45.  Wang, C. (2013). Can institution explain cross country differences in innovative activity?. Journal of Macroeconomics, 37, 128-145. [DOI:10.1016/j.jmacro.2013.05.009]

46.  Tanzi, V., & Davood, H. (1998). Corruption, public investment, and growth. In The Welfare State, Public Investment, and Growth (pp. 41-60). Springer, Tokyo. [DOI:10.1007/978-4-431-67939-4_4]

47.  Zaman, K. (2015). Quality guideline for good governance in higher education across the globe. Pacific Science Review B: Humanities and Social Sciences, 1(1), 1-7. [DOI:10.1016/j.psrb.2016.01.001]