The Effects of Governance Indicators on Per Capita Income, Investment and Employment in Selected Mena Countries

Hosein Mohammadi (), Naser Shahnoushi () and Marzieh Ronaghi ()
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Hosein Mohammadi: Agricultural Economics Department, Ferdowsi University of Mashhad, Mashhad, Iran.
Naser Shahnoushi: Agricultural Economics Department, Ferdowsi University of Mashhad, Mashhad, Iran.
Marzieh Ronaghi: Agricultural Economics Department, Ferdowsi University of Mashhad, Mashhad, Iran.

Iranian Economic Review (IER), 2017, vol. 21, issue 2, 211-229

Abstract: Governance is a way of exercising power in economic and social resource management of a country. Good governance criteria have different weights and relations with regard to the conditions of any country. This study is a descriptive survey and has been carried out to calculate the coefficients and weights of each indicator of good governance in Mena countries and identify the causal relationship between these indicators and their effects on per capita income, investment and employment. After identifying indicators of good governance by Granger causality test and vector Auto-regression test, causal relationships of good governance indices were analyzed in the form of statistical hypotheses. Then, the weights of each indicator was calculated by distributing a questionnaire among the expert’s in the field of good governance by using fuzzy hierarchical analysis and the relationship between main governance indicators and employment-highlighted indices are investigated. Among the research results, high weight of accountability, voice and accountability and social justice indicators can be pointed out compared to other good governance indices. By examining panel data regression of governance indicator on per capita income, investment and employment, it is observed that governance indicators have a significant positive effect in each three regression equations. Therefore, by improving the good governance indicators in developing countries, some important economic, social and political objectives would be achieved simultaneously. Increasing per capita income, increasing domestic and foreign investment, creating sufficient jobs and increasing the welfare are some economic aspects of improving governance indicators in the country.

Keywords: Good Governance; Voice and Accountability; Per Capita Income; Employment; Investment. (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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