Impact of Economic Fragility from the Governance Channel on Setting up New Businesses

Abdul Rahim Hashemi Dizaj (), Razieh Davarikish () and Mehdi Jafari ()
Additional contact information
Abdul Rahim Hashemi Dizaj: Assistant Professor, Mohaghegh Ardabili University, Ardabil, Iran
Razieh Davarikish: PhD student public sector economy, Bu Ali Sina University, Hamedan, Iran
Mehdi Jafari: Assistant Professor Tolo Mehr Higher Education Institute, Qom, Iran

Quarterly Journal of Applied Theories of Economics, 2022, vol. 9, issue 1, 57-90

Abstract: When an internal or external shock occurs, countries with a lack of good governance and economic fragility are more likely to experience economic and social chaos and economic and political instability. Therefore, with increasing uncertainty due to the high fragility of the economy against internal and external shocks, the motivation of economic actors to start and continue business decreases. In other words, due to macroeconomic instability, the costs of starting a business become so high that individuals, firms are reluctant to take advantage of economic opportunities. For this reason, different countries in order to improve macroeconomic stability and reduce successive and unpredictable changes in laws and regulations, political stability of government, strengthening public services and infrastructure and security of property rights are pursuing strategies to improve the the business environment by reducing the economic fragility under the good governance. Therefore, this study intends to investigate the impact of economic fragility through the governance channel on starting new businesses environment with using the Generalized method of moments (GMM) in selected countries during the period 2006-2019. The results show that economic fragility and its components (economic recession and poverty, unbalanced economic development and brain drain and manpower) through the governance index channel have a positive impact on starting new businesses in the countries under study. The results also show that the variables of financial development, government spending on education, total productivity of production factors have a positive impact on starting new businesses

Keywords: Good governance; fragility of economy; business environment; Generalized Method of Moments Approach (search for similar items in EconPapers)
JEL-codes: C23 F18 Q56 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ecoj.tabrizu.ac.ir/article_13916_fb815b2ff75d5152f73d2b7eeb726bb6.pdf Full text (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:qjatoe:0258

Access Statistics for this article

Quarterly Journal of Applied Theories of Economics is currently edited by Sakineh Sojoodi

More articles in Quarterly Journal of Applied Theories of Economics from Faculty of Economics, Management and Business, University of Tabriz Contact information at EDIRC.
Bibliographic data for series maintained by Sakineh Sojoodi ().