What Type of Perceived Governance Institutions Matters the Most for Private Investment in the Middle East and North Africa

Marie-Ange Véganzonès, Ahmet Aysan and Zeynep Ersoy

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Abstract: By using a simultaneous equations model, this paper establishes that the perceived quality of governance, which is measured by three different indicators "Quality of Administration", "Public Accountability" and "Political Stability", has a positive effect on the private investment decisions in the developing countries. Our model allows us to point out the fact that the mechanisms through which each type of indicator affects private investment are different. In addition to our primary result we also show that Middle East and North Africa (MENA) region could have attained a better private investment performance if it had reached a more advanced level of perceived institutions in last two decades. The low level of public accountability, among other governance deficiencies, was predominantly responsible for the deficiency in private investment in MENA.

Date: 2007
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Published in Bogazici University Research Papers, Istanbul, 2007, ISS/EC 2007-01, pp.18

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00229739

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