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

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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.)

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.

Suggested Citation

  • Hosein Mohammadi & Naser Shahnoushi & Marzieh Ronaghi, 2017. "The Effects of Governance Indicators on Per Capita Income, Investment and Employment in Selected Mena Countries," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(2), pages 211-229, Spring.
    • Handle: RePEc:eut:journl:v:21:y:2017:i:2:p:211
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    References listed on IDEAS

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    1. Knoll, Martin & Zloczysti, Petra, 2012. "The Good Governance Indicators of the Millennium Challenge Account: How Many Dimensions are Really Being Measured?," World Development, Elsevier, vol. 40(5), pages 900-915.
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    3. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2010. "The worldwide governance indicators : methodology and analytical issues," Policy Research Working Paper Series 5430, The World Bank.
    4. Daines, Robert M. & Gow, Ian D. & Larcker, David F., 2010. "Rating the ratings: How good are commercial governance ratings?," Journal of Financial Economics, Elsevier, vol. 98(3), pages 439-461, December.
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    Cited by:

    1. Marzieh RONAGHI & Eric SCORSONE, 2023. "The Impact Of Governance On Poverty And Unemployment Control Before And After The 2020 Covid Outbreak In The United States," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 23(2), pages 35-56.
    2. Burak Byükoglu & Ahmet Šit & Ibrahim Halil Ekši, 2021. "Governance matters on non-performing loans: Evidence from emerging markets," PSL Quarterly Review, Economia civile, vol. 74(296), pages 75-91.

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