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Economic freedom, good governance and the dynamics of development

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  • Eva Medina-Moral
  • Vicente J. Montes-Gan

Abstract

The purpose of this research is to provide empirical evidence about what institutions are most likely to favor development in its different stages. Firstly, we identify the three development stages that prevailed in the world between 1996 and 2011 according to the income classification of the World Bank corroborated with data from the UNDP Human Development Index. Secondly, we consider that a country had a “successful” behavior if it improved its development stage in that period. Grouping countries based on “success”, instead of according to the income level, allows us to introduce the dynamics of development in the analysis. Thirdly, we formulate a panel data and a probit model to determine the institutions that are behind the success cases. The results identified economic freedom as the most important institution in all development stages; governance was also found essential, but only in the countries in the intermediate stage of development.

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  • Eva Medina-Moral & Vicente J. Montes-Gan, 2018. "Economic freedom, good governance and the dynamics of development," Journal of Applied Economics, Taylor & Francis Journals, vol. 21(1), pages 44-66, January.
    • Handle: RePEc:taf:recsxx:v:21:y:2018:i:1:p:44-66
    DOI: 10.1080/15140326.2018.1526873
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    Cited by:

    1. Kumar Debasis Dutta & Mallika Saha, 2023. "Role of governance in the nexus between financial development and sustainable development," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(6), pages 1181-1215, August.
    2. Marson, Marta & Migheli, Matteo & Saccone, Donatella, 2022. "Free to Die: Economic Freedoms and Influenza Mortality," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202210, University of Turin.
    3. Marson, Marta & Migheli, Matteo & Saccone, Donatella, 2023. "Free to die: Economic freedoms and influenza mortality," Economics & Human Biology, Elsevier, vol. 49(C).
    4. Muhammad Hussain & Farzan Yahya & Muhammad Waqas, 2021. "Does strong governance stimulate the effect of economic freedom and financial literacy on financial inclusion? a cross-country evidence," Future Business Journal, Springer, vol. 7(1), pages 1-10, December.
    5. Nam, Hyun-Jung & Ryu, Doojin, 2023. "FDI and human development: The role of governance, ODA, and national competitiveness," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 85(C).
    6. Zhang Zhuo & Almalki Sultan Musaad O & Bashir Muhammad & Sher Khan, 2021. "Underlying the Relationship Between Governance and Economic Growth in Developed Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(3), pages 1314-1330, September.
    7. Andreea-Oana Iacobuță & Mihaela Ifrim, 2020. "Welfare Mentality as a Challenge to European Sustainable Development. What Role for Youth Inclusion and Institutions?," Sustainability, MDPI, vol. 12(9), pages 1-25, April.

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