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What Types of Perceived Governance Indicators Matter the Most for Private Investment in Middle East and North Africa

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  • Marie-Ange Véganzonès-Varoudakis

    (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

  • Ahmet Faruk Aysan

    (Department of Economics - Boǧaziçi üniversitesi = Boğaziçi University [Istanbul])

  • Zeynep Ersoy

    (Department of Economics - Boǧaziçi üniversitesi = Boğaziçi University [Istanbul])

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.

Suggested Citation

  • Marie-Ange Véganzonès-Varoudakis & Ahmet Faruk Aysan & Zeynep Ersoy, 2011. "What Types of Perceived Governance Indicators Matter the Most for Private Investment in Middle East and North Africa," Working Papers halshs-00556940, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00556940
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00556940
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    Cited by:

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    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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    More about this item

    Keywords

    Governance quality; Private investment; Developing countries; Middle East and North Africa; Public accountability;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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