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Non-linear Threshold Effect of Governance Quality on Economic Growth in African Countries: Evidence from Panel Smooth Transition Regression Approach

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A Correction to this article was published on 10 August 2023

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Abstract

This paper examines the relationship between governance quality and economic growth for 54 African countries over the period 1996–2019. The panel smooth threshold regression (PSTR) model was applied to determine the optimal level of global governance index, which, once attained, will induce the positive impact of governance quality on economic growth. Results proved that the nexus between governance quality and economic growth is non-linear. Besides, it showed that there exists a statistically positive relationship between governance quality and economic growth above the threshold level of 0.2, above which governance quality starts increasing the GDP per capita growth rate in African countries. The findings revealed, too, that the impact of other macroeconomic variables on economic growth has improved once global governance index reaches a threshold level of 0.2. Finally, it was found that only 6 out of 54 African countries have a global governance index above the threshold of 0.2.

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Notes

  1. Conduct Augmented Dickey-Fuller unit-root tests on each panel.

  2. Conduct Phillips-Perron unit-root tests on each panel.

  3. IPCC (International Panel on Climate Change Working Group II), Climate Change 2007: Impacts, Adaptation and Vulnerability. Published for the International Panel on Climate Change, 2007.

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Authors and Affiliations

  1. Faculty of Law, Economics and Management of Jendouba, University of Jendouba, Jendouba, Tunisia

    Anis Ochi & Yosra Saidi

  2. Carthage High Commercial Studies Institute, University of Carthage, Tunis, Tunisia

    Mohamed Ali Labidi

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  1. Anis Ochi
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Third author "Mohamed Ali Labidi" change of affiliation from "Faculty of Law, Economics and Management of Jendouba, University of Jendouba, Jendouba, Tunisa" to "Carthage High Commercial Studies Institute, University of Carthage, Tunis, Tunisia".

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Ochi, A., Saidi, Y. & Labidi, M.A. Non-linear Threshold Effect of Governance Quality on Economic Growth in African Countries: Evidence from Panel Smooth Transition Regression Approach. J Knowl Econ 14, 4707–4729 (2023). https://doi.org/10.1007/s13132-022-01084-w

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