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Economic, political and social determinants of governance worldwide

Abstract

The objective of this paper was to provide guidance concerning the underlying determinants of cross-country variations in institutional quality and the accompanying performance of governance institutions. Based on theoretical perspectives from the prevailing good governance and institutions literature, this study adopts a solid conceptual approach and examines the disparate theoretical views under a unified framework. The analysis suggests that the quality of governance varies across countries mainly due to differences in countries’ levels of economic development as well as political freedoms and levels of social development. However, these factors do not have a symmetric worldwide impact on governance, but their effects vary depending on the specific dimension of governance under consideration. This conclusion is attributed to the complex nature of governance as it is not only associated with economic development but also closely related to a wide variety of noneconomic factors of social and political nature. Therefore, attaining and sustaining good governance is rather a multidimensional process.

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Fig. 1

Notes

  1. For an extensive overview of the concept of inclusive growth, see, also, Klasen (2010) and McKinley (2010).

  2. The contributions by Mauro (1995), Knack (1995), Hall and Jones (1999), Treisman (2000), Acemoglu et al. (2001) and Gradstein (2004), among others, are used as a reference point in the relevant empirical literature.

  3. In a sense, the political system or the political macrostructure is responsible for determining the political motivation of all players in a state system and it is the very reaction of these factors that determine the behavior of state bureaucracy (Lederman et al. 2005).

  4. See, www.govindicators.org.

  5. See, http://data.worldbank.org/indicator.

  6. See, www.freedomhouse.org.

  7. See, http://hdr.undp.org/en/statistics/hdi.

  8. Histograms presenting the distribution of studentized deleted residuals for all equations examined are available upon request.

  9. The results of this paper are in line with the findings of Al-Marhubi (2004) who investigates the determinants of governance capturing economic factors as well as exogenous and historically predetermined variables.

  10. The taxonomy of countries as free, partly free and not free is based on the Freedom House (2012).

  11. As far as the Human Development Index is concerned, for the year 2012 Singapore ranks thirtieth (30th) out of 187 countries, whereas it scores in the fourth (4th) place among all Asian economies examined, after Korea, Japan and Hong Kong, according to data section 3.1.

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Acknowledgments

The authors would like to acknowledge the very helpful comments of two anonymous reviewers.

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Correspondence to Kostas Rontos.

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Rontos, K., Syrmali, ME. & Vavouras, I. Economic, political and social determinants of governance worldwide. J. Soc. Econ. Dev. 17, 105–119 (2015). https://doi.org/10.1007/s40847-015-0014-3

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Keywords

  • Governance
  • Economic development
  • Social development
  • Transparency
  • Institutions