Abstract.
We test the relationship between governance and macroeconomic technical efficiency on a sample of 62 countries, both developed and developing. We do so by applying Battese and Coelli (1995)’s method at the aggregate level. We find that better governance, measured by six complementary indices each devoted to a different dimension of governance, is always associated with greater efficiency. However, when governance variables are tested against each other, we observe that government efficiency is the aspect of governance that most robustly affects aggregate efficiency.
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Received: September 2003, Accepted: August 2004,
JEL Classification:
C31, K40, O4
We wish to thank Mohammed Chaffai and Jean-Yves Lesueur for their advice. We are also grateful to participants at the XVth Villa Mondragone International Economic Seminar on “ Markets, growth and global governance “ in Rome (June 2003), and seminar participants at the University Robert Schuman of Strasbourg, the University Louis Pasteur of Strasbourg, and the University Lumiére of Lyon, for their helpful comments. We are finally indebted to two anonymous referees whose constructive suggestions led us to substantially improve the paper. All remaining errors are ours.
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Méon, PG., Weill, L. Does better governance foster efficiency? An aggregate frontier analysis. Economics of Governance 6, 75–90 (2005). https://doi.org/10.1007/s10101-004-0080-z
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DOI: https://doi.org/10.1007/s10101-004-0080-z