A Comparative Study on Contribution of Governance on Economic Growth in the East African Community Countries

Joseph Abuga Orayo, George Nyarigoti Mose

Abstract


This study sought to explore the relationship between good governance and economic growth among the East Africa Community (EAC) countries. The study utilized panel data to analyse six major World Bank governance indicators namely: Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption effect on economic growth in the respective country and region for the period 1999-2013. The Random effect model (REM) and Ordinary Least Square (OLS) estimation techniques were employed for comparative analysis. The study showed that among the governance indicators, political stability, quality regulatory and control of corruption were significant. The first two indices were negatively related to economic growth rate while the latter was positively related to economic growth rate. From the OLS models, voice and accountability had a significant effect on economic growth rate in Kenya and Uganda. The quality of regulation had significant effect in Kenya and Tanzania while rule of law was found to be significant only in Kenya. The study suggests that in order to advance the economic performance in EAC countries, the EAC states need to invest in more effective regulation on both public and private institutions to enhance social, political and sustainable economic interactions. Similarly, the government needs to encourage national cohesion and peaceful co-existence that would foster political stability and reduce violence. By investing in good governance through establishment of key institutions of governance are likely to spur economic growth.


Full Text:

PDF

References


Akpan, G. and Effiong, E. (2012). Governance and Development Performance: A Cross- Country Analysis of Sub-Saharan Africa. Journal of Economics and Sustainable Development, 3(14), 54-65.

Arndt, C. and Oman, C. (2006). Uses and Abuses of Governance Indicators. Paris: Development Centre of the OECD.

Arusha, C. (2009). Government expenditure, governance and economic growth. Comparative Economic Studies, 51(3), 401-418.

Azfar, O. and Gurgur, T. (2005). Does corruption affect health and education outcomes in the Philippines?. Available at SSRN 723702.

Brautigam, D. and Knack, S. (2004). Foreign Aid, Institutions, and Governance in Sub‐Saharan Africa. Economic development and cultural change, 52(2), 255-285.

Borenstein, M., Hedges, L., Higgins. J and Rothstein, H. (2009). Introduction to Meta-Analysis. John Wiley and Sons.

Bouoiyour, J.and Naimbaye L, (2010). Economic growth in Sub-Saharan Africa: is governance a source of inequality between countries? Working paper.

Chauvet, Lisa and Paul Collier (2004). Development Effectiveness in Fragile States: Spillovers andTurnarounds. Centre for the Study of African Economies, Department of Economics, Oxford University (Mimeo).

Chong, A. and Calderon, C. (2000). Causality and feedback between institutional measures and economic growth. Economics & Politics, 12(1), 69-81.

Fayissa, B. and Nsiah, C. (2010) The Impact of Governance on Economic Growth: Further Evidence for Africa Department of Economics and Finance Working Paper Series.

Greene, W. H. (2008). Econometric analysis, 5th. Ed.. Upper Saddle River, New Jersey.

Hall, R. E., & Jones, C. I. (1999). Why do some countries produce so much more output per worker than others?(No. W6564). National bureau of economic research.

Kagundu, P. (2006). The Quality of Governance, Composition of Public Expenditures, and Economic Growth: An Empirical Analysis.

Kaufmann, D., Kraay, A. and Zoido-Lobaton, P.(1999). Governance matters. Policy Research Working Paper No. 2196, World Bank.

Kaufmann, D., Kraay, A. and Massimo Mastruzzi, (2009), Governance Matters VIII: Aggregate and Individual Governance Indicators 1996-2008. Policy Research Working Paper Series, 4978.

Kaufmann, D. and Kraay, A. (2003). Governance and growth: causality which way? Evidence for the world, in brief. Manuscript. World Bank publication.

King, R. and Rebelo, S. (1990). Public policy and economic growth: developing neoclassical implications (No. w3338). National Bureau of Economic Research.

Knack,S (2003). Second-generation governance indicators. International Review of Administrative Sciences, 69(3), 345-364.

Ndulu and O’Connell. (1999). Governance and Growth in Sub-Saharan Africa. Journal of Economic Perspectives 13: 41–66.

North, D. (1990). Institutions, Institutional Change and Economic Performance. Cambridge, New York: Cambridge University Press.

North, D. C. (2005). Institutions and the process of economic change. Management International, 9(3), 1-7.

Pritchett, L. (1996). Mind your P's and Q's: the cost of public investment is not the value of public capital. World Bank policy research working paper, (1660).

Quibria, M. G. (2006). Does governance matter? Yes, no or maybe: Some evidence from developing Asia. Kyklos, 59(1), 99-114.

Swaroop, V. and Rajkumar, A. S. (2002). Public spending and outcomes: does governance matter?. World Bank Policy Research Working Paper, (2840).

Rowley, C. K. (1999). Rent seeking and rent extraction from the perspective of Africa. Institutions and collective choice in developing countries, 223, 254.

World Bank Group (Ed.). (2012). World Development Indicators 2012. World Bank Publications.




DOI: https://doi.org/10.5296/ijrd.v3i2.9848

Refbacks

  • There are currently no refbacks.


Interantional Journal of Regional Development  ISSN 2373-9851

Copyright © Macrothink Institute 

To make sure that you can receive messages from us, please add the 'macrothink.org' domains to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', please check your 'spam' or 'junk' folder.