World Governance Indicators Research Articles

The Sustainable Development Index: An Integration of the Ecological Framework Considering the Governance-development Nexus

This paper aims to enhance the formulation of the Sustainable Development Index (SDI) by introducing a further correction term, governance lack (GL) index, in additional to the ecological impact index (EII). The GL considers a country’s governance lack by calculating a governance index (GI) with the World Governance Indicators (WGIs) starting from 1996. The SDI(g) retains the original formula of the SDI, thus remaining an indicator of strong environmental sustainability but adequately considering in its formulation the differences significant in countries’ governance climate. Finally, graphical relationships between DI and GI, and DI and (EII + GL) are shown, and the existence of these relationships are tested with WLS and nonparametric regressions. Our findings show that significant differences in country ranking were found; the graphical relationships are empirically proven; and countries with a worse GI have been further penalized in the SDI(g) ranking.

Health outcome convergence and the roles of public health financing and governance in Africa.

Progress in health outcomes across Africa has been uneven, marked by significant disparities among countries, which not only challenges the global health security but impede progress towards achieving the United Nations' Sustainable Development Goals 3 and 10 (SDG 3 and SDG 10) and Universal Health Coverage (UHC). This paper examines the progress of African countries in reducing intra-country health outcome disparities between 2000 and 2019. In other words, the paper investigates the convergence hypothesis in health outcome using a panel data from 40 African countries. Data were sourced from the World Development Indicators, the World Governance Indicators, and the World Health Organization database. Employing a non-linear dynamic factor model, the study focused on three health outcomes: infant mortality rate, under-5 mortality rate, and life expectancy at birth. The findings indicate that while the hypothesis of convergence is not supported for the selected countries, evidence of convergence clubs is observed for the three health outcome variables. The paper further examine the factors contributing to club formation by using the marginal effects of the ordered logit regression model. The findings indicate that the overall impact of the control variables aligns with existing research. Moreover, governance quality and domestic government health expenditure emerge as significant determinants influencing the probability of membership in specific clubs for the child mortality rate models. In the life expectancy model, governance quality significantly drives club formation. The results suggest that there is a need for common health policies for the different convergence clubs, while country-specific policies should be implemented for the divergent countries. For instance, policies and strategies promoting health prioritization in national budget allocation and reallocation should be encouraged within each final club. Efforts to promote good governance policies by emphasizing anti-corruption measures and government effectiveness should also be encouraged. Moreover, there is a need to implement regional monitoring mechanisms to ensure progress in meeting health commitments, while prioritizing urbanization plans in countries with poorer health outcomes to enhance sanitation access.

The moderation effect of institutional quality on the nexus between migrant remittance and financial inclusion in West Africa

BACKGROUND: Migrants' remittances are critical in financing the economies of Africa and the West African region, in addition to FDI and ODA. It is also a significant driver of financial inclusion. OBJECTIVE: This paper assessed the moderating role of institutional quality on migrants' remittances and financial inclusion in West Africa during 2004–2023. METHODS: Secondary data was used for this study, sourced from the World Bank’s World Development Indicators (WDI), the World Governance Indicator (WGI), and the IMF’s Financial Access Survey (FAS), 2023. This study employed the Panel Fixed Effects (PFE) estimation technique, which accounts for Driscoll and Kraay's (1998) standard error. To ensure the robustness of the findings, the analysis was augmented with the utilisation of feasible generalised least squares (FGLS). RESULTS: There was an overall positive impact of institutional quality on financial inclusion (FI), at a significant rate of 120.8%, accounting for deposit-taking microfinance institutions, thereby highlighting that institutions play a crucial part in improving financial inclusion in West Africa. Also, the moderating effect of institutional quality had a more positive impact on microfinance institutions than commercial banks, at a significant rate of 16.2%. CONCLUSION: In summary, attention should be given to establishing more microfinance institutions as they serve as a better remittance distribution channel when compared to commercial banks, emphasising enhancing quality in financial services delivery. This also encourages more people to be financially included, thereby making better economic use of the remittance received in West Africa.

The role of governance in the effect of the internet on financial inclusion in Sub-Saharan Africa

ABSTRACT This paper analyses the role of governance quality in the relationship between the Internet and financial inclusion in Sub-Saharan African countries. The study uses data from the International Monetary Fund (IMF) database for indicators of financial inclusion, World Development Indicators (WDI) for Internet users and World Governance Indicators (WGI) for governance indicators from 2004 to 2020. Analyzing the data using the System Generalized Method of Moments (SGMM), the results show that the Internet can be effectively complemented with the quality of governance to improve financial inclusion. Thresholds of governance that are needed for the Internet to promote financial inclusion are provided. Policies aimed at reinforcing the quality of governance in SSA countries could help consolidate Internet infrastructure to promote Internet usage and, in turn, improve financial inclusion. Other policy implications are discussed.

Advancing carbon neutrality in post-COP28 in Ghana: Examining the impact of foreign direct investment and governance indicators

This paper investigates the efficacy of foreign direct investment (FDI) and governance quality in reducing the adverse impact of CO2 emissions in Ghana. To achieve this aim, panel data for the independent and control variables spanning from 2000-2022 were obtained from World Development Indicators database and World Governance Indicators. The data was analysed using the Fixed Generalised Least Squares (FGLS) and the Method of Moment Quantile Regression (MMQR) methods. The findings of the study reveal that FDI aids in lowering the level of CO2 emissions in Ghana and therefore can be achieved through political stability, voice and accountability, controlled corruption, and enforcement of rule of law. It further reveals that the level of governance effectiveness and regulation quality is low in attracting FDI to aid in lowering CO2 emissions in Ghana. This study suggests that policymakers in Ghana should strengthen the system and structure governing the environmental management process and improve the quality of environmental policies to encourage environmentally friendly FDI flows.

The Paradox of Progress towards SDG7: Governance Quality and Energy Poverty Dynamics in Pakistan

This study investigates the multidimensional aspects of energy poverty in Pakistan from 2000 to 2022, specifically evaluating the direct, indirect, and total effects of socioeconomic and environmental factors. We employed Partial Least Squares Structural Equation Modeling (PLS-SEM) to examine the impacts of income, population, governance quality, energy intensity, fuel prices, and renewable energy consumption on energy poverty. The study further contributes by examining the mediating role of governance quality and developing the World Governance Indicators (WGI) Index. The findings indicate significant negative effects of energy intensity and renewable energy consumption on energy poverty. Conversely, population growth and income levels demonstrate positive effects, contradicting conventional economic development and energy access assumptions. Governance quality establishes direct and indirect effects that mediate most relationships between independent variables and energy poverty. Bootstrapping analysis confirms the significance of governance quality as a mediator. The model describes significant energy poverty variance with robust predictive relevance. This study emphasizes the need to adopt a comprehensive strategy to decrease Pakistan’s energy poverty by articulating socioeconomic, environmental, and governance factors. Our findings offer valuable information for policymakers to achieve UN Sustainable Development Goal 7, embarking on governance reforms, promoting sustainable growth, and enforcing investments in energy efficiency and renewable sources as Pakistan approaches the 2030 SDG 7 deadline.

Goals and Pathways of Public Governance Contribution to Achieve Progress in the Quality of Life

This research examines the importance of effective public governance in maximising the well-being of citizens in EU member states. Our research strategy used an integrated modelling framework involving data mapping and an autoregressive model with distributed lags (ARDL) for 2012–2022 in the EU member countries. The results demonstrated that the World Governance Indicator (WGI) has a mixed impact on Quality of Life (QL). In the short term, the impact is positive if there is an increase in the level of the public governance indicator, and in the long term, the effect of public governance on the quality of life is negative due to the challenges associated with implementing reforms. Additionally, our results highlighted that, to improve citizens’ quality of life, policies should focus on increasing the Purchasing Power (PP) and Safety of Society (SS) as well as on issues related to Pollution (P) and the Cost of Living (CL). There are similarities between the long-term ARDL analysis estimate and the short-term one, with the latter pointing out that they will be able to have quick positive effects, while pollution and increased living costs have immediate adverse effects on quality of life.

Do cultural differences affect the share price puzzle?

We examine the impact of cultural differences on nominal share prices across 63 countries from 2002 to 2018. Using institutional and catering theories, we assess how cultural dimensions—including World Governance Indicators (WGI), legal systems, religious influences, and GLOBE dimensions—affect the spatial heterogeneity of share price levels. Our findings indicate that share prices are higher in countries with common law systems and comprehensive information reporting, as these environments tend to attract institutional investors. Conversely, cultural traits emphasizing altruistic values correspond with lower share prices, reflecting the preferences of individual investors.

The Governance-FDI Nexus: A Factor-Augmented Fixed Effect Analysis of ASEAN World Governance Indicators and Foreign Direct Investment Inflows

The Governance-FDI Nexus: A Factor-Augmented Fixed Effect Analysis of ASEAN World Governance Indicators and Foreign Direct Investment Inflows

New technologies and income inequalities into Sub-Saharan Africa: Using a new technological indicator

The studies which analyzed the impact of technology innovation on income inequalities have considered only one factor of change at a time. The results are overall inconclusive: technology innovation appears to either reduce or increase inequality, depending on which factor is considered. In the literature of technological change, there is a technology innovation indicator that comprises multiple factors simultaneously. Using this technology innovation indicator and three different measures of income inequality (Gini index, Atkinson index, and the ratio of Palma), the paper analyzed the effect of technology innovation on income inequalities into Sub-Saharan Africa countries. A dynamic panel model was specified and estimated with the Generalized Moments Method (GMM) in System. The data used come from the Global Consumption and Income Project (GCIP), the World Development Indicator (WDI) and the World Governance Indicator (WGI). They were observed over the period 1996–2014 of 30 Sub-Saharan Africa countries. The paper finds robust evidence that technology innovation contributes to reducing income inequalities into Sub-Saharan Africa countries. The implementation of learning policy through improving education condition associated with social policy can contribute to limit the income inequalities due to technologies change into Sub-Saharan Africa countries.

INCOME INEQUALITY, ECONOMIC GROWTH, AND INSTITUTIONAL FACTORS: A COMPARATIVE ANALYSIS AT THE EUROPEAN UNION (EU) LEVEL

The rising income inequality around the world and its persistence represent a social phenomenon raising concerns at all levels (global, regional and country) for governments and pose huge challenges to master it and to identify effective solutions. The aim of the paper is to provide a comparative insight at the European Union (EU) level involving 25 Member States regarding the interplay between income inequality, economic growth, and institutional quality. Gini Index sourced from World Income Inequality Database, GDP per capita series extracted from the World Bank database, and institutional indicators collected from the World Governance Indicators database represent the examined variables over the period 1990-2022. Their dynamic is comparatively analysed and discussed. The clustering method is applied to identify similarities and differences between European Union countries in terms of the interplay between income inequality, economic growth and institutional factors and to draw relevant conclusions for future effective policy measures meant to reduce inequality and to boost economic growth. The clustering analysis based on the average growth rate of income inequality and per capita GDP revealed that European Union countries are differently facing the challenge of income inequality rising. Six groups of countries with similar paths regarding the income inequality and economic growth were identified. High-income countries face low levels of income inequality but with an upward trend. Economic growth is accompanied with high levels and increasing levels of income inequality. The institutional quality level may strength the capacity of a country to address the problem of rising income inequality, but it remains unclear the interplay of institutional quality dynamic in reducing income inequality. The implications of the paper’s findings are framed in the context of the European policies.

Government size, institutional quality and economic welfare in Africa

PurposeMost African countries operate large government sizes but with little corresponding economic outcomes. Institutional economics however, show that strong institution is fundamental in promoting economic growth. This study examines the linkages between government size, institutional quality and economic welfare in Africa.Design/methodology/approachThis study deploys the System Generalized Method of Moments estimation strategy on panel data of 52 African economies from 2000–2018.FindingsThe result shows that government size has a negative impact on economic welfare, while institutional quality has a positive impact on economic welfare. The interaction of government size and institutional quality shows a positive impact on economic welfare, signifying synergy and complementarity. Thus, strong institutions counteract the adverse effects of large government size on economic welfare.Practical implicationsTo promote human development and economic welfare, and attain key Sustainable Development Goals such as good health and well-being, quality education, decent work and economic growth, African policy makers need to keep their government sizes at optimal levels and promote strong institutions.Originality/valueThis paper provides first-hand empirical evidence of the relevance of institutional quality in counteracting the adverse influence of large government size in Africa. It determines the thresholds of government size and uses a composite index as proxy for same. In addition, this study uses the World Governance Indicators and the Fraser Institute Economic Freedom Index as alternative measures of institutional quality and Gross Domestic Product per capita and Human Development Index as proxies for economic welfare.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2024-0075

EXAMINING THE EFFECTS OF GOVERNANCE INDICATORS ON ECONOMIC GROWTH IN NIGERIA: AN ARDL APPROACH

The effects of certain governance indicators on economic growth in an African country (Nigeria) have been researched in this study. Governance indicators such as institutional quality, and rule of law are analysed to understand their effect and direction on economic growth. The data are from the World Development and Governance Indicators (WDI & WGI) and cover the years 1996 to 2016. Using the autoregressive distributed lag (ARDL) approach to estimate the relationship, we discovered that the coefficient of governance indicators produces mixed results, even though the index of governance has a negative influence on economic growth. Furthermore, uni-directional causality was evident between certain governance indicators and trade openness. Significant policy implications suggested by the findings include the government of this African country should put in more effort into improving the general governance structure toward stability. Hence, this will lead to increased investor confidence in the countries’ economies.

Trade openness, governance quality, and economic growth in Latin America and the Caribbean

The existing literature on the relationship between trade openness and economic growth is extensive, but there is a dearth of research that examines whether this relationship is contingent on the quality of governance institutions in a country. In this study, we address this gap by investigating the moderating effects of governance quality on the trade openness-economic growth nexus in Latin America and the Caribbean (LAC) during the 2000–2021 period. We utilize six indicators of governance quality from the World Bank's world governance indicators and employ correlation and the dynamic panel System Generalized Method of Moments technique for robust and efficient analysis, which yields more accurate results when the number of cross-sections exceeds the time dimension of the dataset. Our findings indicate that governance effectiveness, rule of law, control of corruption, and regulatory quality have a significantly positive impact on the positive relationship between trade openness and economic growth. In contrast, the moderating effects of voice and accountability and political stability on the trade openness-economic growth relationship are negative and statistically significant. Based on these results, we conclude that each governance dimension has distinct effects on the trade openness-economic growth nexus. In term of policy recommendation, policymakers need to harness the benefits of international trade for promoting economic growth; therefore, LAC countries should focus on investing in institutional quality and designing policies that would enhance the overall quality and effectiveness of governance.

Energy Poverty and Democratic Values: A European Perspective

This paper explores the complex relationship between energy poverty and the maintenance of democratic values within the European Union (EU), suggesting that energy poverty not only impacts economic stability and health outcomes but also poses significant challenges to democratic engagement and equity. To measure energy poverty, a composite index is developed using the entropy method, which surpasses traditional measures focused solely on access to energy or its developmental implications. To assess the level of democratic governance in EU countries, the voice and accountability index (VEA), which is part of the World Governance Indicators compiled by the World Bank, is utilized. By analyzing EU data from 2006 to 2022, the findings suggest that a 1% improvement in VEA quality, represented by a coefficient of 0.122, is correlated with a notable improvement in the energy poverty index. This suggests that the EU should focus on enhancing transparency and public participation in energy decision-making, along with ensuring accountability in policy implementation. The research also differentiates between full and flawed democracies, noting that tailored approaches are needed. In full democracies, leveraging economic prosperity and trade is crucial due to their significant positive impacts on the energy poverty index. In contrast, in flawed democracies, enhancing governance and accountability is more impactful, as evidenced by a higher coefficient of 0.193. Strengthening legal and regulatory frameworks, improving regulatory quality, and ensuring public engagement in governance could substantially mitigate energy poverty in these contexts. In addition, this paper demonstrates that this relationship is influenced by factors such as income inequality, energy intensity, and trade openness.

Political Regime and Governance on climate Change. Evidence from the Western Balkan Economies

Abstract The political environment plays a crucial role in steering societies to address the challenges posed by global warming and contributing to global initiatives toward a resilient and environmentally sustainable future. Political regimes in different places in the democracy-authoritarianism spectrum show varying degrees of effort to reduce their nation's respective carbon emissions. This paper aims to determine the role of political regimes along with governance dimensions in climate change mitigation. The analysis uses the V-Dem database and the World Governance Indicators (WGI) to conceptualise and measure each country's political system and its institutional quality of governance, respectively. The empirical model uses a panel database of the variables of interest for the years 1998-2022 regarding the Western Balkan (WB) economies. The target group of countries sparks our interest due to their significant challenges, such as widespread pollution, political regime changes, and severe governance problems. Furthermore, integrating the Environmental Kuznets Curve (EKC) hypothesis, which suggests a complex relationship between economic growth and environmental sustainability, the analysis provides evidence that the relationship between CO2 emissions and GDP per capita follows a quadratic trend, suggesting that as GDP per capita increases, the associated CO2 emissions may not change linearly but instead follow a parabolic pattern. WB countries also share the ambition of EU accession and hold the EU candidate status. To the extent these states manage to overcome their institutional issues, they will be in the position to implement the EU environmental acquis efficiently, which will amount to a critical step in the region's environmental health. Policymakers and scholars of the field will benefit from this paper since it determines the impact of political systems precisely matched with empirical results to derive conclusive answers regarding the political systems and climate change debate.

Does institutional quality complement the relationship between ownership structure and corporate social responsibility?

The key purpose of the Study is to examine if institutional quality complements the relationship between Ownership Structure and Corporate Social Responsibility disclosure and performance in the light of legitimacy and agency theory. To the best of my knowledge, it is the first study in literature of finance. The sample comprises of 112 top-performing listed firms (based on market capitalization) at Pakistan Stock Exchange from 2010 to 2019. Institutional quality comprised of world governance indicators which is developed via principal component analysis, an instrumental variable approach and content analysis are used for CSR Disclosure Index to demonstrate the relationship between ownership structure and CSR. The resources complementary phenomenon is adopted to examine the institutional quality's role. Our results show significantly positive impact of Institutional and Foreign Ownerships on CSR while negative significant influence of CEO Duality and Family Ownership on CSR, suggesting that well governed firms will be more socially responsible. In addition, the findings suggest the institutional quality's positive moderating role on the relationship between ownership structure and CSR, signifying the institutional quality's complementary role for the weak corporate environment in Pakistan. Our findings are robust to a series of tests by using Generalized Method of Moment (GMM).

Investing in knowledge assets: a novel approach for measuring national intellectual capital index in emerging economies

PurposeThe aims of the current study were twofold: first, to rank the world’s emerging economies based on a novel National Intellectual Capital Index (NICI) and its components; and second, to examine the impact of NICI and its components on economic growth, measured in terms of real GDP per capita.Design/methodology/approachWe employed principal component analysis (PCA) to construct the novel NICI based on five key socio-economic indicators including (1) national human capital, (2) national structural capital, (3) national relational capital, (4) national informational capital and (5) national innovational capital. These indicators are publicly available for many countries. The index was generated by considering the most appropriate socio-economic indicators as precise measures of NIC from the Penn world table (version 10.0), the World Bank’s database of world governance and development indicators and the KOF globalization across the selected emerging economies.FindingsThe empirical findings revealed that national human capital is a significant driver of NIC, corresponding to higher economic growth. This is followed by national informational capital, national relational capital, national innovation capital and national structural capital. Furthermore, results indicate that the contribution of national structural capital is marginal compared to other critical strands of NIC.Practical implicationsNIC is generally considered the most valuable strategic resource for driving knowledge economies, especially in the Industry 5.0 revolution. Ranking emerging economies based on the NICI sheds light on the accumulated stock of NIC and how it contributes to and improves the economic growth of these economies. The stock of NIC is considered a critical success factor for measuring both current and future economic prosperity. Therefore, using the socio-economic indicators of KOFGI as accurate measures of NICI will assist policymakers in formulating and implementing relevant policies to enhance the accumulation of knowledge-based capital, which are critical components of NIC.Originality/valueTo the best of the authors' knowledge, this is the first study of its kind, both theoretically and empirically, to measure the National Intellectual Capital Index (NICI) using the most nascent socio-economic indicators of NIC. Moving forward, this study evaluates the impact of NICI and its components on economic growth, which is a relatively sparse area of research in the context of emerging knowledge economies.

Local Governance Based on Citizens’ Opinion Method in Municipalities of Madhesh Province

The local-level election took place in 2017, marking the first such event after two decades following the restructuring of Nepal following the new Constitution. Subsequently, a second local-level election occurred in 2022, facilitating the selection of municipal representatives. Over six years, citizens have had the opportunity to benefit from the services provided by the local government (LG), aligning with the constitutional principle of delivering quality services directly to the people. Achieving this objective necessitates a well-established structure, efficient processes, and competent actors, all guided by the principles of good governance. Nepal's performance, as measured by the World Bank based on World Governance Indicators (WGI), has consistently fallen below the global average across six key indicators spanning from 1996 to 2022. Against this backdrop, efforts have been directed towards assessing the status of local governance in the Madhesh Province and offering viable suggestions for improvement to bolster the federal democratic system. Hence, this study focuses on the intellectual community within the province as its sample population. As opinions were collected, the research revealed that local governance in the Madhesh Province falls below the average standard. In light of this circumstance, local governments should enhance and reinforce local governance to support the institutionalization of federalism and democracy.

Entrepreneurial Decisions of the Location Choice for Mergers and Acquisitions in the EU-27

ABSTRACT Locations that offer a positive business climate with strong environmental performance and sustainable practices are more likely to attract companies seeking to integrate carbon dioxide reduction strategies through mergers and acquisitions (M&A). The aim of this study is to analyze the extent to which the business climate in European countries influences the M&A market. We considered the conditions of institutional, economic or sustainability regulations to determine if the ease of doing business (EDB) index, the World Governance Indicators, and carbon dioxide emissions can influence the evolution of M&A. After applying the Ordinary Least Squares regression and panel analysis, the conclusion was that sustainability criteria are important factors for investors when choosing the companies to invest in.