Worldwide Governance Indicators Research Articles

Evaluating the bulk commodities supply risk from the perspective of physical trade

Geopolitical conflicts, trade barriers, and other factors pose great risks to the stable supply of bulk commodities; however, cross-country and inter-temporal assessments and comparisons of various bulk commodity supply risks from the physical trade perspective are still lacking. This gap hinders a holistic understanding of global resource security and further appropriate policy formulation. Based on the Net Positive Import share, the Worldwide Governance Indicator (WGI), and the Bilateral Relationship Indicator which was innovatively quantified using the Global Database of Events, Language, and Tone (GDELT) this study evaluated 32 bulk commodity supply risks (including agricultural products, metals, and energy fuels) in China, Japan, and the USA for the period 1992–2019. We found that the three countries have experienced different supply risk evolutions related to their diverse domestic resource endowments and socioeconomic developmental stages. During the study period, China had increasing supply risks for 20 of the 32 bulk commodities compared to 10 for Japan and the USA. The overall bulk commodity supply risk increased substantially for China, remained high for Japan, and remained relatively low for the USA. Under increasing global trade system uncertainty, in addition to the supply diversification strategy, we advise net importer countries to utilise news media data such as GDELT to monitor and analyse geopolitical changes, especially for major suppliers, which would help improve resilience to supply disruptions.

Tax Revenue In Asian Countries: Contribution Of Economic Sector With The Rule Of Law As A Moderating Variable

The implementation of government effectiveness aims to provide the best service to the community. The effectiveness of this organization can be measured by one of them using The Worldwide Governance Indicators (WGI) project index. From 2010 to 2019, there are seven Asian countries with effectiveness indexes above the world average, namely Georgia, Hong Kong, Thailand, Japan, South Korea, Singapore, and Malaysia. Through this study, it will be assessed whether this effectiveness supports tax revenue by conducting research on the effect of the contribution of the industrial sector and the service sector to Gross Domestic Product (GDP) on the effect of tax revenue. Then the author also conducts research whether the interaction of moderating variables, in this case the Rule of Law Index variable with the two independent variables (the contribution of the industrial sector and the service sector to Gross Domestic Product (GDP)) has an influence on the contribution of tax revenue to GDP considering that law enforcement is one of the steps in the implementation of controlling tax payments. The results obtained in this study state that before the interaction with moderating variables, the independent variables, namely the industrial sector and the service sector in GDP contribution, have a significant negative effect on tax revenue. Then when the moderating variable, namely the rule of law index, interacts with the industrial sector and the service sector, the effect of the two independent variables on the tax revenue variable has increased to a significant positive effect, so that the moderating variable in this study has a role that strengthens the influence of the independent variable on the dependent variable.

Judicial efficiency, debt structure, and cost of debt

AbstractIn the framework of law and finance literature, this study investigates the link between judicial efficiency and financial debt cost in 1487 non‐financial firms across the euro zone from 2010 to 2021. Utilizing qualitative (rule of law) and quantitative (judicial proceeding length) indicators from the Worldwide Governance Indicators and Doing Business databases, our findings support the hypothesis that efficient justice lowers financial debt cost. Additionally, we observe a moderating effect of debt structure, specifically that private non‐bank debt enhances the reduction impact of judicial efficiency on debt cost, unlike bank and corporate bonds debt.

Moderating the Effect of the Multidimensional Poverty Index on the Relationship between Sustainable Governance Indicators and Worldwide Governance Indicators

This research comprehensively addresses the complexity of the Multidimensional Poverty Index (MPI). The research objective is to understand the moderating effect of the MPI on the relationship between Sustainable Governance Indicators (SGIs) and World Governance Indicators (WGIs) in the context of 41 countries belonging to the Organization for Economic Cooperation and Development (OECD) while also analyzing the validity and reliability of the indicators. The applied methodology involves using Structural Equation Modeling with Partial Least Squares (SEM-PLS), and data from 41 OECD countries were analyzed. Data on SGIs, WGIs, and the MPI were extracted from the SGI-2022, WGI-2022, and SGI-MPI (2022) databases. Moderating the interaction between the MPI and SGIs reveals a significant overall negative effect (−0.184) on the relationship between SGIs and WGIs (total effect = 0.474); this implies that elevated levels of the MPI negatively impact sustainable governance between SGIs and WGIs, whereas lower levels of the MPI lead to a stronger relationship between SGIs and WGIs, enhancing sustainable governance. The validity of the structural model is affected by low Average Variance Extraction (AVE) in key variables, such as Economic Policy-EP (0.470) and MPI (0.439), indicating potential limitations in their measurement.

Food insecurity, environment, institutional quality, and health outcomes: evidence from South Asia

BackgroundFood insecurity and environmental degradation pose significant threats to health outcomes in South Asia, necessitating effective policy interventions. Therefore, this study aims to examine the impact of food insecurity and environmental degradation on health outcome indicators amidst global inflationary shocks and institutional quality arrangements. Additionally, it aims to explore the intricate moderating role of institutional quality on the relationship between food insecurity, endogenous variables, and external shocks.MethodIn alignment with the study’s objectives, a set of panel data spanning from 2000 to 2021 is compiled for South Asia. The study introduces a novel variable representing inflationary shock, crafted through the integration of inflation datapoints and the application of the generalized autoregressive conditional heteroskedasticity model. Additionally, a distinctive aggregate institutional quality index is formulated, drawing from six key measures of the Worldwide Governance indicators. To scrutinize the effects of food insecurity, environmental degradation, and other explanatory variables, the study employs the two-step system generalized method of moment technique, offering a robust analytical approach to uncover complex relationships and dynamics in the region.ResultsThe results indicate that the prevalence of undernourishment, inequality in per capita calorie intake, and CO2 emissions significantly reduce life expectancy and increase mortality rates. Additionally, it shows that per capita kilocalorie supply, per capita GDP, per capita health expenditures, and urbanization are statistically significant for increasing life expectancy and decreasing mortality rates. The findings reveal that inflationary shocks severely affect food insecurity and environmental factors, exerting further pressure on contemporary life expectancy and mortality rates. In rebuttal, the institutional quality index is found to have significant effects on increasing and decreasing life expectancy and mortality rates, respectively. Furthermore, the institutional quality index is effective in moderating the nexus between food insecurity, environmental degradation, and health outcomes while also neutralizing the negative impact of inflationary shocks on the subject.ConclusionThe results verify triple health constraints such as food insecurity, environmental factors, and economic vulnerability to global shocks, which impose severe effects on life expectancy and mortality rates. Furthermore, poor institutional quality is identified as a hindrance to health outcomes in South Asia. The findings suggest specific policy implications that are explicitly discussed.

Governance Performance of Muslim and Non-Muslim Countries

Governance refers to the processes and structures implemented by organizations to ensure that they operate effectively, responsibly, and in accordance with legal and ethical standards. It encompasses the systems and practices by which organizations are directed, controlled, and held accountable. Governance is a critical aspect of various sectors, including business, government, non-profit organizations, and other institutions. This paper studied two groups of Muslim and Non-Muslim countries by comparing their governance performances using several indicators of Worldwide Governance Indicators (WGI) within 2015 to 2019. The objectives are: (1) to evaluate the performance of Muslim world nations compares to the non-Muslim counterparts in terms of governance and related issues; (2) to deduce the implication for policy, in order to improve the performance of economic and governance indicators in countries. In general, the results show that in several indicators, Muslim-based countries have advantages over non-Muslim countries. However, on several other governance indicators, Muslim countries are relatively behind. Therefore, in the future, governance in Muslim-based countries needs to be improved to make it better.

Public Debt and Economic Growth in Africa in the Pre-Covid Era: The Role of Control of Corruption

There is evidence of recent rising public debts and low economic growth in Africa which is being attributed to the COVID-19 pandemic and the geopolitical tensions from the Russia-Ukraine war. With the evidence of also recent high corruption amidst low investments in Africa, it is thought-provoking to find empirically how public debt impact on economic growth per capita among African countries even before the COVID-19 pandemic and the geopolitical tensions from the Russia-Ukraine war with the mediation of control of corruption. The study used secondary data from the World Development Indicators, World Economic Outlook, and Worldwide Governance Indicators. The annual data spans from 1996 to 2019 for 45 countries. The study deployed a dynamic panel data estimation technique and controlled for other variables. The findings show a negative impact of gross debt percentage of GDP on economic growth but a positive interactive effect of excessive accumulation of gross public debt and the control of corruption on economic growth per capita among countries in Africa before the outbreak of the COVID-19 pandemic. In this COVID era of high public debt, governments can reduce their indebtedness by financing appropriate infrastructure while controlling corruption to increase the economic growth in their countries.

Investigating the effects of crony capitalism on CO2 emissions

Reducing carbon emissions is crucial on both global and national scales due to their impact on the climate. However, concerns about rent-seeking behavior hindering emissions reduction policies have arisen, as such policies can be costly. The presence of crony capitalism in countries is a significant concern in this regard, which unfortunately has not been considered a research gap. To investigate the impact of crony capitalism on CO2 emissions in 73 countries between 2000 and 2021, this study employed the innovative Method of Moment Quantile Regression (MM-QR). Four proxies for crony capitalism were used, including economic freedom, the International Country Risk Guide (ICRG) indicators, worldwide governance indicators, and a combined proxy of the three proxies aimed at reducing crony capitalism. The results indicated that all four proxies for crony capitalism significantly reduced CO2 emissions at different quantiles. The composite proxy was the most effective, while the ICRG proxy was the least effective. Additionally, all proxies except for the ICRG proxy had a greater impact on reducing CO2 emissions at high quantiles. Therefore, crony capitalism leads to an increase in CO2 emissions. The study confirmed the Kuznets curve and found that energy consumption and industrialization increase CO2 emissions, while higher energy prices and population reduce CO2 emissions.

Institutions, Investment and Economic Growth: Evidence from Sub-Saharan Africa

Sub Saharan African countries experience low private investment compared to other developing countries in world. For instance, private investment in the region averaged 15% of GDP from 2010 to 2016, as compared to 22%, 18% and 17% for developing countries in Asia, Europe and Latin America respectively. This low investment level constrained the region’s ability to grow and improve social outcomes such as; increase in the real wages and poverty reduction. Low quality institutions could explain this phenomenon. Therefore, this study examined the effect of institutions on investment and economic growth of 37 SSA countries from 1996 to 2017 using dynamic panel data model. The data were retrieved from Worldwide Governance Indicators, World Development Indicators and the Chinn-Ito index. System Generalised Method of Moments was used to estimate the result. The key findings generated by the study confirmed that these measures of institutional variables and there interaction with investment yield a positive and statistically significant result. Indicating that strengthening the quality of these institutions could positively affect investment and economic growth of the region. For instance, unit increase in controlling corruption increases investment by 1.4%. Furthermore, there is evidence showing financial development slows investment growth, which can be attributed to the weak institutional arrangements, as the coefficient of financial development is negative and statistically significant. The study recommends that SSA countries should pay greater attention on institutional reforms particularly; control of corruption and political stability to drive a meaningful growth and development in the region.

Mediating Role of Good Governance between Debt Management and Economic Performance

No one country of the planet is self-sufficient for financial and non-financial resources. Some have abundant of natural resources while someone have abundant of human resources and so on. Due to scarce of resources a country needs effective and efficient utilization of resources. Effective and efficient utilization of resources depends upon good governance, competent and sincere economic managers. Keeping in view of the said perception, current study examined the role of good governance in the debt management and economic performance. Current study used the World Bank data from the period of 1990 to 2020. Economic performance is measured by the per capita income (PCI) and taken as dependent variable. Whereas, debt to gross domestic product (GDP) is taken an independent variable. While good governance (GG) is taken as mediating variable and measured through The Worldwide Governance Indicators (WGI) project constructs aggregate indicators of six broad dimensions of governance such as voice and accountability, political stability and absence of violence/terrorism, government effectiveness, regulatory quality, rule of Law and Control of Corruption. Econometric equation is developed to measure the direct and indirect effect of GG with respect to debt to GDP and PCI. The study results concluded that there is no relationship between debt to GDP and economic development. While interesting finding is that there is significant relationship between GG and economic performance. Study also found insignificant mediation of GG between debt to GDP and economic development.

Relations between Development of E-Government and Government Effectiveness, Control of Corruption and Rule of Law in 2010–2020: a Cluster Analysis

Nowadays, an increasing number of citizens use information and communication technologies to interact with the government, and therefore it is necessary for the public sphere to constantly innovate and meet the expectations placed on it under the pressure of an ever-changing environment. The aim of the article is to compare the progress of e-government between 2010 and 2020 in the member states of the European Union based on selected global indices of e-government development. The article examines the relationship between the E-Government Development Index (EGDI) and selected indices within the Worldwide Governance Indicators. The goal of the article is achieved through correlation and cluster analysis. The results of these countries vary from state to state. It was found that according to the level of digitization of public administration and the quality of public services, EU countries can be divided into 5 groups. However, within the monitored period, the EU states achieved progress in the field of digitization and the quality of public administration. The average value of EGDI increased by about 34% between 2010 and 2022 and the share of countries at a very high level EGDI in 2010 was approx. 11% and in 2022 even 100%. The best results in this area are achieved by the states in the north of the EU (for example, Denmark, Finland and Sweden), on the contrary, the worst results are achieved by the states in the east of the EU (for example, Bulgaria and Romania). The results also showed that countries that were in the best cluster and the worst cluster in individual years are still in those clusters.

Effect of Governance on Tourist Arrival in Nepal

It is believed that governance has a direct impact on all sectors of the state. This paper aims to examine the effect of governance on the tourism sector by adopting the Worldwide Governance Indicators (WGIs) produced by Kaufmann et al. (1999). For analyzing tourism sector performance, the annual number of tourists arriving in Nepal and their average length of stay have been taken separately from 2005 to 2019 as dependent variables. The six indicators of WGIs are taken as independent variables which include political stability and absence of violence, government effectiveness, voice and accountability, regulatory quality, rule of law, and control of corruption. The data were collected from secondary sources and analyzed by descriptive statistics using multiple-line graphs and regression models. The result shows that most of the WGIs insignificantly explained both the number of tourists and their length of stay. The finding differs for political stability and the absence of violence which significantly explains the relationship with the average length of stay per tourists. In a nutshell, the study concludes that governance-related indicators have not found a significant impact on tourist arrival in Nepal. Further, the findings of this study suggest reforming the existing level of all worldwide governance indicators for better performance of the tourism sector.

Estimation of building project completion duration using a natural gradient boosting ensemble model and legal and institutional variables

Estimation of building project completion duration using a natural gradient boosting ensemble model and legal and institutional variables

Business’ Attitudes Towards Corruption in Selected Central European Countries

Purpose: Corruption is perceived as a widespread problem throughout the world, including in Central European countries. In terms of corruption, these countries still lag behind the leading EU countries (as indicated by the 2023 Worldwide Governance Indicators). As corruption itself is very difficult to measure, the perception of corruption is often used as a proxy. The aim of this paper is to analyse attitudes towards corruption in selected Central European countries and to draw conclusions on the factors influencing these perceptions. Based on the assumption that the difference between de jure and de facto transparency matters, we selected Czechia, Hungary, and Poland as countries with small differences between these two dimensions of transparency, and Croatia, Slovakia, and Slovenia as countries with large differences.Design/Methodology/Approach: Using Eurobarometer data, we applied logistic regression to analyse attitudes towards corruption in the two groups of countries distinguished by differences in de jure and de facto transparency. Each group, consisting of three Central European countries, was used to create a model, i.e., Model 1 and Model 2, with a total number of observations of 901 and 902, respectively. Both models displayed adequate fit indices and enabled predictions that allowed us to draw conclusions. All respondents were business representatives with decision-making responsibilities in their companies, ensuring that the results reflect company perceptions rather than those of the general public.Findings: Attitudes towards corruption in the countries studied are related to perceptions of patronage and nepotism in business, perceptions of corruption in public procurement, perceived links between politics and business, and attitudes towards tax rates. In the group where there is little difference between de jure and de facto transparency levels, business attitudes towards corruption are also associated with perceptions of adequacy of infrastructure and complexity of administrative procedures. In the countries where these differences are substantial, attitudes towards corruption are related to perceptions of problems arising from frequent changes in the law, problems with debt collection, and differences in views regarding the severity of bribery depending on the value of the bribe.Academic contribution to the field: This research provides a better understanding of the factors influencing the perception of corruption in Central European countries from a business perspective. In doing so, it introduces a methodology that is well-suited for the analysis of survey-collected data, especially since it allows the dependent variable to be categorical. Moreover, by using data from the Transparency Index to differentiate countries, the study has the potential to stimulate further theoretical and empirical research into the relationship between corruption and transparency. Lastly, by linking companies’ perceived problems to overall perceptions of corruption, this paper helps to identify the areas within the studied countries where pockets of corruption are most likely to exist.Originality/Value: Previous research has found that corruption tends to occur when the gap between de facto and de jure transparency is larger. This research demonstrates that the size of this gap can also be successfully used to achieve a better understanding of the factors influencing attitudes towards corruption. Therefore, this paper employs the difference between de jure and de facto transparency as a categorisation criterion to analyse the factors influencing the perception of corruption. This categorisation approach enabled the development of two separate logistic regression models with high predictive power.

Political economy of low-carbon electricity: Governance effects across 198 countries

Which countries best foster low-carbon electricity transitions – authoritarian regimes or democratic societies? Crucial for understanding how transitions unfold is identifying contextual factors conditioning propensity to adopt specific forms of energy production. This research assesses the relationship between quality of governance within 198 countries and domestic electricity production from all major energy sources, across the years 2002–2020. Governance quality is measured via a range of comprehensive, internationally recognised metrics, focusing predominantly on the World Bank's worldwide governance indicators. The data reveal that a future, decarbonised electricity system via wind, solar, and/or nuclear appears most likely in countries where the traditions and institutions by which authority is exercised support good governance. Over the last two decades, the association between electricity from solar and wind and good governance has progressively strengthened globally. Beyond governance, national measures of economic (in)equality are strongly related to electricity production from nuclear and hydropower. These findings offer a point of departure for assessing how governance systems might predispose countries to particular energy choices.

Perceptions of Civil Servant Corruption: A Cross-Country Analysis

Distrust in the civil service is not unique to any country but felt across much of the globe amid ascendant populist movements. A significant correlate of distrust in the civil service is the perception of corruption among bureaucrats. Our research addresses two main questions. First, in OECD countries, to what extent does the public view bureaucrats as corrupt? Second, what factors explain these perceptions? Data from 23 countries in the International Social Survey Programme’s 2016 Role of Government survey are analyzed using multilevel logistic regression models. Among the explanatory variables included in this multilevel analysis are respondents’ exposure to bribery, political party support, and political efficacy. Country-level correlates drawn from the 2016 Worldwide Governance Indicators are analyzed to explore the impact of governance quality on corruption perceptions. Results indicate that better quality of government is associated with lower perceptions of bureaucratic corruption. Likewise, notable individual-level findings suggest political efficacy and exposure to corruption are significantly associated with corruption perceptions.

Unravelling the Relationship between Governance Indicators and Foreign Direct Investment in Tanzania: An Empirical Analysis

Foreign Direct investment (FDI) is recognized as a significant source of capital inflows that can stimulate economic growth in developing countries. In order to attract and benefit from FDI, governments have implemented various economic reforms and focused on improving governance indicators. This study investigated the causality effect of governance indicators on FDI inflows in Tanzania. The governance indicators examined in this study include; rule of law, regulatory quality, government effectiveness, control of corruption, voice and Accountability, political stability and absence of violence. Before measuring the causality effect between the variables, a stationarity, test was conducted using the Augmented Dickey-Fuller (ADF) test. Then the Granger Causality Test was used to address two-way linkages between variables. The data used in the study was secondary quantitative time series data obtained from the World Bank Worldwide Governance Indicators and the Bank of Tanzania from 1996 to 2021. The findings suggested a long-run causality running from governance indicators to FDI inflows in Tanzania. In the short run, voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption individually influence FDI inflows. Furthermore, the Granger causality test indicates that voice and accountability and political stability and absence of violence Granger cause FDI inflows. The other governance indicators also exhibited significant causality with FDI inflows. These results call for policy makers in Tanzania to focus on strengthening governance framework, ensure accountability, enhance investor protection, ensure political stability, promote the rule of law and prevent corruption in achieving increased FDI for sustained economic growth.

The potential of corruption based on Hofstede cultural dimensions and institutional quality: an international evidence

Purpose This paper aims to investigate the risk of corruption in several countries based on the cultural dimensions of Hofstede and institutional quality (IQ). Design/methodology/approach Data was collected from the Corruption Perception Index, Hofstede index and Worldwide Governance Indicators in 92 countries. Structural equation modeling based on partial least squares was used to test the proposed model. Findings The findings support the fraud triangle theory, which states that high transparency of individualist cultural attitudes and institutional control mechanisms reduces the opportunities for fraud to occur. From this research, it is also concluded that culture is a factor that tends to be constant and difficult to change. Research limitations/implications Research limitations include: First, it is limited to the number of samples, where the number of samples depends on the availability of data. However, only 92 countries intersect and have complete information. Second, this study only uses individualism from the Hofstede cultural dimension to see the risk of corruption. Practical implications The result of this study implicates the policymakers in government agencies to increase IQ to reduce the risk of corruption. Originality/value This is a preliminary study that discusses national culture (NC) and corruption, as well as the effect of the mediating variable, namely, the IQ. By including IQ, the authors hope that the impact of the effects of NC on corruption risk can be clarified.

The Impact of FDI on Innovation in Developing Countries: The Mediating Role of Governance

While most studies in the existing literature focused on the direct relationship between FDI and innovation, this paper further analyzes whether governance in developing economies mediates this relationship. A 25-year cross-sectional time-series data from 1995 to 2019 were collected from the World Bank Development Indicators and the Worldwide Governance Indicators (2019) databases. This panel dataset was estimated using a system GMM. A novel finding emerged from the investigation: the positive impact of FDI on domestic innovation is mediated by two governance variables: voice and accountability and regulatory quality. This suggests that the impact of FDI on domestic innovation is strengthened when combined with the effects of mediating variables. The results imply that, in the absence of high governance quality, the traditional policy prescription—such as increasing government spending on R&D and education—may not be adequate to promote FDI's innovation spillovers. The findings suggest that governments in developing nations should work to improve the voice & accountability and regulatory quality indicators by ensuring that citizens take part in the decision-making to promote the flow of knowledge and information that fosters innovation. This will help to strengthen the influence of FDI on domestic innovations. In addition, the governments should foster an environment that is welcoming to foreign investment and implement the appropriate regulatory reforms, such as those that strengthen competition protection, property rights protection, and transparency in the operations of the organizations implementing policies.

The role of institutions in shaping state competitiveness: the evidence from the European countries

The article aims to define the role of institutions in shaping competitiveness in certain European states. The research problem to be addressed through this study is to what extent does the level of competitiveness in world economy depends on Worldwide Governance Indicators (WGI) in particular countries. The study was conducted using a combination of quantitative and qualitative research methods of data analysis. A cross-country comparative analysis, based on data from 32 European states in 2021, revealed that the level of competitiveness is determined by institutional environment. The higher the WGI percentile ranks, the better place in the World Competitiveness Ranking. The results of the study enabled to fully confirm the 1st hypothesis, i.e. the institutional governance quality and control of corruption have a noticeably positive impact on competitiveness. It was revealed that the 2nd hypothesis could not be confirmed because of statistical insignificance, i.e. countries with political stability, absence of violence/terrorism and quality of law are typically more competitive among world economies. Meanwhile, the 3rd one was partially confirmed, i.e. the quality of regulations leads to higher competitiveness of economies, while freedom of expression, free media and ability to participate in national elections have not a significant impact on competitiveness.