Governance and Economic Growth: Evidence of Ten Asian Countries
This study utilizes a frequency domain approach over
the period of 1996 to 2013 to examine the causal relationship between
governance and economic growth in ten Asian countries, which have
different levels of democracy; classified as “Free”, “Partly Free”, and
“Not Free” countries. The empirical results show that there is no
Granger causality running from governance to economic growth in
“Not Free” countries and “Partly Free” countries with the exception of
Singapore. As for “Free” countries such as South Korea and Taiwan,
there is a one-way causality running from governance to economic
growth. The findings of this study indicate that policy makers in South
Korea, Taiwan, and Singapore could use governance index to improve
their predictions of the future economic growth.
[1] D. Kaufmann, A. Kraay, and P. Zoido, “Governance matters,” World Bank
Policy Research Working Paper, no. 2196, 1999.
[2] D. Dollar and A. Kraay, “Growth is good for the poor,” Journal of
Economic Growth, vol. 7, pp. 195-225, 2002.
[3] Rigobon R. and D. Rodrik, “Rule of law, democracy, openness, and
income: estimating the interrelationships,” Economics of Transition, vol.
13, no. 3, pp. 533-564, 2005.
[4] Easterly, W. and R. Levine, “Tropics, germs and crops: how endowments
influence economic development,” Journal of Monetary Economics, vol.
50, no. 1, pp. 3-39, 2003.
[5] H. L. F. De Groot, G. J. Linders, P. Rietveld, and U. Subramanian “The
institutional determinants of bilateral trade patterns,” Kykios, vol. 57, no.
1, pp. 103-123, 2004.
[6] H. Jalilian, C. Kirkpatrick and D. Parker, “The impact of regulation on
economic growth in developing countries: a cross-country analysis,”
World Development, vol. 35, pp. 87-103, 2006.
[7] M.-P. Marı´a-Teresa, M.-A. Galindo-Martı´nb, and D. Ribeiro-Sorianoc,
“Governance, entrepreneurship and economic growth,” Entrepreneurship
and Regional Development, vol. 24, pp. 865-877, 2012.
[8] V. C. Arusha, “Government expenditure, governance and economic
growth,” Comparative Economic Studies, vol. 51, no. 3, pp. 401-418,
2009.
[9] Huynh, K. P. and D. T. Jacho-Cha´ vez, “A nonparametric quantile
analysis of growth and governance,” Advances in Econometrics, vol. 25,
pp. 193-221, 2009.
[10] A. Gani, “Governance and growth in developing countries,” Journals of
Economic, vol. 45, no. 1, pp. 19-39, 2011.
[11] B. Fayissa and C. Nsiah, “The impact of governance on economic growth
in Africa,” Journal of Developing Areas, vol. 47, no. 1, pp. 91-108, 2013.
[12] J. Breitung and B. Candelon, “Testing for short- and long-run causality: a
frequency-domain approach,” Journal of Econometrics, vol.132, no. 2 , pp.
363-378, 2006.
[13] J. Geweke, “Measurement of linear dependence and feedback between
multiple time series,” Journal of the American Statistical Association, vol.
77, pp. 304-324, 1982.
[14] Y. Hosoya, “The decomposition and measurement of the interdependence
between second-order stationary process,” Probability Theory and
Related Fields, vol. 88, pp. 429-444, 1991.
[15] H. Pesaran, Y. Shin, and R. J. Smith, “Bounds testing approaches to the
analysis of level relationships,” Journal of Applied Econometrics, vol. 16,
pp. 289-326, 2001.
[16] H. Y. Toda and T. Yamamoto, “Statistical inference in vector
autoregressions with possibly integrated processes,” Journal of
Econometrics, vol. 66, pp. 225-250, 1995.
[1] D. Kaufmann, A. Kraay, and P. Zoido, “Governance matters,” World Bank
Policy Research Working Paper, no. 2196, 1999.
[2] D. Dollar and A. Kraay, “Growth is good for the poor,” Journal of
Economic Growth, vol. 7, pp. 195-225, 2002.
[3] Rigobon R. and D. Rodrik, “Rule of law, democracy, openness, and
income: estimating the interrelationships,” Economics of Transition, vol.
13, no. 3, pp. 533-564, 2005.
[4] Easterly, W. and R. Levine, “Tropics, germs and crops: how endowments
influence economic development,” Journal of Monetary Economics, vol.
50, no. 1, pp. 3-39, 2003.
[5] H. L. F. De Groot, G. J. Linders, P. Rietveld, and U. Subramanian “The
institutional determinants of bilateral trade patterns,” Kykios, vol. 57, no.
1, pp. 103-123, 2004.
[6] H. Jalilian, C. Kirkpatrick and D. Parker, “The impact of regulation on
economic growth in developing countries: a cross-country analysis,”
World Development, vol. 35, pp. 87-103, 2006.
[7] M.-P. Marı´a-Teresa, M.-A. Galindo-Martı´nb, and D. Ribeiro-Sorianoc,
“Governance, entrepreneurship and economic growth,” Entrepreneurship
and Regional Development, vol. 24, pp. 865-877, 2012.
[8] V. C. Arusha, “Government expenditure, governance and economic
growth,” Comparative Economic Studies, vol. 51, no. 3, pp. 401-418,
2009.
[9] Huynh, K. P. and D. T. Jacho-Cha´ vez, “A nonparametric quantile
analysis of growth and governance,” Advances in Econometrics, vol. 25,
pp. 193-221, 2009.
[10] A. Gani, “Governance and growth in developing countries,” Journals of
Economic, vol. 45, no. 1, pp. 19-39, 2011.
[11] B. Fayissa and C. Nsiah, “The impact of governance on economic growth
in Africa,” Journal of Developing Areas, vol. 47, no. 1, pp. 91-108, 2013.
[12] J. Breitung and B. Candelon, “Testing for short- and long-run causality: a
frequency-domain approach,” Journal of Econometrics, vol.132, no. 2 , pp.
363-378, 2006.
[13] J. Geweke, “Measurement of linear dependence and feedback between
multiple time series,” Journal of the American Statistical Association, vol.
77, pp. 304-324, 1982.
[14] Y. Hosoya, “The decomposition and measurement of the interdependence
between second-order stationary process,” Probability Theory and
Related Fields, vol. 88, pp. 429-444, 1991.
[15] H. Pesaran, Y. Shin, and R. J. Smith, “Bounds testing approaches to the
analysis of level relationships,” Journal of Applied Econometrics, vol. 16,
pp. 289-326, 2001.
[16] H. Y. Toda and T. Yamamoto, “Statistical inference in vector
autoregressions with possibly integrated processes,” Journal of
Econometrics, vol. 66, pp. 225-250, 1995.
@article{"International Journal of Business, Human and Social Sciences:70556", author = "Chiung-Ju Huang", title = "Governance and Economic Growth: Evidence of Ten Asian Countries", abstract = "This study utilizes a frequency domain approach over
the period of 1996 to 2013 to examine the causal relationship between
governance and economic growth in ten Asian countries, which have
different levels of democracy; classified as “Free”, “Partly Free”, and
“Not Free” countries. The empirical results show that there is no
Granger causality running from governance to economic growth in
“Not Free” countries and “Partly Free” countries with the exception of
Singapore. As for “Free” countries such as South Korea and Taiwan,
there is a one-way causality running from governance to economic
growth. The findings of this study indicate that policy makers in South
Korea, Taiwan, and Singapore could use governance index to improve
their predictions of the future economic growth.", keywords = "Economic growth, frequency domain, governance,
Granger causality.", volume = "9", number = "6", pages = "2071-5", }