The Effects of Governance on Economic Growth

Abstract

In this article, we are interested in a very topical issue—to what extent and through which channels can governance influence the economic growth of nations? To answer this question, we reviewed the literature in this field before embarking on the empirical analysis. The main results that we obtained from this research work stipulate that economic governance, approximated by “economic freedom”, has a positive effect on economic growth through its effect on investment. As regards political governance, it seems that it has no effect on economic growth. This reinforces the idea that the role of political institutions is limited to the creation of good economic institutions.