Program and Development Research

Program and Development Research

Comprehensive Analysis of the Impact of Good Governance and Its Sub-Indicators on Economic Development in Southwest Asian Countries

Document Type : Original Article

Authors
Abdullah Tawana 1
Zahra Karimi Moughari 2
Zahra Mila Elmi 3
Shahryar Zaroki 4
1 PhD Student, Department of Economics, Faculty of Economics & Administrative Science, University of Mazandaran, Babolsar, Iran
2 Associate Professor, Department of Economics, Faculty of Economics & Administrative Science, University of Mazandaran, Babolsar, Iran
3 Professor, Department of Economics, Faculty of Economics & Administrative Science, University of Mazandaran, Babolsar, Iran.
4 Associate Professor, Department of Energy Economics, Faculty of Economics & dministrative Science, University of Mazandaran, Babolsar, Iran
10.22034/pbr.2025.536399.1556
Abstract
This study analyzes the relationship between good governance and economic development in Southwest Asian countries during the period 2003 to 2022. To capture economic development, the Legatum Prosperity Index and per capita income are employed as key indicators. Using panel data methods in two approaches; feasible generalized least squares estimators and random effects. The analysis reveals that in the first approach, good governance and per capita income have positive coefficients, indicating their significant positive impact on economic prosperity. Improvements in average governance quality and per capita income thus enhance prosperity. Additionally, investment, as a driving force for economic growth, has a positive and significant relationship with prosperity. In the second approach, the findings show that specific dimensions of governance, such as rule of law, regulatory quality, political stability, and voice and accountability, have a meaningful positive effect on prosperity. Improvements in these governance factors lead to increased per capita income and higher prosperity levels. Economic openness is also found to positively influence per capita income. These outcomes align with descriptive data indicating that countries with higher per capita incomes, such as Qatar and the United Arab Emirates, achieve notably higher Legatum Prosperity scores. Nonetheless, non-monetary factors, including governance quality, political stability, and investment in human capital, play a crucial role in determining prosperity. Countries like Cyprus and Georgia, despite lower per capita incomes, attain higher prosperity scores due to effective governance and robust social policies. Conversely, nations facing challenges like poor governance, corruption, and political instability fail to reach desirable prosperity levels, despite abundant natural resources. The findings emphasize the multidimensional nature of prosperity, illustrating that alongside economic growth, good governance, equitable resource distribution, and economic diversification are essential for achieving sustainable welfare. Overall, the results underscore that strong institutions and sound economic policies can significantly enhance prosperity and economic development in Southwest Asian countries.
Keywords
Good governance
economic development
Southwest Asian
panel data
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