Governance in the MENA region: The hidden engine of economic growth

Abstract

This study investigates the impact of governance on economic growth by analyzing data from 18 Middle East and North Africa (MENA) countries over the period from 2000 to 2023. Using Generalized Least Squares (GLS) estimation, the research explores the interdependent relationship between various dimensions of governance and economic performance. To verify the robustness of the results, the study further employs the Generalized Method of Moments (GMM) and utilizes an alternative proxy for economic growth. The findings indicate that corruption has a detrimental effect on economic growth in the MENA region. Additionally, higher levels of government effectiveness are associated with enhanced economic performance, while weaker voice and accountability are linked to slower growth. Interestingly, political stability exhibits a dual relationship: it is negatively associated with the Human Development Index but positively correlated with real GDP per capita. These outcomes remain consistent across robustness checks using different estimation techniques. The study offers practical insights for policymakers, emphasizing the importance of strengthening institutional frameworks and promoting transparency and accountability to foster sustainable economic growth in the MENA region.