The issue of the relationship between the quality of governance and economic growth lies at the heart of institutional economics. Several empirical studies at the country level have shown that there is a high correlation between gover nance quality and economic growth. In particular, it seems that there is a strong causal relationship between them, directed mainly from the quality of governance to economic growth (the quality of governance significantly affects economic growth), but also a weak one in the opposite direction (economic growth affects the quality of governance). If it is proved that the quality of governance significantly affects the economic growth rates, then governance could be considered as a “quasi” factor of production, as advocated in the framework of institutional economics. However, there are some empirical studies that question this relationship between governance and economic growth. The findings, of this study, resulting from an updated version o f Granger causality type tests provide strong evidence of Granger causality from the quality of governance to economic growth in the case of Greece, during the period 1995-2021. Moreover, it is confirmed that in the case of Greece , there is also a strong causality from economic growth to governance. That is, these variables are significantly correlated and a two - way causal relationship exists. The main implication of our study is that improving the quality of gover nance in Greece is a very challenging issue, since it significantly affects its economic growth rates. Moreover, economic growth is a critical means of improving the quality of the country’s governance.
Acemoglu, D., & Robinson, J. (2010). The Role of Institutions in Growth and Development. Review of Economics and Institutions, 1, 1-44.
AlBassam, B. A. (2013). The Relationship between Governance and Economic Growth during Times of Crisis. European Journal of Sustainable Development, 2, 1-18. https://doi.org/10.14207/ejsd.2013.v2n2p1
Arndt, C., & Oman, C. (2006). Uses and Abuses of Governance Indicators. OECD.
Bevir, M. (2011). Governance as Theory, Practice, and Dilemma. In M. Bevir (Ed.), The SAGE Handbook of Governance (pp. 1-16). SAGE. https://doi.org/10.4135/9781446200964.n1
Bluhm, R., De Crombrugghe, D., & Szirmai, A. (2013). Do Weak Institutions Prolong Crises? On the Identification, Characteristics, and Duration of Declines during Economic Slumps. CESifo Working Paper Series No. 4594. https://doi.org/10.2139/ssrn.2393931
Boţa-Avram, C., Groşanu, A., Rӑchişan, P. R., & Gavriletea, M. D. (2018). The Bidirectional Causality between Country-Level Governance, Economic Growth and Sustainable Development: A Cross-Country Data Analysis. Sustainability, 10, Article 502. https://doi.org/10.3390/su10020502
Commission of the European Communities (2001). European Governance: A White Paper, COM (2001) 428 Final. https://ec.europa.eu/commission/presscorner/detail/en/DOC_01_10
Commission of the European Communities (2003). Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee: Governance and Development, COM (2003) 615 Final. https://aei.pitt.edu/37737/1/COM_(2003)_615_final.pdf
Dolado, J. J., & Lutekepohl, H. (1996). Making Wald Test Work for Cointegrated VAR Systems. Econometrics Reviews, 15, 369-386. https://doi.org/10.1080/07474939608800362
Freedom House (2023). Freedom in the World 2023. Freedom.
Huang, C. J., & Ho, Y. H. (2017). Governance and Economic Growth. North American Journal of Economics and Finance, 39, 260-272. https://doi.org/10.1016/j.najef.2016.10.010
IMF (International Monetary Fund) (2002). The IMF and Good Governance, Factsheet. IMF.
Kaufmann, D. (2005). Myths and Realities of Governance and Corruption. World Economic Forum, Global Competitiveness Report 2005-06, 81-98. https://doi.org/10.2139/ssrn.829244
Kaufmann, D., & Kraay, A. (2002). Growth without Governance. The World Bank. https://doi.org/10.1353/eco.2002.0016
Kaufmann, D., & Kraay, A. (2023). Worldwide Governance Indicators. The World Bank. https://www.govindicators.org/
Kaufmann, D., Kraay, A., & Mastruzzi, M. (2009). Governance Matters VIII: Aggregate and Individual Governance Indicators 1996-2008. World Bank Institute. https://doi.org/10.1596/1813-9450-4978
Kaufmann, D., Kraay, A., & Mastruzzi, M. (2010). The Worldwide Governance Indicators: Methodology and Analytical Issues. Policy Research Working Paper 5430, The World Bank.
Law, S. H., Lim, T. C., & Ismail, N. W. (2013). Institutions and Economic Development: A Granger Causality Analysis of Panel Data Evidence. Economic Systems, 37, 610-624. https://doi.org/10.1016/j.ecosys.2013.05.005
Lutkepohl, H. (1991). Introduction to Multiple Time Series Analysis. Springer-Verlag. https://doi.org/10.1007/978-3-662-02691-5
Manolas, G., Sfakianakis, G., Syrmali, M. E., & Vavouras, I. (2010). Institutions, Quality of Governance and Economic Growth. Statistical Review, 6, 15-34.
North, D. C. (1989). Institutions and Economic Growth: An Historical Introduction. World Development, 17, 1319-1332. https://doi.org/10.1016/0305-750X(89)90075-2
North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge University Press. https://doi.org/10.1017/CBO9780511808678
OECD (1995). Participatory Development and Good Governance. Development Co-Operation Guidelines Series, Development Assistance Committee.
Rapanos, V. T., & Kaplanoglou, G. (2014). Governance, Growth and the Recent Economic Crisis: The Case of Greece and Cyprus. Cyprus Economic Policy Review, 8, 3-34
Rodrik, D. (2008). Thinking about Governance. In D. Rodrik (Ed.), Governance, Growth, and Development Decision-Making (pp. 17-24). The World Bank.
Rontos, K., Syrmali, M. E., Tsapala, F., & Vavouras, I. (2015). Governance Quality: Theory, Determinants and Policy Issues. In J. A. Filipe, N. Nagopoulos, K. Rontos, & I. Vavouras (Eds.), Towards a Society with a More Fair Economy or an Economy with a More Social Face (pp. 1-37). Nova Science Publishers.
Sims, C. A. (1980). Macroeconomics and Reality. Econometrica, 48, 1-48. https://doi.org/10.2307/1912017
Tanzi, V., & Davoodi, H. (2000). Corruption, Growth and Public Finances. IMF Working Paper Series WP/00/182. https://doi.org/10.5089/9781451859256.001
Toda, H. Y., & Yamamoto, T. (1995). Statistical Inference in Vector Autoregression with Possibly Integrated Processes. Journal of Econometrics, 66, 225-250. https://doi.org/10.1016/0304-4076(94)01616-8
UNESCAP (2006). What Is Good Governance? https://www.unescap.org/sites/default/files/good-governance.pdf
United Nations Development Programme (UNDP) (1997). Governance for Sustainable Human Development. UNDP.
United Nations Development Programme (UNDP) (2007). Governance Indicators: A User’s Guide (2nd ed.). United Nations Development Programme.
United Nations Development Programme (UNDP) (2011). Towards Human Resilience: Sustaining MDG Progress in an Age of Economic Uncertainty. Bureau for Development Policy.
Vavoura, C., Manolopoulos, D., & Vavouras, I. (2022). The Interactions between Governance Quality and Economic Development. In V. A. Vlachos, A. Bitzenis, & B. Sergi (Eds.), Modeling Economic Growth in Contemporary Greece (pp. 105-118). Emerald. https://doi.org/10.1108/978-1-80071-122-820211007
Vavouras, I., Manolas, G., Syrmali, M. E., & Sfakianakis, G. (2011). The Effect of Governance on Economic Development: The Case of Greece. In Sklias, P. G., & I. Sideris (Eds.), Development, Leadership, Society: Texts of Comparative Political Analysis (pp. 41-51). I. Sideris Publishers.
Waggoner, D. F., & Zha, T. (1999). Conditional Forecasts in Dynamic Multivariate Models. Review of Economics and Statistics, 81, 639-651. https://doi.org/10.1162/003465399558508
Watson, M. (1994). Vector Autoregressions and Cointegration. Handbook of Econometrics, 4, 2843-2915. https://doi.org/10.1016/S1573-4412(05)80016-9
World Bank (1989). Sub-Saharan Africa: From Crisis to Sustainable Growth. World Bank.
World Bank (1992). Governance and Development. World Bank.
World Bank (1994). Governance: The World Bank Experience. World Bank.