THE ROLE OF FIRST-BEST GOVERNANCE INSTITUTIONS ON GROWTH IN LEAST DEVELOPED COUNTRIES

Authors : Adem GÖK

Pages : 208-229

Doi:10.14780/muiibd.511029

View : 166 | Download : 16

Publication Date : 2019-01-11

Article Type : Research Paper

Abstract :The study addresses the issue of the low level of GDP per capita growth in Least Developed Countries  insert ignore into journalissuearticles values(LDCs);, with special emphasis on the role of first-best governance institutions as a main determinant of  growth. LDCs can be characterized by a clear deficit in first-best governance institutions compared to  high-income OECD countries supporting the argument that economies that are different for a variety  of reasons will differ both in their institutions and in their income per capita. The contribution of the  study is to fill the gap in the new political economy of growth by establishing the mechanism of how  first-best governance institutions affect growth through the political, economical, administrative and  democratic channels. Although the adoption of first-best governance institutions of advanced countries  to LDCs is not a panacea to sustainable economic growth, improvement of first-best governance  institutions in LDCs significantly induce growth, since investments in governance institutions are  subject to diminishing returns, so that the benefits are most pronounced for smaller and developing  economies.
Keywords : Governance, LDCs, Growth, PCA, System GMM