TITLE:
Governance Matters and Economic Growth: Beyond the Egyptian Revolution
AUTHORS:
Islam Abdelbary
KEYWORDS:
Governance, Economic Growth, Egyptian Revolution, Arab Spring, Vector Error Correction Model (VECM)
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.4,
March
19,
2018
ABSTRACT: Following the Egyptian revolution in January 2011,
the need for a new development approach has become essential. That is
development with a human face. This study aims to contribute to the discussion
on sustainable economic growth in Egypt by examining the interdependence of
inclusive governance, economic and social inclusion, through empirically assessing
the relationship between governance indicators and economic growth in Egypt.
The study applied a vector error correction model (VECM) to assess the causal
relationship between the two key variables, using Worldwide Governance
Indicators (WGI) from the World Bank and economic indicators from Economic
Intelligent Unit (EIU) database over the period 1996-2016. The results show
that the Egyptian economy suffered during the study period from a significant
decrease in the level of governance. The analysis indicated that most of the
governance indicators have a causal relationship with economic growth except
corruption control, while economic growth has a positive effect and contributes
to the development of political stability and regulatory quality. The paper concludes
that appropriate initiatives and efficient governance could play a significant
role in influencing economic growth in Egypt. This is consistent with previous
studies on the impact of institutions on economic growth and development.
However, these results need further investigation to determine additional key
variables that influence the growth of GDP in Egypt.