Effects of Governance on Health: a Cross‐National Analysis of 101 Countries

The importance of good governance for the health of populations has hardly been researched even though major donors and international financial institutions make their aid and loans increasingly conditional upon reforms that ensure ‘good governance’. We analyse the role of governance in improving the health of individuals using a cross‐sectional analysis for 101 countries over the period 2000–2005. Instead of focusing on one particular indicator of population health like most previous studies, we employ 18 indicators. Explorative Factor Analysis shows that these variables are individually all good but imperfect indicators of the latent construct population health. Similarly, we employ 6 indicators of government governance. Also these indicators are all good but imperfect indicators of the latent construct governance. Our hypothesis is that good governance has a positive impact on the health of individuals, be it directly and/or indirectly through its impact on the health care sector or income. The selection of the control variables in our model is based on the general‐to‐specific approach. As both the dependent and some of the explanatory variables are latent variables, we use Structural Equation Modelling. Our results show that government governance is not directly related to the health of individuals once economic and demographic control variables are included. Indirectly, however, governance has influence on health via its positive impact on income and the quality of the health care sector. However, the significance of these indirect effects differs across country groups. In countries with a relatively healthy population, governance has a positive indirect effect through the quality of the health care sector, but not via income. In countries with poor health, governance has a positive indirect effect through income, but not via the quality of the health care sector.