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Non-linear Threshold Effect of Governance Quality on Economic Growth in African Countries: Evidence from Panel Smooth Transition Regression Approach

Author

Listed:
  • Anis Ochi

    (University of Jendouba)

  • Yosra Saidi

    (University of Jendouba)

  • Mohamed Ali Labidi

    (University of Carthage)

Abstract

This paper examines the relationship between governance quality and economic growth for 54 African countries over the period 1996–2019. The panel smooth threshold regression (PSTR) model was applied to determine the optimal level of global governance index, which, once attained, will induce the positive impact of governance quality on economic growth. Results proved that the nexus between governance quality and economic growth is non-linear. Besides, it showed that there exists a statistically positive relationship between governance quality and economic growth above the threshold level of 0.2, above which governance quality starts increasing the GDP per capita growth rate in African countries. The findings revealed, too, that the impact of other macroeconomic variables on economic growth has improved once global governance index reaches a threshold level of 0.2. Finally, it was found that only 6 out of 54 African countries have a global governance index above the threshold of 0.2.

Suggested Citation

  • Anis Ochi & Yosra Saidi & Mohamed Ali Labidi, 2023. "Non-linear Threshold Effect of Governance Quality on Economic Growth in African Countries: Evidence from Panel Smooth Transition Regression Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(4), pages 4707-4729, December.
    • Handle: RePEc:spr:jknowl:v:14:y:2023:i:4:d:10.1007_s13132-022-01084-w
    DOI: 10.1007/s13132-022-01084-w
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