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Does Governance Matter?Some Evidence from Indian States

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  • Sudip Ranjan Basu

    (Graduate Institute of International Studies HEI , Geneva)

Abstract

This paper attempts to propose a methodology to combine different dimensions of governance indicators into a composite index. The governance index is computed as the weighted average of principal components of the standardized governance indicators, where weights are variances of successive principal components. Since the notion of good governance is multi-dimensional, it is conceptualised as a goal and as a process that accelerates growth, equity and human development potential. We therefore estimate the governance index on the basis of five indicators, such as crime rates, riots, industrial disputes and strikes, Gini index, and debt-income ratio. Then we propose to explore whether the quality of governance determines development outcomes such as life expectancy, literacy, infant mortality rate and per capita income (logarithms of), within the panel data model framework. The evidence from 16 major Indian states (from state/regional level) strongly suggests that better quality of governance leads to better development outcomes.

Suggested Citation

  • Sudip Ranjan Basu, 2005. "Does Governance Matter?Some Evidence from Indian States," Development and Comp Systems 0509008, EconWPA.
  • Handle: RePEc:wpa:wuwpdc:0509008
    Note: Type of Document - pdf; pages: 38 . pdf format
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    Cited by:

    1. Sudip Ranjan Basu, 2004. "Economic Growth, Well-Being and Governance under Economic Reforms: Evidence from Indian States," IHEID Working Papers 05-2004, Economics Section, The Graduate Institute of International Studies.
    2. Gupta, Eshita, 2008. "Oil vulnerability index of oil-importing countries," Energy Policy, Elsevier, vol. 36(3), pages 1195-1211, March.

    More about this item

    Keywords

    Governance; Development; Index; Panel Data;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • C0 - Mathematical and Quantitative Methods - - General

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