The objective of this paper is to determine the impact of governance on investment growth by examining the relationship between governance indicators and the change in GDP. And to indicate whether there is an impact on the relationship between governance and the growth of investment rates.
The relationship between governance, foreign direct and/or domestic investment, and growth is well studied but, admittedly, a function of a wide range of factors including the soundness of macroeconomic policies, the strength of economic and political institutions, the functioning of the legal and regulatory framework, and the quality of infrastructure and other services, amongst others.
The political importance of country governance in attaining increased investment and sustained economic growth is generally accepted.
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https://www.cambridge.org/core/journals/hague-journal-on-the-rule-of-law/article/abs/worldwide-governance-indicators-methodology-and-analytical-issues1/D2DBA45F726D0442A29A651710D96C37
https://www.sciencedirect.com/science/article/pii/S2214845021000399#bib26
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A democratic interplay of the body politic and body economic seems to be a key necessity for market growth by investment strategies, imo.
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There is no more dangerous menace to civilization than a government of incompetent, corrupt, or vile men. The worst evils which mankind ever had to endure were inflicted by bad governments. The state can be and has often been in the course of history the main source of mischief and disaster.
Ludwig von Mises
Seems strange if there were not! Sounds like you are shooting fish in a barrel.
Lou
Liu et al 2018, says governance helps to mitigate the grabbing and helps to influence the helping hand of those in power.
For example if government effectiveness and the rule of law are well functional, then corruption both in public and private sector will be reduced. Then funds spared for investment will solely be used for investment and profits from investments will be reinvested or reallocated to other meaning national projects.
Obviously, governance always impacted investment growth of a country. In the era of new liberal economy there is a strong bonding between governance and market. Nature of market depends on the degree of governance. Good governance always in favour of growth. So, growth of investment in present day world depends on the degree of governance of a country.
The impact of governance on investment growth cannot be over emphasized. The quality of governance determines the market dynamics. This in turn is driven by economic indices which govern the forces of demand and supply. These indices have direct bearing on government policies and their interpretation and implementation.
@ jaroslav. Corruption is a hydra-headed monster the deal with not only governance but also the governed. Unfortunately, corruption has assumed very complex dimensions. With such sophisticated dimensions, curbing it is a Herculean task while an attempt to eliminate it appears impossible.
You are absolutely right. The biggest threat to governance and even economic and therefore social stability is corruption.
Weak governance is an important factor to affect on investment growth.