Institutions and Growth: An Investigation of the Governance’s Transmis-sion Channels

(Pages: 79-94)

Ahmed S. Abou-Zaid1,* and Hamid Lahouij2

1Department of Economics, Eastern Illinois University, USA and Faculty of Politics and Economics, Suez University, Egypt.
2Lumpkin School of Business, Eastern Illinois University, U.S.A.


The relationship between quality institutions, governance reform and economic growth has been one of the important issues in the literature in the last two decades, and recently met with interest from international devel-opment institutions and various developing countries. This paper investigates the issue for developing economies by applying the panel approach to account for heterogeneity in the data. The paper also examines the existence of transmission channels through which governance influence growth. The results indicate that good governance can generate positive spillover externalities through domestic, foreign and human capital.


Economic Growth, FDI, Governance, Human Capital, Institutional Quality.