Friday, November 9, 2007

Big Question II: Does good governance lead to economic growth?

Maybe, says a review of this paper.

Government indicators that calculate sound decision making – political stability and the rule of law – may promote growth but have so-so results in relation to poverty reduction. However, governance indicators worried about transparency issues – civil liberties, political freedom – may be good for poverty reduction, “but the evidence is rather mixed, and the relationship of these variables with growth remains unclear,” writes Enrique Mendizabal.

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