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Sustainability 2018, 10(2), 502; https://doi.org/10.3390/su10020502

The Bidirectional Causality between Country-Level Governance, Economic Growth and Sustainable Development: A Cross-Country Data Analysis

1
Faculty of Economics and Business Administration, Babeş-Bolyai University, 400084 Cluj-Napoca, Romania
2
Faculty of Business, Babeş-Bolyai University, 400084 Cluj-Napoca, Romania
*
Author to whom correspondence should be addressed.
Received: 15 January 2018 / Revised: 6 February 2018 / Accepted: 10 February 2018 / Published: 13 February 2018
(This article belongs to the Special Issue Marketing and Sustainability)
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Abstract

In the context of contemporary society, characterized by the information users’ growing and differentiated needs, the way country-level governance and social responsibility contribute to the ensuring of sustainable economic development is a concern for all the actors of the economic sphere. The aim of this paper is to test the causal linkages between the quality of country-level governance, economic growth and a well-known indicator of economic sustainable development, for a large panel of world-wide countries for a period of 10 years (2006–2015). While there are some prior studies that have argued the bidirectional causality between good public governance and economic development, this study intends to provide a new focus on the relationship between country-level governance and economic growth, on one hand, and between country-level governance and adjusted net savings, as a selected indicator of economic sustainable development, on the other hand. Four hypotheses on the causal relationship between good governance, economic growth and sustainable development were tested by using Granger non-causality tests. Our findings resulting from Granger non-causality tests provide reasonable evidence of Granger causality from country-level governance to economic growth, but from economic growth to country-level governance, the causality is not confirmed. In what regards the relationship between country-level governance and adjusted net savings, the bidirectional Granger causality is not confirmed. The main implication of our study is that improving economic growth and sustainable development is a very challenging issue, and the impact of macro-level factors such as country-level governance should not be neglected. View Full-Text
Keywords: economic sustainable development; country-level governance; economic growth; gross domestic product; adjusted net savings as a percentage of gross national income; Granger non-causality test; vector autoregressive model economic sustainable development; country-level governance; economic growth; gross domestic product; adjusted net savings as a percentage of gross national income; Granger non-causality test; vector autoregressive model
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).
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Boţa-Avram, C.; Groşanu, A.; Răchişan, P.-R.; Gavriletea, M.D. The Bidirectional Causality between Country-Level Governance, Economic Growth and Sustainable Development: A Cross-Country Data Analysis. Sustainability 2018, 10, 502.

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