Paper short abstract:

This study examines the relationship between governance and development performance in Sub-Saharan Africa (SSA) and Southeast Asia (SEA) from 1995 to 2017. The results reveal considerable variations in the relationship between governance and development across countries both in SSA and SEA.

Paper long abstract:

Understanding Sub-Saharan Africa (SSA) requires explaining whether, why, and how it responds differently to particular variables (i.e., institutional quality) compared to other developing regions. This study contributes to this exercise and adds to the recent research comparing development processes and outcomes between SSA and Southeast Asia (SEA). According to these studies, based on SEA experience, good governance "as defined by donors" should not be regarded as a prerequisite for development success in SSA. This study calls this view into question by examining the relationship between governance and development performance in SSA and SEA from 1995-2017. It defines good governance according to the governance effectiveness (GE) indicator of the World Bank's Worldwide Governance Indicators. It focuses on development performance as progress in the Human Development Index of the United Nations Development Program. It uses the hybrid (or within-between) random effects model, which accounts for heterogeneity. The study finds a positive and significant association between improvements in GE in a given period and development progress in the subsequent period. The results also reveal considerable variations in the relationship between governance and development across countries, suggesting the importance of context. The paper concludes by providing some recommendations for institutional reform and further research on governance and development.