Good governance, innovation, economic growth and the stock market turnover rate

ABSTRACT

This study is primarily aimed at testing the theory of good governance in the group of eight developing Islamic countries. Using a panel data regression model, we examined the data to determine the relationship between political economy and economic development of eight countries, for the period 2005 to 2014. The results show a significant positive correlation between the rule of law, corruption control with economic growth and stock market turnover rate proxy. The examination through an artificial neural network resulted in a higher determination coefficient and less average standard error. This, in turn, reveals that the fitting power and efficiency of this method is higher than the panel data regression model. Furthermore, the findings of this study suggest that the application of good governance theory calls for more inquiry.

KEYWORDS:

• Good governance
• innovation
• economic growth
• stock market turnover rate
• group of eight

JEL CLASSIFICATIONS:

• O16, H54

Acknowledgments

We are grateful to the two anonymous reviewers for their time and efforts. We would like also to thank the Journal co-editor, Dr. Sgro, Pasquale, for his support and editorial assistance. The usual caveats apply.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. For more information, see the official site of G8 (www.developing8.org).