Governance and economic development: good governance and millennium development goals

This study examined whether the Good Governance (Boeninger, 1991) reforms recommended by the World Bank have been successful in helping countries to achieve the United Nation’s (UN) Millennium Development Goals (MDGs) implemented in 2000 to encourage development by improving the socioeconomic conditions of the world’s poorest countries (Raykar, 2011; UN, 2000).

In this study, a new methodology was developed for the construction of a new governance indicator. This new methodology extended Goldberger’s (1972) Multiple Indicators Multiple Cause (MIMC) methodology. This study used the ‘raw’ data of Kaufmann et al.’s (1999) and a simulation study to compare the results of the new methodology with Kaufmann’s (1999) methodology. The new methodology was found to deliver a better governance indicator with higher precision and lower variance.

To enable more in-depth research to be undertaken, the scope of this study was limited to an examination of a number of carefully selected MDGs. Specifically, this study examined the effect of governance and health aid on child mortality rates and found that governance has an important role in reducing child mortality rates. Additionally, this study considered the environmental aspect of the MDGs, CO2 emissions, and found that while governance as a whole has a statistically significant role in reducing Carbon Dioxide (CO2) emissions, Control of Corruption (CC) has a much larger role in reducing CO2 emissions. The role of CC on CO2 emissions was found to be robust across different models and methodologies. Overall, the findings suggested that levels of governance are deterministic in achieving the MDGs. Thus, Good Governance should be considered as strategy for achieving MDGs.