Navigating Success: How Good Governance Fuels Economic Development in Nepal

Good governance is essential for economic development in Nepal, particularly in combating corruption, which impedes financial progress. This study assesses governance levels and their correlation with GDP growth using descriptive analysis and Granger causality tests, drawing on Worldwide Governance Indicators (WGI) and data from the World Bank and Nepal's Central Bank from 2000 to 2020. Trend analysis reveals significant fluctuations in governance indicators—such as voice and accountability, political stability, and regulatory quality—linked to political events, including changes in 2002, the 2015 earthquake, and the COVID-19 pandemic. The Granger causality test indicates that both control of corruption and regulatory quality significantly impact GDP growth. Prioritizing anti-corruption efforts is vital for enhancing democracy and political stability. The study’s results have important implications for policymakers, governments, international organizations, and aid donors, highlighting the need to prioritize anti-corruption measures, enhance accountability, and improve regulatory frameworks.