Governance Quality and Economic Performance in Arab Countries: An Empirical Evidence

The Arab world's economy has grown slowly and erratically during the previous two decades. Comparative scholars and practitioners of development policy contend that governance is a fundamental condition for economic growth, and many attribute the Arab World's growth slowdown to weak governance performance. This study empirically investigates the impact of governance quality on economic growth in a sample of 12 Arab countries over the period 2013–2020, a phase marked by significant economic, political, and institutional challenges following the Arab Spring. While the governance–growth nexus has been extensively examined in the international literature, empirical evidence focusing specifically on Arab economies remains limited and often relies on broad regional samples or static estimation techniques. To address this gap, the study employs a dynamic panel data approach using the Generalized Method of Moments (GMM) estimator, which allows for controlling endogeneity, unobserved heterogeneity, and the dynamic nature of economic growth. Governance quality is captured through two key dimensions—regulatory quality and the rule of law—reflecting the effectiveness of policy formulation, contract enforcement, and institutional credibility. Economic growth is measured by real GDP per capita growth, while a set of control variables is included to account for macroeconomic and structural factors. The empirical results reveal that both regulatory quality and the rule of law exert a positive and statistically significant effect on economic growth across the sampled Arab countries. These findings underscore the importance of strengthening institutional frameworks, improving regulatory environments, and enhancing legal systems to support sustainable economic performance. The study contributes to the existing literature by providing region-specific evidence for Arab economies during the post–Arab Spring period and offers policy-relevant insights that can assist decision-makers in designing targeted governance reforms aimed at fostering long-term economic growth.