Examining the Granger Causal Relationship between Good Governance Components and Green Economic Growth in MENA Countries
Document Type : Research Paper
Authors
1 MSc student of Agricultural Economics, Department of Agricultural Extension and Education, Faculty of Agriculture, Bu-Ali Sina University, Hamedan, Iran
2 Assistant Professor of Natural Resources and Environmental Economics, Department of Agricultural Extension and Education, Faculty of Agriculture, Bu-Ali Sina University, Hamedan, Iran
Abstract
Green growth holds particular significance in addressing environmental challenges and achieving the goals of sustainable development. One of the intermediary factors identified as influencing green growth is the quality of governance and its constituent dimensions. The present study aims to examine the causal relationship between the governance index and its components with green economic growth in the MENA countries during the period 1995–2024. To calculate the Green GDP index, the approach of Stjepanović et al. (2022) was employed, and to analyze the Granger causality relationship, the panel data method and the Dumitrescu–Hurlin Granger causality test were utilized. The results indicate that the components of “political stability and absence of violence” and the overall “governance quality index” exhibit a bidirectional causal relationship with “green GDP,” reflecting a positive causal cycle wherein an improvement in either side reinforces the other, thereby generating synergy. Moreover, a unidirectional causal relationship is observed from “green GDP” to all components of good governance, except for “regulatory quality” and “voice and accountability.” This finding suggests that the enhancement of sustainable and green economic growth also contributes to improving the indicators and dimensions of good governance. Based on the study’s results, it is recommended that MENA countries adopt policies aimed at improving institutional quality and reforming governance structures to achieve sustainable green economic growth. Such policies should include institutional reforms, the establishment of effective institutional arrangements, improvement of environmental regulations and legislation, preservation of political stability and security, and other related measures to promote environmental sustainability.
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