The Role of Social and Political Variables in Economic Growth of Developing Countries: A Panel Data Analysis

Abstract

The traditional growth theories which are primary objectives of all economies to obtain and sustain economic growth, mostly deal with factors such as real capital, labor price, technological development, population growth in order to suggest the determining elements of economic growth. However, not only economical but also non-economic, socio-political factors affect the economical performance of a country. These factors cover several issues such as supremacy of the law, operation of bureucracy, fight against corruption, political stability, democratization and development of non-governmental organizations. The advancement of socio-cultural factors will lead to the rise of institutional quality, assurance of property rights and minimization of transaction costs by clearing away uncertainties in the long-term. The positive factors mentioned above contribute to growth supporting atmosphere and rise in investments. The main aim of this study is to bring up and interprete through panel regression analysis, the relationship between growth parameter and the political index, the corruption perception index, the human development index, the economic freedom index, global competitiveness index, global innovation index and multidimensional poverty index. Apart from the corruption perception index between 2010-2014 for 15 developing countries, all the independent variables had statistically significant effects on growth.