European Research Studies Journal

Volume XXIII, Issue 2, 2020

pp. 529-556
Good Governance and Institutional Quality of Public Sector:
Theoretical and Empirical Implications
Submitted 11/02/20, 1st revision 15/03/20, 2nd revision 31/03/20, accepted 14/04/20

Marzanna Poniatowicz1, Ryta Dziemianowicz2, Aneta Kargol-Wasiluk3

Abstract:

Purpose: The main aim of this article is to conduct an econometric analysis and to examine
relations between institutional factors pertaining to the quality of governance and the level of
GDP per capita in 28 member states of the European Union.
Design/Methodology/Approach: The analysis of public governance and good governance
concepts is based on critical analysis of the recent literature. Institutional quality of the public
sector is analyzed as a part of New Institutional Economics theory. This allows to indicate the
institutional dimensions of the quality of public sector. In the empirical part, focus was given
to measuring governance and examining relations between institutional factors pertaining to
the quality of public governance and the level of GDP per capita in 28 member states of the
European Union. To this end, World Bank data were used, and six indicators proposed by this
institution were assumed as synthetic measures of governance quality (The Worldwide
Governance Indicators – WGI).
Findings: The conducted analyses resulted in positively verifying the model of relations
between dimensions of governance quality and the pace of economic growth in the EU-28.
Based on correlation studies, out of the six analyzed dimensions of governance quality i.e.
voice and accountability, political stability, government effectiveness, regulatory quality, rule
of law and control of corruption, only political stability transpired not to be correlated to the
level of GDP per capita in the studied economies.
Practical Implications: The results are especially important for policy makers to understand
the importance and the role of good governance. As for society, research results can increase
awareness in assessing the quality of governance in each country.
Originality/Value: The scientific results fill the gap in the research area of institutional quality
of the public sector, and also show the significant relationship between the quality of
governance and the economic outcomes (economic growth).

Keywords: Public sector, new institutional economics, public governance, good governance.

JEL Code: B52, H83, D73.

Paper type: Research article.

1
Full Professor, University of Bialystok, Faculty of Economics and Finance, Poland,
e-mail: [email protected]
2
Associate Professor, University of Bialystok, Faculty of Economics and Finance, Poland,
e-mail: [email protected]
3
PhD, University of Bialystok, Faculty of Economics and Management, Poland,
e-mail: [email protected]
 Good Governance and Institutional Quality of Public Sector:
Theoretical and Empirical Implications
530

1. Introduction

The growing importance of the public sector of the economy is nowadays a

characteristic trend. Emerging new conditions and challenges such as rapid
technological progress, dynamic demographic changes, migrations, deepening
economic diversification, dynamic growth of public debt, fiscal crises and
complicated fiscal relations between different levels of public authority, growing
expectations of citizens for new public services, put pressure on public authorities to
increase the efficiency and effectiveness of the public sector in the economic
dimension (Dickinsen, 2016; Barczewska-Dziobek, 2018).

The authors of this study, looking for an answer to the question how to shape the
system of effective and efficient public sector management, refer to the postulates of
economic doctrine by the achievements of New Public Management (NPM), New
Public Governance (NPG), as well as selected theoretical concepts of the New
Institutional Economics (NIE).

The literature often emphasizes that the concept of NPG was created as a result of
criticism of selected assumptions of the MPM model. With an improved and more
mature version of it, the paper puts a special emphasis on the model of public
governance, referred to as Good Public Governance (GPG), treating it as a specific
standard and model for good functioning of public authority.

The study has several tasks: 1) to explain the relationship between governance and
government according to public sector and public administration; 2) to outline the
different approaches to public governance; 3) to clarify some core concepts in public
governance theory and the different models of governance; 4) to present the
institutional aspect of quality of public sector in the context of the idea of good public
governance.

In the empirical part of this article, focus was given to measuring governance. The
empirical purpose of the work was to examine relations between institutional factors
pertaining to the quality of public governance and the level of GDP per capita in 28
member states of the European Union. It was assumed that good governance has a
positive effect on the level of GDP of the studied countries.

The primary source of knowledge used by the authors were the World Bank data. Six
indicators proposed by this institution were assumed as synthetic measures of (good)
public governance (The Worldwide Governance Indicators – WGI) i.e., Voice and
Accountability (VA), Political Stability and Absence of Violence (PS), Government
Effectiveness (GE), Regulatory Quality (RQ), Rule of Law (RL), Control of
Corruption (CC).
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2. From Traditional to Modern Models of Public Administration

The observation of the evolution of the public management concept allows for
distinguishing three basic models of public administration management (Osborne,
2006):
i. Old Public Administration (OPA) – a model covering the period from the late
nineteenth century to the late seventies/early eighties of the 20th century;
ii. New Public Management (NPM) – a model covering the period from the late
1980s to the early 21st century;
iii. The public governance (PG), then evolving towards New Public Governance
(NPG) – nowadays.

The theoretical foundations of the OPA are related to the traditional administration
model and the concept of ideal bureaucracy proposed by Weber (Max Weber's Ideal
Bureaucracy Model). Hierarchy and bureaucracy are crucial in this model, and the
principle of its operation comes down to a precise and bureaucratic definition of the
relations between the subordinate unit (citizen) and the superior unit (government,
state). Weber points to the following features of ideal bureaucracy in public
administration (Sager and Rosser, 2009; Katsamunska, 2012):

i. The organisational structure of administration based on centralisation,

hierarchical subordination, formalisation, control and discipline;
ii. The professionalism of officials appointed on the basis of their professional
qualifications rather than their choice (Weber believed that the choice of
officials unnecessarily modifies and distorts the severity of hierarchical
subordination);
iii. A political-administrative dichotomy consisting in a strict separation of
administration from politics (according to Weber, such separation is a
necessary condition for eliminating corruption in public administration).

Thus, while the traditional bureaucratic model favoured the process of administration
above all, contemporary models (NPM and NPG) put the art of management before
the art of administration. This approach is aptly characterized by Huges:
“administration means filling in instructions, while management means achieving
results” (Huges, 1994).

In this context, it is essential to distinguish two concepts of government and

governance. The first refers to the situation when a public authority, having formal
legal powers, performs and implements certain actions. Governance refers to the
execution and implementation of activities supported by the common goals of citizens
and organisations (Rosenau, 1992). According to Wojciechowski, public governance
is “the process of influencing public entities (institutions), including the authorities
and public administration, on the course of public affairs, the settlement of which is
in the interest of the general public” (Wojciechowski, 2010).
 Good Governance and Institutional Quality of Public Sector:
Theoretical and Empirical Implications
532

In turn, the term governance as a specific concept first appeared in the private sector
(corporate governance) in the sense of organizational power and the related strategic
level of corporate governance, as opposed to the current/operational level
(Raczkowski and Mikułowski, 2013; Thalassinos et al., 2014; 2015). It was only later
that the term was transferred to the public sector, interpreting it as a process of sharing
power in the process of public decision-making, supporting the autonomy and
independence of citizens and ensuring the process of development of the common
good through civic involvement (Jedrzejowska-Schiffauer et al., 2019). Pereira treats
public governance above all as a manifestation of the domination of public policy over
public administration. According to the opinion of this author, it allows to strengthen
the potential and powers of many stakeholders and thus a specific administrative and
regulatory order is achieved (Pereira et al., 2017).

The concept of NPM, based on the idea of managerialism in the public sector,
emphasizes certain similarities in the functioning of public administration to the
private sector. Hood is often considered to be the precursor of this idea (Hood, 1991).
The idea was popularised in the 1980s and 1990s, initially in countries such as
Australia, New Zealand and the USA, and later also in European countries. There is
also a proof of its growing popularity in the country of the authors of this paper, i.e.,
in Poland, where research articles related to the issue in question, referring both to the
government and local government sector are more and more frequently published
(Zalewski, 2007; Lubińska, 2009; Krynicka, 2006; Supernat, 2003; Zawicki, 2011;
Pająk, 2018).

The key postulates of the NMP may also serve as recommendations for necessary
changes in the context of increasing the effectiveness of the management system of
public sector entities. They are as follows (Poniatowicz and Dziemianowicz, 2017):

i. The adaptation of management methods and techniques used in the private

sector (business-like management);
ii. Public managerialism and liberation management – responsibility for the
public economy should rest with highly qualified public managers, to whom
it is much easier to assign responsibility for financial decisions than to
passive, not always competent officials;
iii. Result-oriented public administration and public sector;
iv. Focus on the consumer of goods and public service – while traditional public
management has treated members of the public as impersonal petitioners,
NPMs treat them as individual consumers/customers who should be able to
influence the decisions made by public policy makers;
v. Using competitive governance – freeing up competition and market
mechanisms in management processes, i.e. the so-called marketisation of the
public sector; public decision-makers always face the dilemma of make or
buy when making decisions concerning the process of production and delivery
of public goods and services; when choosing the latter option, they cooperate
with the private sector;
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533

vi. The public sector should carry out some of its functions with the help of
private entities, e.g. in the formula of public-private partnership or
privatization; this is aptly illustrated by the acronym used by Osborne and
Gaebler in the public sector context: "steer, not row" (Osborne and Gaebler,
1992);
vii. The “3E rule” in the evaluation of public projects (economy, effectiveness and
efficiency);
viii. The need for public sector risk management – it is assumed that public sector
bodies, just like private entities, must look ahead, react dynamically to
changes and make optimal use of available opportunities; risk management is
the basis for such action and is an essential condition for optimising the
delivery of public goods and services;
ix. Moving away from the traditional understanding of the public budget toward
performance budgeting, which allows for the identification of tasks that are
the most important for the achievement of public objectives and the
determination, by means of appropriate measures, the degree of completion
of public tasks;
x. Long-term financial planning (multi-annual public finance) – it is assumed
that public finance management requires a long-term/perspective approach
(long-term financial planning; multi-annual public finance); it is no longer
sufficient to look at these issues from the perspective of the financial year
alone;
xi. Democratization and citizen participation – democratization of the processes
of managing public affairs, among other things, in the formula of involving
citizens in decision-making processes undertaken in the public sector (e.g.
public consultations, public referendums, participatory budgeting, etc.);
xii. Transparent public administration – special emphasis is placed on the
transparency of public administration and, consequently, on the
dissemination of good practices in the field of openness and transparency of
the public sector and the related system of public finances.

In the last decade, the NPM model has been criticised, among other things, for too
uncritical use of private sector experience and inadequacy for the specifics of public
sector decision-making (Monteduro, 2005). As a result, a new concept of public
governance has emerged, i.e., Public Governance (PG). It is assumed that just as in
the past NPM replaced the traditional concept of public administration, nowadays PG
will replace NPM (Bryson, Crosby, Bloomberg, 2014). Rhodes, based on the analogy
to NPM, proposes the term New Public Governance (NPG), defining the process of
public co-decision, with a significantly reduced role of government (governing
without government) (Rhodes, 1996). While the NPM concept focuses on the
professionalisation of management, standards and measures of success, results and
economic effects, the NPG concept focuses on processes involving public and private
sector actors in the form of governance as self-organizing networks, the relationship
between public authority and society (partnership, civic participation) and the
principles of liberal democracy (Rhodes, 1996).
 Good Governance and Institutional Quality of Public Sector:
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In order to systematise and compare key management aspects in each of the described
models of public administration (OPA, NPM and NPG), Iacovino, Barsanti and
Cinquini (2017) propose the use of this illustrative matrix in Table 1.

Table 1. Public management models reference matrix

OPA NPM NPG
Leading logic/ Bureaucratic. Internal efficiency. System efficiency,
Subject Focus on Legitimacy, Focus on Management effectiveness.
compliance with strict and the working logic Focus on policy-making,
predetermined rules and of each single PA. public services, management
procedures. and democracy.
Systemic Closed system. Partially closed Partially open system.
approach The organization is system. The organization is more
centered on its internal The organization is oriented towards
bureaucratic and oriented towards relationships and its strategic
administrative dynamics results. external environment, by
with inadequate concern stimulating process of
for the external integration and coordination.
environment.
Perspective Micro / Self-referential. Micro. Involves all three levels:
Procedures and rules- Emphasis on PA - micro (each single PA);
oriented. management features. - meso (PAs and company
systems);
- macro (socio-economic
systems).
Relevant Legitimacy and Effectiveness, Efficiency, effectiveness, and
dimensions administrative, efficiency, economy. the full range of democratic
conformity with rules and The focus is on and constitutional values
regulations. ultimate performance (equity, transparency, ethics,
results in an quality, improvement,
economical and economic, social and
managerial environmental sustainability
perspective - “The 3E of the implemented policies,
Principle”. accountability).
Internal Hierarchical Separation of the Overcoming the politician-
relationships relationships. political level from the manager dichotomy.
administrative level
(management).
Decision- Specific and strict. Introduction of Introduction of multiple
making multiple criteria for criteria for the evaluation of
contents the evaluation of decisions: flexibility,
decisions: flexibility, cooperation.
competition.
External Public monopoly – PA is Competition /contrast Cooperation among PAs,
relationships the only provider of public-public and other public and private
public services. public-private. entities.
Accountability User Client Citizen
Planning and
control Input, formal results Output Output, outcome
Governance
model Procedural governance Corporate governance Network governance
Source: Iacovino, Barsanti and Cinquini, 2017.
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535

In accordance with the characteristics of individual models of public administration

presented in the Table above, the NPG concept appears not only as the most mature,
but also as being based to the widest extent on specific public values4 (including
democratic and constitutional ones). Bryson, Crosby and Bloomberg (2014)
emphasize that, according to the NPG, the decision-making freedom of public
decision-makers should be limited by law, democratic and constitutional values, and
a broad approach to responsibility. At the same time, as emphasized in the literature
on the subject, this responsibility should be multi-faceted, and not just hierarchical (as
in OPA) or market (as in NPM), because public officials must take care of law,
community values, political norms, public standards and citizens' interests (Bryson,
Crosby and Bloomberg, 2014). Only the comprehensive fulfillment of these
conditions allows the implementation of the idea of good public governance (GPG),
whose attributes are open and developmental public policy, professional
administration, acting for the public good, respect for the law, transparency of
processes and strong civil society.

3. Institutional Approach in the Theory of Economics: Traditional

Institutionalism vs. New Institutional Economics

In economic sciences, more and more attention is paid to the issues of the public sector
in the context of the institutional approach. The terms institutionalism and institutional
development have become synonymous with actions aimed at reformation of this
sector in many countries, while the institutional approach in the process of
modernization of this sector is understood as creating new principles and mechanisms
for its functioning, especially in terms of increasing its efficiency and effectiveness.
What is characteristic of this approach is paying special attention to institutions, both
formal and informal, whose quality, but also mutual relations, implicate operation of
the sector concerned. From this perspective, institutional economics is a part of
economic sciences which, in order to explain the specificity of economic processes
that are taking place, analyze and emphasize in this scope primarily the influence of
non-economic factors (social, cultural, historical, legal, political factors etc.).

The term new institutional economics was introduced to literature by Oliver E.

Williamson (Williamson, 1998a; 1998b) thus emphasizing dissimilarity of the new
approach in comparison to the so-called “old institutionalism” (classical/historical
institutionalism) which emerged in the United States in the 20s of the twentieth
century, and whose main representatives were two American economists, Thorstein
B. Veblen and John R. Commons (Rosińska, 2008). The former initiated the
behavioral approach in economic analyses, studying mainly the impact of non-formal

4
The term of public value was originally used by M.H. Moore (Moore, 1995). Public value
refers to the value created by government through public services, laws,
regulation and other actions. This term relates to the following categories: public
satisfaction, social value from the user perspective, trust and legitimacy, public service
quality, protecting citizens’ rights etc.
 Good Governance and Institutional Quality of Public Sector:
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536

institutions (Veblen, 1899). The latter, John R. Commons, in his studies, focused
mainly on formal institutions including, above all, the system of law (Commons,
1957).

The trend of new institutional economics appeared in the early 70s of the twentieth
century, and its leading representatives were: the British economist Ronald Harry
Coase, the American economist Oliver E. Williamson, and the American economist
and historian Douglass C. North. Analysis of the theoretical achievements of these
authors allows to identify specific differences between traditional institutionalism and
the new institutional economics.

Firstly, while traditional institutional economics was treated as an alternative and a

kind of substitute for neoclassical economics, representatives of the new institutional
economics treat their analyses solely as complementation and enrichment of
mainstream economics (e.g., by achievements in the field of legal sciences, the theory
of organization and management, sociology, political science, psychology etc.), at the
same time assuming that failure to include institutional topics leads to interpretational
errors in analyses of market processes (Woźniak-Jęchorek, 2013). These issues are
treated in a similar way by the Polish economist Bogusław Fiedor who stresses that
new institutional economics is a continuation and enrichment of the paradigm of
mainstream economics – not rejection thereof. This author refers to the new
institutional economics as a neoclassical theory of institutions which transfers the
basic methodological assumptions as well as the categorial apparatus and analysis
methods characteristic of mainstream economics to the area of studies on institutions
(both formal and informal) (Fiedor, 2013).

Secondly, while the doctrine of traditional institutionalism assumed that only

institutions shape the behavior of economic entities, according to the new institutional
economics it is the behavior of entities that influences shaping the institutions.

Thirdly, the difference between the traditional and modern institutional approach is
also reflected in the subject of research. As noted by M. Lissowska, in the former
approach, the area of research is extensive and not very specific, and it is based also
on non-formalized institutions such as, for instance, habits, traditions etc. In the latter
approach, however, the subject of research are clearly defined: transactions made
between economic entities (Lissowska, 2004).

In contrast to mainstream economics, the new institutional economics is distinguished

mainly by:

i. an economic interpretation of facts which seemingly do not affect the

economic reality, and thus a broader and more interdisciplinary approach
to complex economic problems, noticing the weight and significance of
institutions in the process of market exchange, as well as taking into
account the role of transaction costs;
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537

ii. abandonment of the model of full economic rationality, in favor of the so-
called limited rationality in the formula of modification of the homo
oeconomicus conception’s assumptions, primarily in the context of
opportunism and people’s natural tendency to make mistakes; in such
approach, the method and results of public organizations’ operation
should also be considered through the prism of individual preferences and
choices (public decision-makers – politicians, consumers of public goods
– voters, private entities that cooperate with the public sector);
iii. abandonment of the conception of allocative effectiveness that is typical
of neoclassical economics (understood as optimization of the relations
between economic expenditures and results, in the given institutional
environment) in favor of adaptive effectiveness (understood in the context
of institutional flexibility i.e., institutions’ ability to adapt to the changing
conditions of the environment) (North, 2010);
iv. concentration of research on the contract/transaction category and their
associated benefits and costs (the so-called transaction costs and, in the
case of public sector entities, public transaction costs); in the context of
the public sector’s specificity, it ought to be added that public (political)
contracts are significantly different from contracts concluded on the
market of private goods and services i.e. private contracts. Among others,
this is due to the fact that the public (political) market is governed by
different rules, and the decisions made on this market are a public choice
that reflects social preferences and involves a compromise made between
economic rationality and social justice (Zbroińska, 2009).

Analysis of the possibilities of using the postulates of the new institutional economics
in development of the public sector, first of all, requires a broader discussion of the
issues connected with two key components that constitute pillars of the modern
institutionalism’s conception. These are: institutions and transaction costs.

4. Institutions as the Main Category of the New Institutional Economics and

their Importance in Analyses Pertaining to the Public Sector

The category of institutions is defined by Douglass C. North, who refers to them as

certain limitations and conditions that have a major impact on interpersonal
interactions and thus on the quality of relations that exist in the economy, also in the
public sector as an integral component of every economic system. According to this
author, institutions may be treated as game rules in the society i.e., specific restrictions
and limitations as regards concluding agreements between the actors of economic life
(in the case of public sector entities – public and public-private agreements) that shape
the economic, social and political relations existing in the economy and that,
consequently, ensure predictability of human behavior. North distinguishes two types
of institutions i.e., informal ones (religion, habits, traditions, values, codes of conduct
etc.) and formal ones (constitution, legal acts, property rights etc.) (North, 1990; 1991;
1994).
 Good Governance and Institutional Quality of Public Sector:
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In this doctrine, institutions are treated as the key to understanding contemporary

economic problems. This is due to the fact that, on the one hand, they constitute
commonly accepted rules of behavior and, on the other, specific limitations of the
choice. These limitations may also pertain to public choices and public policy,
including shaping relations between public, social and private organizations (Rudolf,
2015).

Institutionalists point out that the key to socio-economic development is institutional

order understood as an optimally formed institutional system. According to Michał G.
Woźniak, it is “the determinant of an economic system’s efficiency, where this
efficiency is materialized through its capability of economic effectiveness,
stabilization of real processes and the economy’s functioning mechanism, economic
growth, economic balance and generation of fair i.e. economically justified and
socially accepted inequalities in terms of income and property” (Woźniak, 2005).

In this context, the institutional coherence of an economic system is treated as a major

determinant of its efficiency. Source literature, however, emphasizes that
investigation into the impact of institutions on economic growth and development,
whose nota bene important component is development of the public sector, requires
dealing with the problems of identification and measurement of institutions. These
problems have their origin in the following characteristics of institutions (Woźniak,
2009):

i. institutions constitute a complex category of axiological values that determine

the rules of thought and perception of reality with varied directions and
degrees of impact on economic decisions and effectiveness of actions;
ii. institutions do not explicitly determine human actions, but only create a space
for selection of goals and the means for achieving them, thus merely defining
the boundary conditions of free choice.

Considering the aspect of institutions’ effect on the economic reality, Mary M. Shirley
divides them into two categories: (i) institutions which facilitate market exchange by
reducing transaction costs and increasing trust; (ii) institutions which shape the system
of state authority towards strengthening of private property and freedom of individuals
(Shirley, 2005).

From the standpoint of the research issues undertaken by the authors, the latter
category is particularly important. This is due to the fact that in the context of the
public sector, which is of most interest to us, the institutional approach allows to
evaluate the quality of governance by public authorities. This is connected with the
model of public governance referred to as good governance. These issues will be
further discussed in the paper.
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5. Public Governance – Institutional Dimensions of the Public Sector’s

Operation

When analyzing the operation of the public sector, the new institutional economics
(NIE) refers to the term of governance (Przesławska, 2007). This term means:
governing, the quality of governing, exercising authority, public governance (co-
governing), co-managing, order, coordination, and even management. Generally
speaking, the term governance “(…) refers to all the models of rules. It is a set of
principles assumed by an organization such as an enterprise or the state, determining
how to rule and what principles to apply in internal and external relations between
the stakeholders” (Valkama et al., 2004). Governance is a concept from the field of
economic and political, or even sociological sciences (Hill and Lynn, 2004). As stated
by Jessop (2007), it can be easily moved between the boundaries of various schools
of thought and scientific disciplines as well as various areas of practical use.
Therefore, it is an ambiguous and multi-contextual term.

In the general sense, public governance means the government’s ability to function
with or without the private sector, in order to drive the economy and the society toward
achievement of common goals (Peters, 2012). According to Peters (2012), public
governance may also be realized via the use of traditional methods of hierarchical
nature, which means that the foundations of such co-governing are rooted in the
conception of traditional governments (centralized and autocratic). This is the case in
many countries. Traditional methods are used, e.g., in the sphere of taxation,
regulation of business activity, even in countries in which there are strong tendencies
toward governance using more interactive mechanisms. This is because the given
model of governance may not be suitable for every political system or every public
policy. The cited author notes that the term governance has become popular partly
because it constitutes an alternative to traditional hierarchical forms of ruling a nation
state, especially in centralized systems. The main logic behind governing without a
government is that self-organizing networks of actors can supply/constitute
alternative, more effective, human/humanitarian and democratic models of
governance (Peters, 2012). Table 2 presents the main differences between the
traditional way of governing by a government, and public governance.

Rotberg (2004) believes that “public governance is good” when it allows to allocate
and manage the resources so as to satisfy the collective needs (solve collective
problems) or, in other words, when the government effectively provides public goods
of appropriate quality. Therefore, governments should be evaluated in terms of both
quality and quantity of goods supplied. Supply of public goods as part of public
policies is based on such principles as: human rights, democratization and democracy,
transparency, participation of decentralized authority, good public administration,
responsibility/accountability, rule of law, effectiveness, equality, strategic vision
(Cheema, 2005).
 Good Governance and Institutional Quality of Public Sector:
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540

Table 2. Government vs. public governance

Issue Government Public governance
Definition Authority/body that makes formal Formal and informal exercise of
political decisions sanctioned by authority aimed at achieving a
formal institutional rules consensus in specific situations
Actors A small number of participants, A large number of participating
mostly public entities actors, public entities, private entities,
civil society
Focus on Organizational structures and Processes, policies, results
institutions
Structures Closed systems, territorial limitations Open systems, functional division of
on exercise of authority, compulsory authority, voluntary participation
participation
Hierarchy Networks and partnerships
Decision-making Narrow scope of consultations, no More extensive consultations,
process cooperation or involvement of cooperation between actors in
citizens in the process of exercising defining and realizing the public
authority or in implementing/realizing policy
public policy
Implementation Top-down tools. Mostly formal. Often informal tools that create
tools conditions and incentives to accept
formal decisions
Methods of Hierarchical exercise of authority, Relations based on consultation and
interaction conflict relations, confidential/secret cooperation, a transparent and open
system of governance and control public administration,
direct provision of services an inclusive role of public
administration
Decisions Fixed and specific Based on criteria and principles
oriented toward autonomous decisions
External Results imposed in a top-down Requirements not imposed top-down,
consequences/eff manner, prohibitions and obligations but rather incentives and conditions
ects/results of determining the behavior of various
decisions actors
Source: Monteduro et al., 2013.

The term good governance was first used in documents of the World Bank in the early
90s of the twentieth century. World Bank’s definition of 1992 described good
governance using the following qualities: an open and developmental policy,
professional administration, acting for the public good, rules of the law, transparency
of processes, a strong civil society (Schöler and Walther, 2003). It ought to be added
that, in various texts, different values defining the idea of good governance are
specified. For instance, UN documents mention eight principles associated with this
formula of public administration’s operation. These are: participation, social
consensus, accountability of public authority, transparency, timeliness, effectiveness
and efficiency, social justice, rule of law (United Nations, 2009).

Good governance allows to reduce corruption. It promotes gender equality, has a

positive impact on sustainable development, allows citizens to enjoy personal
freedoms, delivers tools for combating poverty, privation, fear and violence. UN
perceives good governance as a participative, transparent and accountable system. It
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encompasses state institutions and their actions as well as the private sector and civil
society organizations. In practice, such rules should translate into “strengthening of
democratic institutions” (Cheema, 2005). Moreover, good public governance
provides the basis for good corporate governance. Good public governance is the
foundation for stable and effective economies. Those who question the possibility of
defining conditions of good governance are inclined toward creating/defining
conditions of the good enough governance model. As a conception, good enough
governance suggests that not all the deficits/shortcomings of public governance must
be immediately remedied, and that building of institutions and capabilities of the state
requires time (Grindle, 2011). Grindle proposes that, within the frameworks of good
enough governance, attention is paid to the minimum conditions of governance that
enable political and economic development, and a solution that may be used in
practice is not necessarily presented (Grindle, 2011).

6. Measurement of Governance

In economic terms, the method of governing in an economy may be considered as a

pure public good. “The «created» quality of governance does not require that
additional costs connected with its «consumption» be incurred by an additional
member of the society, nor can any member of the given society be deprived of the
opportunity to use it” (Miłaszewicz, 2015). According to Rodrik, “(…) governance
has an instrumental value in the scope in which it gives manufacturers and households
a greater transparency on the rules of the game, and – to investors – a greater
certainty that they will be able to get return rates proportionate to their efforts”
(Rodrik, 2008). If we assume such a way of understanding this term, governance
becomes an instrument that allows to achieve the primary goal of operation of the
entire socio-economic system. Then, quality of this governance ought to be considered
to be a result that characterizes actions of the public sector, whereas evaluation of this
quality should be assumed as the measure of results achieved by this sector
(Miłaszewicz, 2014).

However, measurement of governance which, in recent years, has become the subject
of many empirical analyses, poses many problems. Application of statistical tools to
evaluate governance quality is not easy because these actions are often immeasurable.
In the opinion of Przesławska, governance quality indicators do not measure the
objective state, which is probably indefinable, but rather “(…) the perception of the
given phenomenon in the selected group of respondents, e.g., experts of the given field
or companies operating in the given country. Here, a certain institutional model is the
point of reference (…)” (Przesławska, 2007). Therefore, many institutions have made
attempts to prepare relevant models. The most elaborate governance quality measures,
based on aggregated data and international comparative studies, have been published
by the World Bank, the European Central Bank, the International Institute for
Management Development (IMD) and the World Economic Forum (WEF)
(Wojciechowski and Podgórniak-Krzykacz, 2008). Each of the proposed methods for
this evaluation has its advantages and disadvantages.
 Good Governance and Institutional Quality of Public Sector:
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Still, the leading institution in terms of construction of quality indicators is the World
Bank. The first empirical study concerning this measurement was published in 1996
by Kaufmann, Kraay and Zoido-Lobaton (1999). The study covered 178 countries.
The next study was published in 1999 in the World Bank’s Policy Research Working
Paper (Kaufmann et al., 1999). The analysis concerned 199 countries and was
prepared on the basis of 300 indicators. Its authors aggregated individual measures of
governance quality into six categories that encompass the key dimensions of
governance quality (Kaufmann et al., 1999):

i. voice and accountability – covers measurement of political rights, civil

liberties and human rights;
ii. political stability – means measurement of the probability of
destabilization, violent threats and changes in the government through
possibly unconstitutional acts of violence, terrorism included;
iii. government effectiveness – covers measurement of the public
administration’s professionalism and the quality of public services
provided;
iv. regulatory quality – pertains to measurement of the degree of
interference of the public-administrative factor in the market economy;
this indicator concentrates on the perceived occurrence of a policy that
is unfavorable for the market;
v. rule of law – this indicator evaluates operational efficiency of the
judiciary, the quality of contracts and protection of property rights;
vi. control of corruption – this indicator measures the perception of
corruption understood as using public authority for private purposes5.

The way in which the above categories are put into groups does not aspire to the status
of a precise definition of governance quality. It is, rather, a reflection of the author’s
views on “a coherent and useful organization of data, consistent with the common
notion of governance quality (a model of unobservable components)” (Przesławska,
2007).

Based on aggregated measures, a governance indicator was designed that assumes

values from -2.5 to 2.5. The higher the value, the higher the level of development. The
latest Worldwide Governance Indicators (WGI) report, published by the World Bank,
covers the years 1996-2018 (World Bank, The Worldwide Governance Indicators –
WGI). The designed indicators are based on several hundred individual variables that
measure subjective perception of governance quality. They were prepared on the basis
of more than 30 separate sources of data, and pertain to more than 200 countries.

5
Originally, this category was defined as: Graft (i.e. bribery). Only in 2002 it was changed to
control of corruption (Wojciechowski and Podgórniak-Krzykacz, 2008).
 M. Poniatowicz, R. Dziemianowicz, A. Kargol-Wasiluk

543

According to some researchers, the weakness of WGI lies in being based solely on
subjective data and, therefore, the possibility of formulating biased opinions and
discrepancy between respondents. However, in many cases, objective data, as
emphasized by Zawojska, (2012), may be even more inadequate due to extreme
incompatibilities between the de jure and de facto situations. Other researchers
(Glaeser et al., 2004) criticize WGI for failing to relate to the permanent elements of
an institution’s definition proposed by North (1990) and for measuring results of an
institution (i.e., policy choices) rather than the formal limitations of executive
authority. According to Kurtz and Schrank (2007), WGI’s deficiency is the mutual
correlation of subindices.

7. Influence of Governance Quality on Economic Growth, the Case of the

EU-28: An Empirical Model6

Nowadays, emphasis is placed on the considerable influence of institutional factors,

pertaining to governance quality, on economic growth and prosperity. Individual
countries develop at different speeds, and this can be significantly influenced by the
quality of governance (via various factors) (Bayar, 2016).

The authors of the research made an attempt to examine the statistical relationship
between institutional factors of the so-called good governance, and the level of
economic growth in 28 member states of the European Union. Therefore, it was
assumed that the quality of governance has a positive effect on the level of GDP per
capita in the studied countries. The main source of knowledge were the World Bank’s
data. Six indicators proposed by this institution were assumed as the measures of
governance quality (The Worldwide Governance Indicators – WGI).

WGI represent aggregated indicators based on several hundred variables that evaluate
the perception of institutions (Table 3), collected from dozens separate sources of data
gathered by 30 organizations from around the world. The indicators of governance
quality (or the state’s institutional efficiency) assumed for the study reflect the
processes of selecting, monitoring and changing public authorities (Voice and
Accountability VA), political stability and absence of violence/terrorism (PS), the
public authorities’ ability to effectively formulate and implement the right decisions
(Government Effectiveness GE, and Regulatory Quality RQ) as well as the respect of
citizens/the state for institutions which govern mutual relations (Rule of Law RL and
Control of Corruption CC) (Kaufmann et al., 2010; Zawojska, 2012).

6
See: Poniatowicz, Dziemianowowicz, Kargol-Wasiluk, 2017.
 Good Governance and Institutional Quality of Public Sector:
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Table 3. Description of Worldwide Governance Indicators (WGI)

Institutional indicators Area of measurement
Democratic process
VA Perception of the extent to which citizens of the given country
Voice and accountability may participate in electing and dismissing the authorities, as
well as the extent of freedom of speech, freedom of
association and independence of media
PS Subjective evaluations of the likelihood of destabilization or
Political stability and overthrowing of the government (authorities) by
absence of violence unconstitutional and violent means, including internal
violence and acts of terrorism
An honest and effective government
GE Perception of the quality of public services, quality of the civil
Government Effectiveness service and its independence from political pressure, the
quality of formulating and implementing policies, as well as
the credibility of political commitments made by the
government
RQ Perception of the government’s (state’s) ability to create and
Regulatory Quality implement proper policies and regulations that enable and
promote development of the private sector (e.g. absence of
price controls, proper banking supervision)
RL Perception of entities’ degree of confidence and adherence to
Rule of Law the norms of social life, in particular, the quality of enforcing
contracts, property rights, police and courts of law, as well as
the likelihood of crime and violence
CC Perception of the extent to which public authority is used for
Control of corruption (i.e. private gains, including not only minor and major forms of
combating corruption) corruption, but also whether the state is being appropriated or
‘captured’ by elites and private interest groups
Source: Kaufmann et al., 2010; Zawojska, 2012.

The year 2018 was chosen for the purposes of the analysis because the most recent
(available) data come from that period. In order to serve as a measure of the gross
domestic product, GDP was assumed as an average GDP per capita for the EU-28
(the so-called dependent variable). Selected indicators of governance quality for the
EU-28 (independent variables) and the level of GDP per capita in 2018 are presented
in Appendices 1–7. The following table (Table 4) presents the variables used in the
empirical analysis, together with the applied abbreviations and data sources.

The following model of multiple regression was considered:

GDP = β0 + β1VA+ β2PSV + β3GE + β4RQ + β5RL + β6CC + Ɛ

β 0...6 – parameters of the model;

Ɛ – random component.
 M. Poniatowicz, R. Dziemianowicz, A. Kargol-Wasiluk

545

Table 4. Variables used in the empirical analysis

Variable Explanation Source of data:
GDP/FRPGDP GDP per capita EUROSTAT
VA/FRPVA Voice and Accountability The Worldwide
PSV/FRPPSV Political Stability and Absence of Governance
Violence/Terrorism Indicators Database
GE/FRPGE Government Effectiveness The World Bank
RQ/FRPRQ Regulatory Quality
RL/FRPRL Rule of Law
CC/FRPCC Control of Corruption
Note: FRP – fractional rank as %.
Source: Own study.

The IBM SPSS Statistics (version 25) program was used for empirical analyses.
Descriptive statistics are presented in Tables 5 and 6 for raw data and for ranged data,
whereas the correlation matrix is presented in Table 7.

Table 5. Descriptive statistics

VA PSV GE RQ RL CC GDP
N Valid 28 28 28 28 28 28 28
Missing 0 0 0 0 0 0 0
Mean 1.0882 .6714 1.0832 1.1732 1.0911 .9939 30548.57
Median 1.0900 .7500 1.1000 1.1800 1.0550 .7450 24900.00
Standard deviation .38853 .37034 .55874 .49534 .60766 .79615 19793.272
Skewness -.446 -.117 -.337 -.054 -.159 .187 1.715
Standard error of .441 .441 .441 .441 .441 .441 .441
skewness
Kurtosis -.549 -.770 -.278 -1.201 -1.104 -1.444 4.023
Standard error of .858 .858 .858 .858 .858 .858 .858
kurtosis
Minimum .32 .05 -.25 .30 -.03 -.15 7980
Maximum 1.61 1.37 1.98 2.02 2.05 2.21 98640
Source: Own study.

When analyzing descriptive statistics of independent variables VA, PSV, GE, RQ, RL
CC and of the GDP dependent variable, one could conclude that, due to similar values
of the mean and median in all the cases, the distributions of these variables are normal.
The kurtosis, which is a measure of flattening, is positive for GDP which means that
its distribution is slimmer than in the case of the normal distribution. As regards the
other variables, the distributions are more flattened. The skewness coefficient is
negative in all the cases (except for CC and GDP), which indicates left-sidedness of
the distribution.
 Good Governance and Institutional Quality of Public Sector:
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Table 6. Descriptive statistics

FRPVA FRPPSV FRPGE FRPRQ FRPRL FRPCC FRPGDP
N Valid 28 28 28 28 28 28 28
Missing 0 0 0 0 0 0 0
Mean 51.7857 51.7857 51.7857 51.7857 51.7857 51.7857 51.7857
Median 51.7857 51.7857 51.7857 51.7857 50.8929 50.8929 51.7857
Standard 29.35435 29.35838 29.37446 29.37044 29.37044 29.36642 29.37848
deviation
Skewness -.005 .000 .001 .000 .001 .000 .000
Standard error of .441 .441 .441 .441 .441 .441 .441
skewness
Kurtosis -1.218 -1.198 -1.200 -1.205 -1.198 -1.198 -1.200
Standard error of .858 .858 .858 .858 .858 .858 .858
kurtosis
Minimum 5.36 3.57 3.57 3.57 3.57 3.57 3.57
Maximum 96.43 100.00 100.00 100.00 100.00 100.00 100.00
Source: Own study.

Due to the high skewness of the distribution for GDP and the value of kurtosis,
normalization (standardization) of variables was conducted, leading to the results
presented in Table 6.

Table 7. Correlation matrix

FRPVA FRPPSV FRPGE FRPRQ FRPRL FRPCC FRPGDP
FRPVA Pearson Correlation 1 .370 .911** .876** .915** .940** .930**
Significance (2-tailed) .053 .000 .000 .000 .000 .000
N 28 28 28 28 28 28 28
* * * *
FRPPSV Pearson Correlation .370 1 .440 .411 .459 .408 .376*
Significance (2-tailed) .053 .019 .030 .014 .031 .049
N 28 28 28 28 28 28 28
FRPGE Pearson Correlation .911** .440* 1 .886** .963** .950** .838**
Significance (2-tailed) .000 .019 .000 .000 .000 .000
N 28 28 28 28 28 28 28
FRPRQ Pearson Correlation .876** .411* .886** 1 .906** .889** .801**
Significance (2-tailed) .000 .030 .000 .000 .000 .000
N 28 28 28 28 28 28 28
FRPRL Pearson Correlation .915** .459* .963** .906** 1 .946** .849**
Significance (2-tailed) .000 .014 .000 .000 .000 .000
N 28 28 28 28 28 28 28
FRPCC Pearson Correlation .940** .408* .950** .889** .946** 1 .868**
Significance (2-tailed) .000 .031 .000 .000 .000 .000
N 28 28 28 28 28 28 28
** * ** ** ** **
FRPGDP Pearson Correlation .930 .376 .838 .801 .849 .868 1
Significance (2-tailed) .000 .049 .000 .000 .000 .000
N 28 28 28 28 28 28 28
 M. Poniatowicz, R. Dziemianowicz, A. Kargol-Wasiluk

547

**. Correlation is significant at the 0.01 level (2-tiled).

*. Correlation is significant at the 0.05 level (2-tiled).
Source: Own study.

In order to determine the relationship between variables, Pearson's correlation

coefficient (Table 7) was used. It can assume positive and negative values ranging
from -1 to 1. Negative values indicate occurrence of a negative dependence (as the
values of the independent variable increase, the values of the dependent variable
decrease). Positive values confirm occurrence of a positive dependence between
variables (as the values of the independent variable increase, the values of the
dependent variable increase too).

Based on the analysis of data from the correlation matrix, PSV was excluded as an
indicator which is not significantly correlated to GDP. Next, a regression analysis was
performed, trying to find the answer to the question of which governance indicators
influence the economic growth in the EU-28 to the greatest extent. Therefore, in
further analyses, the following model was subjected to verification:

GDP = β0 + β1VA+ β2GE + β3RQ + β4RL + β5CC + Ɛ

The model of multiple regression was chosen for the analysis. Parameters of the model
were estimated using the least squares method (OLS). In the regression equation, the
regression coefficients (β) represent independent contributions of each independent
variable to forecasting the GDP dependent variable. After carrying out repeated
analyses, the following results were obtained:

Table 8. Results of the analysis of variance, which determines matching of the

regression model
Anovaa
Significan
Model Sum Sq df Mean Sq F ce
1 Regressio 20138.299 1 10069.259 165.419 .000b
n
Residual 3165.272 26 121.741
Total 23303.571 27
a. Dependent Variable: FRPGDP
b. Predictors: (Constant), FRPVA
Source: Own study.
 Good Governance and Institutional Quality of Public Sector:
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Table 9. Coefficients of the regression model

Coefficientsa

Unstandardized Standardized
Coefficients Coefficients Linearity Statistics
Standa
rd
Model B Error Beta t Significance Tolerance VIF
1 (Consta 3.606 4.287 .841 .408
nt)
PRSVA .930 .072 .930 12.8 .000
1 1
62
a. Dependent Variable: FRPGDP
Beta (β) – correlation strength
Source: Own study.

Table 10. Summary of the model – value of the multiple correlation coefficient and
the R-squared statistics
Model – Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .930a .864 .859 11.03364
a. Predictors: (Constant), FRPVA
Source: Own study.

Therefore, the estimated model is:

PRSGDP (±11.03) = 0.93 (±0.07) FRPVA

A multiple regression analysis was carried out, in which the explained variable was
GDP per capita in the EU-28 as an average GDP per capita for all the member states,
and the explaining variables was VA. The proposed regression model transpired to be
well matched to the data of F (1;26) = 165.42 p ˂ 0.01. Based on the analysis of
regression coefficients, it may be concluded that GDP per capita in the EU-28 is
strongly and positively associated with VA (beta = 0.93, p < 0.01). This means that a
country characterized by a high level of GDP per capita is also characterized by a
high level of VA. The tested model explains 86% of the variability of the dependent
variable. The independent variable, which was included in the model, have a positive
effect on the dependent variable.

The obtained model presents the relationship between GDP and such dimension of
governance quality as voice and accountability. Extension of the analysis could prove
that, at the given stage of economic development, other dimensions of governance
quality have a greater significance. However, if you use the linear regression model,
you can build five one-factor models (one-factor regression model) (Table 11).
 M. Poniatowicz, R. Dziemianowicz, A. Kargol-Wasiluk

549

Table 11. One-factor regression models

PRSGDP = 0.93 FRPVA
PRSGDP = 0.84 FRPGE
PRSGDP = 0.80 FRPRQ
PRSGDP = 0.85 FRPRL
PRSGDP = 0.87 FRPCC
Source: Own study.

Results obtained in the empirical study are, to a considerable extent, convergent with
the results of the study conducted by Bayar in transition countries (Bayar, 2016).

8. Conclusions

The new institutional economics assumes that modern economic processes are
determined by various kinds of institutions. Hence, an important role in dynamizing
the processes of socio-economic development is attributed to the quality of
governance, which is often expressed in institutional terms. Studies are undertaken
which, on the one hand, enable identification of its dimensions and, on the other,
demonstrate the impact of the governance quality on the rate of growth and the level
of economic development.

The conducted theoretical study falls within the boundaries of the new institutional
economics trend, providing the basis for further advancement of research in reference
to the public sector, especially as far as governance quality is concerned. Key
theoretical concepts in this context, which are consistent with the paradigm of the new
institutional economics, include the public choice theory (along with constitutional
economics and the economic theory of democracy that were derived from it) as well
as other theories i.e. the agency theory, the transaction costs theory and the property
rights theory.

As the conducted empirical study has demonstrated, changes in operation of the public
sector, in relation to governance quality, exert an influence on economic results of the
given country such as the level of GDP per capita. The conducted analyses resulted
in positively verifying the model of relations between dimensions of governance
quality and the pace of economic growth in the EU-28. Based on correlation studies,
out of the six analyzed dimensions of governance quality i.e., voice and
accountability, political stability, government effectiveness, regulatory quality, rule of
law and control of corruption, only political stability transpired not to be correlated to
the level of GDP per capita in the studied economies, where the individual dimensions
are, to a varying degree, correlated to the explained variable.

The empirical model of dependences between the studied values has confirmed the
assumptions of the authors about the positive effect of Voice and Accountability (VA).
Based on the analysis of regression coefficients, it may be concluded that GDP per
capita in the EU-28 is strongly and positively associated with VA (beta = 0.93, p <
 Good Governance and Institutional Quality of Public Sector:
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550

0.01). This means that a country characterized by a high level of GDP per capita is
also characterized by a high level of VA. The tested model explains 86% of the
variability of the dependent variable.

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Appendices:
Appendix 1. Voice and Accountability
GEO/TIME 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Austria 1.39 1.43 1.40 1.45 1.46 1.39 1.38 1.34 1.34 1.38
Belgium 1.35 1.36 1.33 1.35 1.37 1.37 1.39 1.38 1.38 1.40
Bulgaria 0.56 0.53 0.45 0.40 0.34 0.37 0.43 0.40 0.38 0.32
Cyprus 1.07 1.02 1.05 1.02 0.98 1.02 1.03 1.05 1.06 1.04
Czechia 1.03 1.01 1.02 0.97 0.98 1.03 1.04 1.02 0.97 0.93
Germany 1.33 1.30 1.35 1.39 1.41 1.44 1.42 1.36 1.39 1.42
Denmark 1.54 1.54 1.55 1.67 1.67 1.52 1.55 1.54 1.52 1.61
Spain 1.18 1.12 1.09 1.06 0.99 0.99 1.04 1.04 1.03 1.06
Estonia 1.09 1.11 1.13 1.11 1.12 1.17 1.19 1.21 1.21 1.21
Finland 1.47 1.49 1.51 1.60 1.57 1.54 1.54 1.53 1.55 1.61
France 1.24 1.20 1.17 1.24 1.22 1.22 1.21 1.14 1.15 1.18
United Kingdom 1.30 1.29 1.30 1.34 1.33 1.28 1.30 1.29 1.33 1.38
Greece 0.89 0.90 0.82 0.70 0.69 0.62 0.65 0.67 0.71 0.86
Croatia 0.49 0.48 0.52 0.54 0.51 0.51 0.56 0.52 0.51 0.50
Hungary 0.91 0.89 0.84 0.75 0.74 0.55 0.56 0.40 0.37 0.32
Ireland 1.35 1.32 1.31 1.32 1.31 1.32 1.33 1.29 1.29 1.32
Italy 1.03 0.96 0.91 0.92 0.95 1.00 1.03 1.03 1.05 1.05
Lithuania 0.90 0.92 0.86 0.93 0.94 0.96 0.97 1.00 0.99 0.92
Luxembourg 1.56 1.57 1.60 1.65 1.63 1.55 1.55 1.50 1.52 1.57
Latvia 0.85 0.79 0.74 0.78 0.77 0.85 0.85 0.84 0.80 0.81
Malta 1.15 1.17 1.14 1.17 1.16 1.18 1.20 1.20 1.17 1.12
Netherlands 1.46 1.45 1.54 1.61 1.57 1.55 1.56 1.54 1.57 1.60
Poland 1.03 1.04 1.03 1.06 1.00 1.11 1.04 0.84 0.78 0.72
Portugal 1.13 1.11 1.11 1.03 1.07 1.11 1.13 1.16 1.21 1.20
Romania 0.46 0.43 0.38 0.32 0.31 0.43 0.49 0.54 0.52 0.46
Slovakia 0.88 0.91 0.97 0.97 0.96 0.96 0.97 0.96 0.94 0.88
Slovenia 1.06 1.05 1.06 1.00 1.00 0.96 0.99 1.01 1.00 0.99
Sweden 1.55 1.54 1.61 1.69 1.66 1.61 1.57 1.56 1.58 1.61
Source: World Bank. The Worldwide Governance Indicators – WGI. Retrieved from:
http://info.worldbank.org/governance/wgi/index.aspx#home (16.01.2020).

Appendix 2. Political Stability and Absence of Violence/Terrorism

GEO/TIME 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Austria 1.19 1.15 1.19 1.34 1.36 1.27 1.14 0.91 1.05 0.92
Belgium 0.82 0.81 0.95 0.92 0.94 0.70 0.59 0.44 0.43 0.41
Bulgaria 0.35 0.36 0.30 0.38 0.17 0.08 0.02 0.08 0.33 0.42
Cyprus 0.39 0.45 0.61 0.64 0.56 0.55 0.55 0.60 0.54 0.54
Czechia 0.91 0.99 1.11 1.05 1.08 0.99 0.98 0.98 1.00 1.04
Germany 0.86 0.80 0.84 0.78 0.93 0.93 0.70 0.68 0.59 0.60
Denmark 1.00 1.04 1.10 0.91 0.96 0.95 0.90 0.87 0.87 0.96
Spain -0.47 -0.32 0.02 -0.03 0.01 0.24 0.25 0.41 0.28 0.25
Estonia 0.57 0.66 0.61 0.64 0.75 0.78 0.62 0.67 0.65 0.60
Finland 1.46 1.42 1.39 1.40 1.39 1.28 1.04 1.00 1.08 0.92
France 0.51 0.68 0.60 0.55 0.45 0.30 0.11 -0.10 0.28 0.11
United Kingdom 0.12 0.41 0.35 0.40 0.49 0.42 0.52 0.36 0.33 0.05
Greece -0.21 -0.13 -0.10 -0.22 -0.17 -0.14 -0.23 -0.12 -0.07 0.09
Croatia 0.61 0.61 0.62 0.61 0.64 0.62 0.59 0.66 0.69 0.77
Hungary 0.54 0.69 0.74 0.68 0.80 0.67 0.75 0.65 0.81 0.76
Ireland 1.06 1.02 0.95 0.94 0.90 1.05 0.91 0.85 1.00 1.03
Italy 0.35 0.47 0.50 0.51 0.50 0.46 0.38 0.37 0.31 0.31
Lithuania 0.63 0.72 0.67 0.79 0.96 0.74 0.76 0.83 0.78 0.75
Luxembourg 1.45 1.46 1.32 1.33 1.34 1.38 1.44 1.42 1.33 1.37
Latvia 0.35 0.53 0.32 0.45 0.59 0.49 0.44 0.48 0.46 0.42
Malta 1.25 1.25 1.06 1.07 1.04 1.13 1.06 1.08 1.25 1.29
Netherlands 0.94 0.94 1.11 1.19 1.14 1.05 0.93 0.91 0.92 0.87
Poland 0.94 1.02 1.07 1.05 0.97 0.84 0.87 0.51 0.52 0.55
Portugal 0.79 0.72 0.74 0.78 0.75 0.81 0.92 0.97 1.12 1.14
Romania 0.36 0.27 0.19 0.08 0.18 0.05 0.19 0.28 0.06 0.06
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Slovakia 0.92 1.05 0.97 1.09 1.12 1.04 0.87 0.72 0.91 0.75
Slovenia 0.93 0.87 0.97 0.94 0.88 0.97 0.95 0.99 0.87 0.91
Sweden 1.09 1.09 1.23 1.17 1.13 1.07 0.95 1.02 0.98 0.91
Source: World Bank. The Worldwide Governance Indicators – WGI. Retrieved from:
http://info.worldbank.org/governance/wgi/index.aspx#home (16.01.2020).

Appendix 3. Government effectiveness

GEO/TIME 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Austria 1.67 1.84 1.62 1.58 1.59 1.57 1.48 1.51 1.46 1.45
Belgium 1.57 1.58 1.66 1.60 1.61 1.38 1.44 1.33 1.18 1.17
Bulgaria 0.17 0.11 0.11 0.14 0.16 0.08 0.21 0.30 0.26 0.27
Cyprus 1.42 1.53 1.56 1.39 1.37 1.14 1.05 0.96 0.92 0.92
Czechia 0.88 0.91 0.93 0.93 0.89 1.02 1.05 1.04 1.01 0.92
Germany 1.58 1.57 1.55 1.59 1.54 1.73 1.74 1.73 1.72 1.62
Denmark 2.23 2.10 2.10 1.98 1.99 1.82 1.85 1.88 1.80 1.87
Spain 0.95 0.99 1.03 1.12 1.15 1.16 1.17 1.12 1.03 1.00
Estonia 1.01 1.09 1.08 0.95 0.97 1.02 1.07 1.09 1.11 1.19
Finland 2.23 2.23 2.24 2.22 2.17 2.00 1.81 1.83 1.94 1.98
France 1.48 1.43 1.36 1.34 1.48 1.40 1.44 1.41 1.35 1.48
United Kingdom 1.51 1.57 1.56 1.55 1.50 1.63 1.74 1.60 1.41 1.34
Greece 0.62 0.56 0.51 0.32 0.46 0.40 0.26 0.23 0.31 0.34
Croatia 0.60 0.62 0.56 0.71 0.70 0.69 0.51 0.49 0.57 0.46
Hungary 0.67 0.67 0.67 0.63 0.65 0.53 0.50 0.46 0.52 0.49
Ireland 1.34 1.35 1.46 1.55 1.49 1.60 1.53 1.33 1.29 1.42
Italy 0.42 0.44 0.38 0.42 0.46 0.37 0.45 0.53 0.50 0.41
Lithuania 0.69 0.74 0.70 0.83 0.83 0.98 1.18 1.07 0.97 1.07
Luxembourg 1.75 1.72 1.75 1.67 1.63 1.65 1.72 1.69 1.68 1.78
Latvia 0.62 0.71 0.70 0.84 0.89 0.96 1.09 1.01 0.90 1.04
Malta 1.17 1.19 1.20 1.25 1.26 1.03 0.85 0.96 1.00 0.97
Netherlands 1.74 1.73 1.79 1.81 1.78 1.82 1.83 1.83 1.85 1.85
Poland 0.53 0.64 0.62 0.68 0.72 0.83 0.80 0.71 0.64 0.66
Portugal 1.16 1.01 0.95 1.04 1.23 0.99 1.22 1.21 1.33 1.21
Romania -0.36 -0.27 -0.33 -0.31 -0.07 -0.03 -0.06 -0.17 -0.17 -0.25
Slovakia 0.87 0.84 0.83 0.84 0.79 0.88 0.84 0.89 0.80 0.71
Slovenia 1.15 1.03 0.99 1.03 1.01 1.01 0.97 1.13 1.17 1.13
Sweden 2.05 2.00 1.97 1.96 1.91 1.80 1.82 1.77 1.84 1.83
Source: World Bank. The Worldwide Governance Indicators – WGI. Retrieved from:
http://info.worldbank.org/governance/wgi/index.aspx#home (16.01.2020).

Appendix 4. Regulatory Quality

GEO/TIME 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Austria 1.45 1.45 1.38 1.52 1.49 1.49 1.40 1.44 1.44 1.54
Belgium 1.31 1.29 1.24 1.23 1.29 1.16 1.29 1.34 1.24 1.23
Bulgaria 0.67 0.65 0.54 0.56 0.54 0.57 0.56 0.66 0.63 0.58
Cyprus 1.36 1.42 1.24 1.13 0.92 1.10 1.06 1.05 1.03 1.02
Czechia 1.31 1.30 1.20 1.06 1.09 1.01 1.10 0.99 1.23 1.26
Germany 1.52 1.57 1.55 1.54 1.55 1.70 1.72 1.82 1.78 1.75
Denmark 1.88 1.88 1.91 1.81 1.81 1.69 1.73 1.58 1.62 1.68
Spain 1.19 1.16 1.07 0.95 0.94 0.75 0.81 1.01 0.94 0.95
Estonia 1.40 1.39 1.39 1.42 1.45 1.68 1.67 1.70 1.64 1.56
Finland 1.81 1.88 1.82 1.83 1.85 1.88 1.84 1.82 1.82 1.79
France 1.22 1.31 1.16 1.13 1.16 1.08 1.13 1.07 1.16 1.17
United Kingdom 1.58 1.73 1.66 1.65 1.77 1.83 1.85 1.76 1.71 1.76
Greece 0.84 0.64 0.50 0.53 0.63 0.33 0.41 0.15 0.24 0.30
Croatia 0.56 0.57 0.54 0.46 0.46 0.40 0.36 0.36 0.42 0.45
Hungary 1.08 1.02 1.03 0.99 0.91 0.75 0.77 0.60 0.65 0.60
Ireland 1.70 1.62 1.60 1.57 1.58 1.76 1.82 1.74 1.59 1.60
Italy 0.97 0.90 0.72 0.75 0.78 0.64 0.73 0.71 0.70 0.67
Lithuania 0.95 0.96 0.93 1.12 1.15 1.19 1.28 1.14 1.16 1.11
Luxembourg 1.65 1.68 1.87 1.77 1.78 1.63 1.66 1.72 1.69 1.76
Latvia 0.99 0.98 0.96 1.02 1.04 1.17 1.09 1.08 1.15 1.19
Malta 1.37 1.43 1.34 1.33 1.30 1.08 1.17 1.16 1.28 1.34
Netherlands 1.70 1.73 1.81 1.75 1.77 1.77 1.80 1.98 2.05 2.02
Poland 0.95 0.98 0.93 0.96 1.05 1.05 1.00 0.95 0.88 0.88
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Portugal 0.99 0.72 0.63 0.83 0.80 0.75 0.96 0.84 0.91 0.89
Romania 0.60 0.64 0.66 0.55 0.61 0.58 0.60 0.59 0.49 0.45
Slovakia 1.05 1.00 1.00 1.05 0.93 0.89 0.79 0.89 0.82 0.81
Slovenia 0.92 0.76 0.70 0.63 0.63 0.66 0.63 0.64 0.58 0.69
Sweden 1.65 1.66 1.90 1.91 1.91 1.81 1.82 1.85 1.80 1.80
Source: World Bank. The Worldwide Governance Indicators – WGI. Retrieved from:
http://info.worldbank.org/governance/wgi/index.aspx#home (16.01.2020).

Appendix 5. Rule of law

GEO/TIME 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Austria 1.78 1.80 1.80 1.86 1.85 1.95 1.86 1.81 1.81 1.88
Belgium 1.38 1.39 1.42 1.43 1.44 1.52 1.46 1.39 1.34 1.37
Bulgaria -0.04 -0.07 -0.11 -0.09 -0.10 -0.05 -0.10 -0.06 -0.04 -0.03
Cyprus 1.21 1.22 1.07 1.10 1.04 1.08 1.04 0.72 0.88 0.75
Czechia 0.96 0.95 1.04 1.04 1.04 1.15 1.15 1.04 1.12 1.05
Germany 1.66 1.63 1.62 1.66 1.65 1.86 1.79 1.62 1.61 1.63
Denmark 1.92 1.90 1.92 1.87 1.90 2.10 2.04 1.91 1.86 1.83
Spain 1.16 1.19 1.20 1.06 1.02 0.95 0.90 0.98 1.01 0.97
Estonia 1.13 1.16 1.18 1.16 1.20 1.37 1.33 1.23 1.28 1.24
Finland 1.97 1.97 1.95 1.95 1.94 2.10 2.06 2.02 2.03 2.05
France 1.45 1.52 1.45 1.45 1.43 1.47 1.41 1.41 1.44 1.44
UK 1.74 1.76 1.65 1.72 1.71 1.89 1.81 1.69 1.68 1.64
Greece 0.65 0.63 0.57 0.43 0.47 0.36 0.27 0.11 0.08 0.15
Croatia 0.16 0.20 0.22 0.25 0.29 0.32 0.20 0.41 0.33 0.32
Hungary 0.80 0.78 0.76 0.62 0.58 0.50 0.40 0.42 0.53 0.56
Ireland 1.75 1.77 1.76 1.73 1.73 1.78 1.77 1.52 1.43 1.46
Italy 0.40 0.43 0.47 0.40 0.40 0.38 0.28 0.33 0.32 0.25
Lithuania 0.73 0.78 0.77 0.85 0.84 0.94 1.01 1.03 0.99 0.96
Luxembourg 1.83 1.85 1.83 1.80 1.82 1.91 1.87 1.76 1.74 1.81
Latvia 0.81 0.79 0.75 0.79 0.77 0.87 0.79 0.96 0.93 0.96
Malta 1.48 1.42 1.29 1.34 1.33 1.19 1.14 1.00 1.14 1.05
Netherlands 1.81 1.82 1.82 1.86 1.84 1.98 1.94 1.89 1.83 1.82
Poland 0.63 0.68 0.77 0.78 0.82 0.84 0.80 0.64 0.47 0.43
Portugal 1.06 1.06 1.02 1.07 1.06 1.14 1.15 1.10 1.13 1.14
Romania 0.05 0.05 0.06 0.04 0.13 0.17 0.16 0.36 0.39 0.33
Slovakia 0.54 0.57 0.61 0.49 0.48 0.50 0.50 0.65 0.57 0.53
Slovenia 1.08 1.01 1.05 1.01 1.00 1.00 0.97 1.08 1.02 1.06
Sweden 1.97 1.96 1.94 1.95 1.97 1.99 2.04 2.02 1.94 1.90
Source: World Bank. The Worldwide Governance Indicators – WGI. Retrieved from:
http://info.worldbank.org/governance/wgi/index.aspx#home (16.01.2020).

Appendix 6. Control of corruption

GEO/TIME 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Austria 1.70 1.59 1.43 1.39 1.55 1.47 1.52 1.55 1.53 1.60
Belgium 1.46 1.53 1.58 1.61 1.67 1.57 1.57 1.64 1.50 1.51
Bulgaria -0.21 -0.19 -0.22 -0.23 -0.27 -0.25 -0.26 -0.17 -0.16 -0.15
Cyprus 0.91 0.97 0.87 1.25 1.25 1.08 1.01 0.83 0.78 0.64
Czechia 0.39 0.33 0.34 0.27 0.23 0.37 0.43 0.54 0.57 0.50
Germany 1.76 1.78 1.74 1.83 1.81 1.84 1.84 1.84 1.84 1.95
Denmark 2.45 2.36 2.40 2.38 2.40 2.25 2.21 2.23 2.19 2.15
Spain 1.06 1.08 1.10 1.13 0.90 0.63 0.58 0.52 0.49 0.61
Estonia 1.01 1.00 1.05 1.10 1.19 1.30 1.29 1.27 1.24 1.51
Finland 2.25 2.16 2.20 2.24 2.20 2.17 2.28 2.24 2.22 2.21
France 1.44 1.47 1.53 1.46 1.33 1.31 1.31 1.40 1.26 1.32
UK 1.63 1.60 1.62 1.67 1.70 1.74 1.88 1.90 1.84 1.83
Greece 0.07 -0.06 -0.10 -0.19 -0.05 -0.12 -0.08 -0.09 -0.14 -0.07
Croatia -0.05 0.06 0.06 0.01 0.12 0.22 0.25 0.20 0.19 0.13
Hungary 0.43 0.37 0.40 0.36 0.32 0.16 0.15 0.10 0.09 0.05
Ireland 1.76 1.69 1.56 1.46 1.54 1.60 1.62 1.58 1.55 1.55
Italy 0.20 0.13 0.18 0.07 0.05 -0.03 0.02 0.08 0.19 0.24
Lithuania 0.23 0.38 0.33 0.39 0.43 0.56 0.62 0.71 0.55 0.50
Luxembourg 1.97 2.05 2.16 2.12 2.12 2.07 2.10 2.10 1.99 2.09
Latvia 0.23 0.23 0.29 0.25 0.33 0.42 0.47 0.43 0.54 0.33
Malta 0.77 0.79 0.77 0.94 0.98 0.85 0.90 0.72 0.74 0.58
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Netherlands 2.13 2.14 2.12 2.12 2.05 1.99 1.88 1.91 1.87 2.01
Poland 0.45 0.50 0.56 0.66 0.60 0.64 0.67 0.74 0.72 0.64
Portugal 1.09 1.09 1.11 0.96 0.95 0.95 0.96 0.93 0.87 0.85
Romania -0.26 -0.23 -0.21 -0.26 -0.19 -0.11 -0.02 -0.02 -0.03 -0.12
Slovakia 0.27 0.29 0.28 0.10 0.08 0.16 0.18 0.23 0.22 0.36
Slovenia 1.06 0.92 0.95 0.84 0.73 0.73 0.77 0.82 0.81 0.87
Sweden 2.25 2.27 2.20 2.31 2.29 2.15 2.24 2.19 2.14 2.14
Source: World Bank. The Worldwide Governance Indicators – WGI. Retrieved from:
http://info.worldbank.org/governance/wgi/index.aspx#home (16.01.2020).

Appendix 7. GDP per capita (euro)

GEO/TIME 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Austria 34 530 35 390 36 970 37 820 38 210 38 990 39 890 40 880 42 100 43 640
Belgium 32 090 33 330 34 060 34 770 35 210 35 950 36 960 37 980 39 240 40 240
Bulgaria 4 930 5 050 5 610 5 750 5 770 5 940 6 360 6 820 7 390 7 980
Cyprus 23 110 23 400 23 270 22 500 20 880 20 420 21 030 22 160 23 320 24 290
Czechia 14 170 14 900 15 630 15 360 15 010 14 880 15 980 16 690 18 100 19 530
Germany 30 390 31 940 33 550 34 130 34 860 36 150 37 090 38 060 39 260 40 340
Denmark 41 880 43 840 44 500 45 530 46 100 47 090 48 050 49 420 50 700 52 010
Spain 23 060 23 040 22 760 22 050 21 900 22 220 23 220 23 980 24 970 25 730
Estonia 10 640 11 150 12 660 13 620 14 420 15 340 15 820 16 490 18 070 19 740
Finland 34 040 35 080 36 750 37 130 37 570 37 880 38 590 39 580 40 990 42 500
France 29 930 30 690 31 510 31 820 32 080 32 420 33 020 33 430 34 220 34 980
United Kingdom 27 900 29 750 30 220 33 150 32 730 35 760 40 560 37 090 35 780 36 480
Greece 21 390 20 320 18 640 17 310 16 480 16 400 16 380 16 380 16 760 17 220
Croatia 10 460 10 500 10 460 10 290 10 270 10 250 10 600 11 170 11 890 12 620
Hungary 9 420 9 900 10 180 10 050 10 310 10 730 11 400 11 740 12 830 13 690
Ireland 37 470 36 790 37 310 38 090 38 890 41 870 55 970 57 210 61 870 66 670
Italy 26 470 26 930 27 450 26 920 26 590 26 770 27 260 27 970 28 690 29 220
Lithuania 8 520 9 030 10 310 11 160 11 830 12 460 12 850 13 560 14 940 16 160
Luxembourg 74 220 79 160 83 100 83 000 85 270 89 240 91 440 93 930 95 170 98 640
Latvia 8 780 8 500 9 820 10 870 11 350 11 860 12 350 12 800 13 810 15 130
Malta 14 880 15 920 16 420 17 060 17 950 19 570 21 690 22 750 24 190 25 510
Netherlands 37 800 38 470 38 960 38 970 39 300 39 820 40 730 41 590 43 090 44 920
Poland 8 240 9 390 9 870 10 100 10 250 10 680 11 190 11 100 12 160 12 920
Portugal 16 600 16 990 16 680 16 010 16 300 16 640 17 350 18 060 19 020 19 830
Romania 6 150 6 190 6 550 6 640 7 190 7 550 8 090 8 650 9 580 10 510
Slovakia 11 830 12 540 13 190 13 590 13 740 14 070 14 710 14 920 15 540 16 470
Slovenia 17 760 17 750 18 050 17 630 17 700 18 250 18 830 19 550 20 810 22 080
Sweden 33 730 39 920 43 590 45 050 45 850 45 130 46 350 47 000 47 690 46 310
Source: Eurostat: https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=nama_10_pc&lang=en (16.01.2020)
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