The Role of Good Governance in Economic Development: Evidence from Eastern European Transition Countries

The paper aims to evaluate the impact of main good governance indicators on GDP per capita and FDI in Eastern European Transition Countries. Empirical results confirm that Government Efficiency and Rule of Law have a positive impact on GDP per capita growth while Control of Corruption harms GDP per capita growth, so a reduction in corruption generates GDP per capita growth. The results also show that government efficiency has a positive impact on increasing the flow of foreign investment and that an increase in corruption somewhat reduces FDI flow.