ANALYZING THE IMPACT OF GOVERNANCE QUALITY ON POVERTY ALLEVIATION IN KENYA: A QUANTITATIVE ASSESSMENT
Abstract
The broad objective of the study was to analyze the impact of governance quality on poverty alleviation in Kenya. The study was informed by Endogenous Growth Theory and the New Growth Theory. The study employed longitudinal research design and made use of time-series data to analyze four indicators which will cover a 25-year period that is from 1996 to 2021. The data on the poverty reduction and governance was sourced from the World Bank official website. The findings indicated that a positive and significant impact of government effectiveness and corruption control on poverty reduction in Kenya. However, voice and accountability had negative and significant impact on poverty reduction in Kenya, while political stability had negative and statistically insignificant impact on poverty reduction in Kenya. Thus, the study concludes that government effectiveness and corruption control are key in fostering poverty reduction. However, voice and accountability had detrimental effect on poverty reduction in Kenya. Therefore, the study recommends that Kenyan policymakers to prioritize and invest in enhancing government effectiveness as a pivotal strategy for fostering poverty reduction. They should prioritize and strengthen initiatives aimed at curbing corruption, fostering transparency, and ensuring a predictable business environment. Policymakers should carefully navigate the challenges associated with accountability measures, recognizing potential short-term costs and addressing cultural and institutional barriers. Strategies to mitigate policy gridlock, foster stakeholder engagement, and ensure a smooth transition are crucial.
Keywords: Governance, Government Effectiveness, Voice and Accountability, Political Stability, Corruption Control, Poverty Reduction.
References
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Adegboyega, R.R. (2017) The Impact of Export and Import on Economic Growth in Nigeria: Evidence from VAR Approach. Journal of Management and Social Sciences, 6, 364-349.
Afonso, G., Giannone, D., La Spada, G., and Williams, J. C. (2022). Scarce, Abundant, or Ample? A Time-Varying Model of the Reserve Demand Curve. Staff Report 1019, Federal Reserve Bank of New York.
Ahmad, S., Nafees, B. and Khan, Z.A. (2012). Determinants of profitability of Pakistani banks, Journal of Business Studies Quarterly, 4 (1), pp. 149-165.
Al Mamun, Md, Kazi Sohag, and M. Kabir Hassan. 2017. Governance, resources and growth. Economic Modelling 63: 238–61.
Alexiou, K & Wiggins, J & Preece, S. (2020). Crowdfunding Acts as a Funding Substitute and a Legitimating Signal for Nonprofit Performing Arts Organizations. Nonprofit and Voluntary Sector Quarterly. 49. 089976402090833. 10.1177/0899764020908338.
Arndt, C., & Oman, C. (2006). Uses and Abuses of Governance Indicators. Paris, France: Development Centre Studies, OECD Publishing. Retrieved 06-20-2010 from http://www.worldbank.org/ieg/governance/oman_arndt_paper.pdf.
Awad, I. M., & Al Karaki, M. S. (2019). The impact of bank lending on Palestine economic growth: An econometric analysis of time series data. Financial Innovation, 5(14), 1–21. https://doi.org/10.1186/s40854-019-0130-8
Azimi, M. N. (2022). Revisiting the governance-growth nexus: Evidence from the world’s largest economies. Cogent Economics & Finance, 10(1), 2043589.
Azimi, M.N., Shafiq, M.M (2020). Hypothesizing directional causality between the governance indicators and economic growth: the case of Afghanistan. Futur Bus J 6, 35 (2020). https://doi.org/10.1186/s43093-020-00039-4
Bayar, A. (2016). Challenges Facing Principals in the First Year at Their Schools. Universal Journal of Educational Research. 4. 192-199. 10.13189/ujer.2016.040124.
Bedane, B. & Alam, M. & Kitenge, E. (2017). Government Effectiveness and Economic Growth. Economics Bulletin. 37. 222-227.
Bichaka F and Christian, N 2010. “Impact of the governance on the economic growth: further evidences for Africa” middle Tennessee State University, department of economics and finance working paper series.
Breusch, T.S. and A.R. Pagan, (1979), A simple test for heteroscedasticity and random coefficient variation, Econometrica 47, 1287- 1294.
Cebula, Richard & Foley, Maggie, 2011. "A Panel Data Study of the Effects of Economic Freedom, Regulatory Quality, and Taxation on the Growth Rate of Per Capita Real GDP," MPRA Paper 54703, University Library of Munich, Germany.
Çela, A. & Hysa, E. (2021). Impact of Political Instability on Economic Growth in CEE Countries. Ekonomika regiona [Economy of region], 17(2), 582-592, https://doi.org/10.17059/ekon.reg.2021-2-16
Chand, R., Singh, R., Patel, A., Jain, D. K., & Read, R. (2020). Export performance, governance, and economic growth: Evidence from Fiji - a small and vulnerable economy. Cogent Economics and Finance, 8(1), 1–16
Cooray, A.; F. Schneider (2014): Does Corruption Promote Emigration? An Empirical Examination. Journal of Population Economics 29, 293-310.
Dixit, A. (2009). Governance Institutions and Economic Activities. American Economic Review, 99 (1), 5-24
Doumbia, D. (2020). The Role of Good Governance in Fostering Pro-Poor and Inclusive Growth. Washington DC: Brookings Institution.
Enofe, A. 0, Egbe, M. E. & America, D. 0. (2016). Internal control mechanism and fraud prevention in the Nigerian public sector: An application of the new fraud diamond theory. Journal of Accounting and Finance Management, 2(16),35-51
Gründler, K. and Niklas P (2019): Corruption and Economic Growth: New Empirical Evidence, ifo Working Paper No.7480.
Hadj Fraj, S., Hamdaoui, M., & Maktouf, S. (2018). Governance and economic growth: The role of the exchange rate regime. International Economics, 156, 326–364
Hall R E., a., & Jones C I., a. (1999). Why Do Some Countries Produce So Much More Output Per Worker Than Others?. The Quarterly Journal Of Economics, (1), 83. Retrieved June 13, 2017 from http://eds.a.ebscohost.com.proxybc.researchport.umd.edu/eds/pdfviewer/pdfviewer?vid=2&sid=5fe4b048-3fc6-4ac2- 8dc8-fa9003c69a46%40sessionmgr4010
Han, Xuehui & Khan, Haider & Zhuang, Juzhong. (2014). Do Governance Indicators Explain Development Performance? A Cross-Country Analysis. SSRN Electronic Journal. 10.2139/ssrn.2558894.
Hashem, E. (2019). The Impact of governance on economic growth and human development during crisis in Middle East and North Africa. International Journal of Economics and Finance, 11(8), 61-79.
Huynh, K. P., & Jacho-Chávez, D. T. (2009). Growth and governance: A nonparametric analysis. Journal of Comparative Economics, 37(1), 121-143.
Kaufmann, D., & Kraay, A. (2002). Governance Indicators: Where are we and Where Should we Go? World Bank Research Observer, 23(1):1-30
Lucas, R. E. Jr. 1988. On the mechanics of economic development, Journal of Monetary Economics 22(1): 3–42. http://dx.doi.org/10.1016/0304-3932(88)90168-7
Mehanna, R., Yazbeck, Y., & Sarieddine, L. (2010). Governance and Economic Development in MENA Countries: Does Oil Affect the Presence of a Virtuous Circle?. Journal of Transnational Management, 15 (2), p. 117-150.
Nguyen, H. C., Nguyen, M. H., Do, B. N., Tran, C. Q., Nguyen, T. T. P., Pham, K. M., et al. (2020). People with suspected COVID-19 symptoms were more likely depressed and had lower health-related quality of life: the potential benefit of health literacy. J. Clin. Med. 9:965. doi: 10.3390/jcm9040965
North, Douglas C. (1981); Structure and Change in Economic History, New York: Norton
North, Douglas C. (1990); Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press.
Ozegbe, A & Kelikume, K. (2022). The Interactive Effects of Corruption and Institutional Quality on Economic Performance. International Journal of Management, Economics and Social Sciences. 11. 10.32327/IJMESS/11.2-3.2022.6.
Paruchuru, M., Mavuri, S., Jyothsna, M. (2020). Challenges for Economic Growth In India – A Critique. Journal of Critical Reviews. ISSN- 2394-5125 Vol 7, Issue 7, 2020. DOI:http://dx.doi.org/10.31838/jcr.07.07.27
Radu, M. (2015). Political stability-a condition for sustainable growth in Romania? Procedia Economics and Finance, 30, 751–757. DOI: https://doi.org/10.1016/S2212–5671(15)01324–6.
Romer, P. M. 1980. Growth based on increasing returns due to specialization, American Economic Review 77: 56–62
Romer, P. M. 1991. The problem of development: a conference of the Institute for the Study of Free Enterprise Systems, Journal of Political Economy 98(1): 1–11.
Rusli, A. M., Syamsu, S., & Ansar, M. C. (2024). The Effects Of Governance And Multidimensional Poverty At The Grassroots Level In Indonesia. Public Policy and Administration, 23(2), 259-273.
Saidi, H., Rachdi, H., & Mgadmi, N. (2017). Revisiting the role of governance and institutions in the impact of fnancial liberalization on economic growth using the PSTR model. Panoeconomicus, 64(3), 315–336.
Schneider, A. (2015) Reflexivity in Sustainability Accounting and Management Transcending the Economic Focus of Corporate Sustainability.
Seldadyo, Harry, Emmanuel Pandu Nugroho, and Jakob De Haan. 2007. Governance and growth revisited. Kyklos 60: 279–90.
Smith, B. (2007). Good Governance and Development. New York, NY: Palgrave Macmillan
Ugur, M. 2014. "Corruption'S Direct Effects On Per-Capita Income Growth: A Meta-Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 472-490, July.
United Nations (UN). (2000). “We Can End Poverty 2015: Millennium Development Goals” New York. Retrieved 06/14/2011 from www.un.org/millenniumgoals/.
Williams, K. (2017). Foreign direct investment, economic growth, and political instability. Journal of economic development, 42(2), 17–37.
Wilson, R. (2016). Does governance cause growth? Evidence from China. World Development, 79, 138–151.
World Bank. (2018). The World Bank Annual Report 2018: Ending Poverty, Investing in Opportunity. Washington, DC: World Bank. © World Bank. https://openknowledge.worldbank.org/handle/10986/32333 License: CC BY-NC-ND 3.0 IGO.”
World Bank. (2020). The World Bank Annual Report 2020: Supporting Countries in Unprecedented Times. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/34406 License: CC BY-NC-ND 3.0 IGO.”
World Bank. 2022a. The Multilateral Investment Guarantee Agency’s Experience with NonHonoring of Sovereign, Sub-Sovereign, and State-Owned Enterprise Financial Obligation Guarantees. Meso-Evaluation. Independent Evaluation Group. Washington, DC: World Bank.
World Bank. 2022b. The International Finance Corporation’s and Multilateral Investment Guarantee Agency’s Support for Private Investment in Fragile and Conflict-Affected Situations, Fiscal Years 2010–21. Independent Evaluation Group. Washington, DC: World Bank.
World Bank. 2022c. Private Participation in Infrastructure (PPI) 2022 Annual Report. Washington, DC: World Bank.
World Bank. 2023. The Big Push for Transformation through Climate and Development – Recommendations of the High-Level Advisory Group on Sustainable and Inclusive Recovery and Growth. Washington, D.C.: World Bank Group.
Zheng Y. (2016). The impact of e-participation on corruption: a cross-country analysis. Int. Rev. Public Adm., 21 (2) p. 1 13, 10.1080/12294659.2016.1186457
Zhuo, Z., Muhammad, B., & Khan, S. (2021). Underlying the relationship between governance and economic growth in developed countries. Journal of the Knowledge Economy, 12(3), 1314-1330.
Acemoglu, D., Johnson, S. and Robinson, J. (2010); “Institution as the Fundamental Cause of Long-Run Growth”, Handbook of Economic Growth, Edited by Philippe Aghion and Steven N. Durlauf, Edition 1, Vol. 1, chapter 7, pages 473-552, Elsevier
Adegboyega, R.R. (2017) The Impact of Export and Import on Economic Growth in Nigeria: Evidence from VAR Approach. Journal of Management and Social Sciences, 6, 364-349.
Afonso, G., Giannone, D., La Spada, G., and Williams, J. C. (2022). Scarce, Abundant, or Ample? A Time-Varying Model of the Reserve Demand Curve. Staff Report 1019, Federal Reserve Bank of New York.
Ahmad, S., Nafees, B. and Khan, Z.A. (2012). Determinants of profitability of Pakistani banks, Journal of Business Studies Quarterly, 4 (1), pp. 149-165.
Al Mamun, Md, Kazi Sohag, and M. Kabir Hassan. 2017. Governance, resources and growth. Economic Modelling 63: 238–61.
Alexiou, K & Wiggins, J & Preece, S. (2020). Crowdfunding Acts as a Funding Substitute and a Legitimating Signal for Nonprofit Performing Arts Organizations. Nonprofit and Voluntary Sector Quarterly. 49. 089976402090833. 10.1177/0899764020908338.
Arndt, C., & Oman, C. (2006). Uses and Abuses of Governance Indicators. Paris, France: Development Centre Studies, OECD Publishing. Retrieved 06-20-2010 from http://www.worldbank.org/ieg/governance/oman_arndt_paper.pdf.
Awad, I. M., & Al Karaki, M. S. (2019). The impact of bank lending on Palestine economic growth: An econometric analysis of time series data. Financial Innovation, 5(14), 1–21. https://doi.org/10.1186/s40854-019-0130-8
Azimi, M. N. (2022). Revisiting the governance-growth nexus: Evidence from the world’s largest economies. Cogent Economics & Finance, 10(1), 2043589.
Azimi, M.N., Shafiq, M.M (2020). Hypothesizing directional causality between the governance indicators and economic growth: the case of Afghanistan. Futur Bus J 6, 35 (2020). https://doi.org/10.1186/s43093-020-00039-4
Bayar, A. (2016). Challenges Facing Principals in the First Year at Their Schools. Universal Journal of Educational Research. 4. 192-199. 10.13189/ujer.2016.040124.
Bedane, B. & Alam, M. & Kitenge, E. (2017). Government Effectiveness and Economic Growth. Economics Bulletin. 37. 222-227.
Bichaka F and Christian, N 2010. “Impact of the governance on the economic growth: further evidences for Africa” middle Tennessee State University, department of economics and finance working paper series.
Breusch, T.S. and A.R. Pagan, (1979), A simple test for heteroscedasticity and random coefficient variation, Econometrica 47, 1287- 1294.
Cebula, Richard & Foley, Maggie, 2011. "A Panel Data Study of the Effects of Economic Freedom, Regulatory Quality, and Taxation on the Growth Rate of Per Capita Real GDP," MPRA Paper 54703, University Library of Munich, Germany.
Çela, A. & Hysa, E. (2021). Impact of Political Instability on Economic Growth in CEE Countries. Ekonomika regiona [Economy of region], 17(2), 582-592, https://doi.org/10.17059/ekon.reg.2021-2-16
Chand, R., Singh, R., Patel, A., Jain, D. K., & Read, R. (2020). Export performance, governance, and economic growth: Evidence from Fiji - a small and vulnerable economy. Cogent Economics and Finance, 8(1), 1–16
Cooray, A.; F. Schneider (2014): Does Corruption Promote Emigration? An Empirical Examination. Journal of Population Economics 29, 293-310.
Dixit, A. (2009). Governance Institutions and Economic Activities. American Economic Review, 99 (1), 5-24
Doumbia, D. (2020). The Role of Good Governance in Fostering Pro-Poor and Inclusive Growth. Washington DC: Brookings Institution.
Enofe, A. 0, Egbe, M. E. & America, D. 0. (2016). Internal control mechanism and fraud prevention in the Nigerian public sector: An application of the new fraud diamond theory. Journal of Accounting and Finance Management, 2(16),35-51
Gründler, K. and Niklas P (2019): Corruption and Economic Growth: New Empirical Evidence, ifo Working Paper No.7480.
Hadj Fraj, S., Hamdaoui, M., & Maktouf, S. (2018). Governance and economic growth: The role of the exchange rate regime. International Economics, 156, 326–364
Hall R E., a., & Jones C I., a. (1999). Why Do Some Countries Produce So Much More Output Per Worker Than Others?. The Quarterly Journal Of Economics, (1), 83. Retrieved June 13, 2017 from http://eds.a.ebscohost.com.proxybc.researchport.umd.edu/eds/pdfviewer/pdfviewer?vid=2&sid=5fe4b048-3fc6-4ac2- 8dc8-fa9003c69a46%40sessionmgr4010
Han, Xuehui & Khan, Haider & Zhuang, Juzhong. (2014). Do Governance Indicators Explain Development Performance? A Cross-Country Analysis. SSRN Electronic Journal. 10.2139/ssrn.2558894.
Hashem, E. (2019). The Impact of governance on economic growth and human development during crisis in Middle East and North Africa. International Journal of Economics and Finance, 11(8), 61-79.
Huynh, K. P., & Jacho-Chávez, D. T. (2009). Growth and governance: A nonparametric analysis. Journal of Comparative Economics, 37(1), 121-143.
Kaufmann, D., & Kraay, A. (2002). Governance Indicators: Where are we and Where Should we Go? World Bank Research Observer, 23(1):1-30
Lucas, R. E. Jr. 1988. On the mechanics of economic development, Journal of Monetary Economics 22(1): 3–42. http://dx.doi.org/10.1016/0304-3932(88)90168-7
Mehanna, R., Yazbeck, Y., & Sarieddine, L. (2010). Governance and Economic Development in MENA Countries: Does Oil Affect the Presence of a Virtuous Circle?. Journal of Transnational Management, 15 (2), p. 117-150.
Nguyen, H. C., Nguyen, M. H., Do, B. N., Tran, C. Q., Nguyen, T. T. P., Pham, K. M., et al. (2020). People with suspected COVID-19 symptoms were more likely depressed and had lower health-related quality of life: the potential benefit of health literacy. J. Clin. Med. 9:965. doi: 10.3390/jcm9040965
North, Douglas C. (1981); Structure and Change in Economic History, New York: Norton
North, Douglas C. (1990); Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press.
Ozegbe, A & Kelikume, K. (2022). The Interactive Effects of Corruption and Institutional Quality on Economic Performance. International Journal of Management, Economics and Social Sciences. 11. 10.32327/IJMESS/11.2-3.2022.6.
Paruchuru, M., Mavuri, S., Jyothsna, M. (2020). Challenges for Economic Growth In India – A Critique. Journal of Critical Reviews. ISSN- 2394-5125 Vol 7, Issue 7, 2020. DOI:http://dx.doi.org/10.31838/jcr.07.07.27
Radu, M. (2015). Political stability-a condition for sustainable growth in Romania? Procedia Economics and Finance, 30, 751–757. DOI: https://doi.org/10.1016/S2212–5671(15)01324–6.
Romer, P. M. 1980. Growth based on increasing returns due to specialization, American Economic Review 77: 56–62
Romer, P. M. 1991. The problem of development: a conference of the Institute for the Study of Free Enterprise Systems, Journal of Political Economy 98(1): 1–11.
Rusli, A. M., Syamsu, S., & Ansar, M. C. (2024). The Effects Of Governance And Multidimensional Poverty At The Grassroots Level In Indonesia. Public Policy and Administration, 23(2), 259-273.
Saidi, H., Rachdi, H., & Mgadmi, N. (2017). Revisiting the role of governance and institutions in the impact of fnancial liberalization on economic growth using the PSTR model. Panoeconomicus, 64(3), 315–336.
Schneider, A. (2015) Reflexivity in Sustainability Accounting and Management Transcending the Economic Focus of Corporate Sustainability.
Seldadyo, Harry, Emmanuel Pandu Nugroho, and Jakob De Haan. 2007. Governance and growth revisited. Kyklos 60: 279–90.
Smith, B. (2007). Good Governance and Development. New York, NY: Palgrave Macmillan
Ugur, M. 2014. "Corruption'S Direct Effects On Per-Capita Income Growth: A Meta-Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 472-490, July.
United Nations (UN). (2000). “We Can End Poverty 2015: Millennium Development Goals” New York. Retrieved 06/14/2011 from www.un.org/millenniumgoals/.
Williams, K. (2017). Foreign direct investment, economic growth, and political instability. Journal of economic development, 42(2), 17–37.
Wilson, R. (2016). Does governance cause growth? Evidence from China. World Development, 79, 138–151.
World Bank. (2018). The World Bank Annual Report 2018: Ending Poverty, Investing in Opportunity. Washington, DC: World Bank. © World Bank. https://openknowledge.worldbank.org/handle/10986/32333 License: CC BY-NC-ND 3.0 IGO.”
World Bank. (2020). The World Bank Annual Report 2020: Supporting Countries in Unprecedented Times. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/34406 License: CC BY-NC-ND 3.0 IGO.”
World Bank. 2022a. The Multilateral Investment Guarantee Agency’s Experience with NonHonoring of Sovereign, Sub-Sovereign, and State-Owned Enterprise Financial Obligation Guarantees. Meso-Evaluation. Independent Evaluation Group. Washington, DC: World Bank.
World Bank. 2022b. The International Finance Corporation’s and Multilateral Investment Guarantee Agency’s Support for Private Investment in Fragile and Conflict-Affected Situations, Fiscal Years 2010–21. Independent Evaluation Group. Washington, DC: World Bank.
World Bank. 2022c. Private Participation in Infrastructure (PPI) 2022 Annual Report. Washington, DC: World Bank.
World Bank. 2023. The Big Push for Transformation through Climate and Development – Recommendations of the High-Level Advisory Group on Sustainable and Inclusive Recovery and Growth. Washington, D.C.: World Bank Group.
Zheng Y. (2016). The impact of e-participation on corruption: a cross-country analysis. Int. Rev. Public Adm., 21 (2) p. 1 13, 10.1080/12294659.2016.1186457
Zhuo, Z., Muhammad, B., & Khan, S. (2021). Underlying the relationship between governance and economic growth in developed countries. Journal of the Knowledge Economy, 12(3), 1314-1330.
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2024-12-31
How to Cite
Karama, F. B. . (2024). ANALYZING THE IMPACT OF GOVERNANCE QUALITY ON POVERTY ALLEVIATION IN KENYA: A QUANTITATIVE ASSESSMENT. African Journal of Emerging Issues, 6(22), 84–102. Retrieved from https://ajoeijournals.org/sys/index.php/ajoei/article/view/739
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