ASSESSMENT OF GOOD GOVERNANCE INDICATORS ON THE PERVASIVENESS OF SHADOW ECONOMY: EMPIRICAL INSIGHTS FROM NIGERIA

Abstract

This study focused on the relationship between good governance and the shadow economy in Nigeria from 1996 to 2020. Employing the autoregressive distributed lag modelling approach, the study found that only the regulatory quality index was found to be consistent in taming the size of the shadow economy in Nigeria in both situations. Other indicators, such as the control of corruption, government effectiveness index, political stability index, and perception of the rule of law, had a short-run desirable impact on the shadow economy but portended serious boosters to the prevalence of shadow economic activities in the long run. This points to the prevalence of very weak institutional quality. The Nigerian government should improve more on its legislative quality to consolidate on the gains of regulatory quality. Again, the need for willful desire and action of all Nigerians to build stronger institutions to lay a solid foundation for an enduring system.

Keywords

• economic activities
• good governance
• governance indicators
• shadow economy