The Effect of Political Factors on Productivity Components in Selected Developing Countries (Relying on Governmental Institutions)

Abstract

In recent years, the determinants of productivity have gone beyond the mentioned items in growth theories, and the role of political factors in this base has attracted the attention of researchers. In fact, the role and position of political factors in promoting productivity is a reality that cannot be indifferent, and inattention in this regard can cause irreparable damage on productivity component trends. This paper analyzed the effect of political factors indicators (voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law and control of corruption) on productivity components (total factor productivity, labor productivity, and capital productivity) at 15 selected developing countries during 2006 to 2017 with using of panel data econometrics based on dynamic ordinary least squares (DOLS) approach. The variables of foreign direct investment, research and development, degree of economics openness and banking credits were also included as control variables at models. The results indicate that all indicators of political factors have had a positive effect on productivity components. In relation to control variables, we see positive relationships. Therefore, according to the results, it can be acknowledged that, the significant part of productivity growth depends on political factors. Therefore, it seems necessary that the governments of developing societies, while accurately recognizing political structures should pay special attention to the role of components at political factors and establish more political stability, so that they can provide opportunities to improve productivity components as much as possible.

Keywords

• political factors
• governmental institutions
• productivity