Belarusian Economic Research and Outreach Center
 Aleh Mazol, Sergey Mazol

Does good corporate governance supports economic development: the role of CG in increasing stock market value, fighting corruption and attracting FDI


We examine the empirical relationship between the quality of corporate governance practices and economic development in an unbalanced panel of 185 countries covering 2010 through 2015. We find that corporate governance is positively associated with the FDI inflow and market capitalization, and negatively associated with the public sector employment in low-income countries. Our results also suggest that corporate governance is negatively correlated with corruption in the high-income countries. Finally, we establish the unidirectional causality running from corporate governance to economic development, and find no evidence of causal effect of economic development on corporate governance. Therefore, our results suggest that the policy makers should in the first place address the institutional transition of the countries including the implementation of best corporate governance practices to accelerate economic development in developing economies.