The Non-Linear Relation between Governance and Efficiency: Evidence from Agriculture

Abstract

This study aims to explore the relations between governance and agricultural performance of countries. Data Envelopment Analysis was used to find out agricultural performance of 81 countries at first stage. Panel data regression was employed in the second stage to assess the relations between performance levels of countries and their governance. Six governance indicators namely; voice and accountability, control of corruption, government effectiveness, regulatory quality, rule of law and political stability and violence were analyzed in this stage. Findings show that firstly, governance indicators are highly correlated with each other. Secondly, developed countries are more efficient and have better governance than developing and undeveloped countries. Finally, a quadratic form of regression was the fitting model that is the marginal effects of good governance on performance are increasing in high values of governance.