Note(s): Standard errors in brackets; ^*p < 0.10, ^**p < 0.05, ^***p < 0.01

Time dummies included in the production function; CORR (Control of Corruption): reflects perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as capture of the state by elites and private interests (higher values indicate strong governance performance in controlling corruption). It indicates the perceived overall level of corruption specifically referring to the abuse of public power for private gain. GE (Government Effectiveness) reflects perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation and the credibility of the government's commitment to such policies. It is related to the quality of public service provision and the quality of the bureaucracy. PS (Political stability): measures perceptions of the likelihood of political instability and/or politically motivated violence, including terrorism and represents the sustainability of governments. In countries with high political instability there is room for higher corruption and very poor accountability of public spending; RL (Rule of law): reflects perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police and the courts, as well as the likelihood of crime and violence. It is related to what extent an independent judiciary exists as well as civil rights are guaranteed and protected, reflecting whether there are fair judgements for people and organizations. Societies characterized by a high level of weakness in law may have more corruption and abuses in public administration; RQ (Regulatory quality): reflects perceptions of the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development. It measures the incidence of market unfriendly policies such as price controls or inadequate bank supervision, as well as perceptions of the burdens imposed by excessive regulation in areas such as foreign trade and business development. VOICE (Voice and accountability): reflects perceptions of the extent to which a country's citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association and whether media are free. It measures various aspects of the political process such as civil liberties and political rights. It captures the equality of rights of all citizens and the extent to which citizens of a country are able to participate in the selection of governments as well as the independence of the media

Source(s): Authors own creation