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This paper aims to ascertain the effects of convergence in governance on investment decisions among a sample of 43 developing countries, using dynamic system GMM estimations. In an increasingly interdependent economic world, regions with good governance are considered to be areas of higher investment, as a result of further integration and collaborative action among member states. Since its foundation, in 1992, Black Sea Economic Cooperation (BSEC) countries have gone through a transition process and, to a large extent, this is about institutional transformation. Good governance institutions are an assurance to guarantee property rights and minimize transaction costs, thus creating an environment conducive to investment and growth. In this paper, we investigate the impact of BSEC on its member countries regarding convergence of governance institutions. We show that convergence has occurred within the region with respect to bureaucratic quality, control over corruption, law and order, internal conflict, ethnic tensions, but not to government stability and democratic accountability. The paper also calculates how much capital accumulation the region would gain by reaching the average institutional standards of the EU-12. This study is the first attempt in the BSEC region to investigate the link between regionalization and institutional convergence, at the same time as to quantify its economic impact through investment.

This paper addresses the issue of the low level of private investment in the Middle East and North Africa (MENA) region, with special emphasis on the role of governance. Based on the existing literature, we have categorized what types of governance institutions are more detrimental to entrepreneurial investments. We have then estimated a simultaneous model of private investment and governance quality where economic policies concurrently explain both variables. Our empirical results show that governance plays a significant role in private investment decisions. This result is particularly true in the case of "Administrative Quality" in the form of control of corruption, bureaucratic quality, investment-friendly profile of administration, and law and order, as well as for "Political Stability". Evidence in favor of "Public Accountability" seems, however, less robust. Our estimations also stress that structural reforms -- such as financial development and trade openness – and human development affect private investment decisions directly, and/or through their positive impact on governance. These findings bring new empirical evidence on the subject of private investment in the developing world and in MENA countries in particular.

This paper aims to ascertain the effects of convergence in governance on investment decisions among a sample of 43 developing countries, using dynamic system GMM estimations. In an increasingly interdependent economic world, regions with good governance are considered to be areas of higher investment, as a result of further integration and collaborative action among member states. Since its foundation, in 1992, Black Sea Economic Cooperation (BSEC) countries have gone through a transition process and, to a large extent, this is about institutional transformation. Good governance institutions are an assurance to guarantee property rights and minimize transaction costs, thus creating an environment conducive to investment and growth. In this paper, we investigate the impact of BSEC on its member countries regarding convergence of governance institutions. We show that convergence has occurred within the region with respect to bureaucratic quality, control over corruption, law and order, internal conflict, ethnic tensions, but not to government stability and democratic accountability. The paper also calculates how much capital accumulation the region would gain by reaching the average institutional standards of the EU-12. This study is the first attempt in the BSEC region to investigate the link between regionalization and institutional convergence, at the same time as to quantify its economic impact through investment.

This paper addresses the issue of the low level of private investment in the Middle East and North Africa (MENA) region, with special emphasis on the role of governance. Based on the existing literature, we have categorized what types of governance institutions are more detrimental to entrepreneurial investments. We have then estimated a simultaneous model of private investment and governance quality where economic policies concurrently explain both variables. Our empirical results show that governance plays a significant role in private investment decisions. This result is particularly true in the case of "Administrative Quality" in the form of control of corruption, bureaucratic quality, investment-friendly profile of administration, and law and order, as well as for "Political Stability". Evidence in favor of "Public Accountability" seems, however, less robust. Our estimations also stress that structural reforms -- such as financial development and trade openness – and human development affect private investment decisions directly, and/or through their positive impact on governance. These findings bring new empirical evidence on the subject of private investment in the developing world and in MENA countries in particular.

This paper addresses the issue of the low level of private investment in the Middle East and North Africa (MENA) region, with special emphasis on the role of governance. Based on the existing published reports, we categorize what types of governance institutions are more detrimental to entrepreneurial investments. We then estimate a simultaneous model of private investment and governance quality where economic policies concurrently explain both variables. Our empirical results show that governance plays a significant role in private investment decisions. This result is particularly true in the case of "administrative quality" in the form of control of corruption, bureaucratic quality, investment‐friendly profile of administration, law and order, as well as for "political stability." Evidence in favor of "public accountability" is also found. Our estimations also stress that structural reforms like financial development, trade openness, and human development affect private‐investment decisions directly, and/or through their positive effect on governance.