Governance Quality, Economic Growth and Well-Being: An Empirical Analysis for six Western Balkan Countries

Abstract

The quality of governance plays a crucial role in driving economic growth and enhancing citizens’ well-being, particularly in developing countries. This study examines the relationship between governance quality, economic performance, and social development in six Western Balkan countries from 2010 to 2024. These countries have undergone extensive economic, political and institutional reforms to improve the quality of governance, in align with EU standards. The analysis relies on data from the Worldwide Governance Indicators (WGI), the World Development Indicators (WDI) and the Human Development Index (HDI). Empirical findings reveal a strong and positive correlation between governance quality and both economic growth and well-being. Countries with stronger institutions exhibit more stable growth, higher social outcomes and improved human development. The study highlights that effective governance, characterized by transparency, accountability and the rule of law, is a key driver of sustainable development in transition economies. The findings show that there is a strong and positive relationship between governance quality, economic growth and well-being of citizens for the indicators analyzed in this study.