Open AccessAn assessment of the interrelations between country risk, economic growth and good governance: The case of the Visegrád four
Author(s) -
Daniel Meyer
Publication year - 2021
Publication title -
journal of eastern european and central asian research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.223
H-Index - 5
eISSN - 2328-8280
pISSN - 2328-8272
DOI - 10.15549/jeecar.v8i4.810
Subject(s) - index (typography) , corporate governance , good governance , country risk , estimation , panel data , economics , investment (military) , causality (physics) , granger causality , economic risk , risk governance , development economics , business , international economics , politics , macroeconomics , econometrics , finance , financial economics , political science , physics , management , quantum mechanics , world wide web , computer science , law
nvestors assess the environment and the level of risk before they invest in a specific region or country. Several country risk indexes have been developed since the beginning of the 1990s, using risk factors such as politics, the economy and sovereign risk factors. This study aims to determine the relationships between the country risk index, economic performance and good governance. The study implemented a quantitative research methodology with panel data, focusing on the four Visegrad countries, using time-series data from 1996 to 2019. The results indicate both long- and short-run relationships. Both GDP and good governance significantly impact the country risk index with coefficients of between 0.17 to 0.31 and 0.02 to 0.15 according to different estimation models. The Granger causality results indicated that both GDP and good governance cause changes in the country risk indexes of the countries, and good governance causes increased economic performance. In conclusion, the study showed clear evidence that a lower country risk index is important to attract investment and sustained economic growth and good governance is critical in this process.