The study assessed the administrative regions of the EU Member States using data collected by the Quality of Government Institute at the University of Gothenburg. The institute measures dozens of variables that influence the quality of governance for almost 200 countries. Regional indicators are also available for the 27 EU Member States between 2010 and 2024, allowing for a more detailed analysis.
This detailed data allows improvements in the quality of regional governance and its interaction with regional growth and well-being to be assessed. We know that parts of Italy are more corrupt than others (no offense to my Italian readers). But corruption has decreased in these regions. Has that decline in corruption led to greater prosperity?
In short, the answer is yes. The graph below shows the change in GDP per capita in the four years following a one-point improvement in the quality of governance indicator for the region (the indicator can range from -3 to +3). An improvement of one point leads to an increase in GDP per capita of 3.8% on average within four years. But as you can see, the impact for poorer regions, which tend to suffer from poorer governance to begin with, is even greater: 6.1%.
Impact of a one-point increase in the quality of governance on GDP per capita
Source: Filip and Setzer (2025)
Furthermore, the authors attempted to estimate the likelihood of an economic crisis based on the quality of governance in a region. The graph at the bottom shows the probability of a region experiencing a sharp decline in GDP per capita, i.e. in the 10% worst declines ever measured as a function of the quality of governance. Such a sharp decline in GDP per capita is very unlikely (around 2.5%) in regions with strong governance, but increases to almost 20% for the worst governed regions.
Probability of a sharp decline in GDP per capita at different levels of government
Source: Filip and Setzer (2025)
#Governance #important