Rule of Law and Political Stability in Nigeria’s Governance and Economic Policy

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Updated: Sep 07, 2023
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Institutional qualities are the major determinant of good governance within every aspiring country. Factors such as voice and accountability, regulatory control, control of corruption, government effectiveness, rule of law, and political stability come into play. This study will focus on the rule of law and political stability as proxies for good governance. Good governance of a nation pertains to the management of the public sectors of the economy in terms of accountability, efficiency, and effectiveness, along with the free flow and dissemination of information across the country.

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Elements such as transparency, justice, liberties, and respect for human rights are crucial (United Nations Economic and Social Council, 2006). Poor governance is inherently linked to the rising instability of a nation’s economic, political, and social systems (North, 1990). This study investigates the effectiveness of the Nigerian government in combatting high levels of criminal activities. The assumption is that crime prevention, in terms of protecting property rights and a decrease in criminal activity, is a process of good governance. The empirical studies conducted by Neumayer (2003), Andres and Asongu (2013), Asongu and Oasis (2013), and Habibullah et al (2016) all found a negative relationship between good governance and crime, with rule of law and political stability acting as proxies in the study. Asongu and Oasis (2013) suggest a number of measures for good governance and examine the best methods to reduce the negative impact of crime on economic growth across 38 African countries. Governance indicators used include the rule of law, regulation, government effectiveness, political stability, voice and accountability, corruption control, and democracy. In their cross-sectional analysis, they included additional control variables such as the number of police, the number of working-age individuals in the total labor force, GDP per capita, education level, and population density. Their findings reveal that the features of good governance reduce the negative impact of crime on economic growth, leading to a reduction in crime rates with an increase in good governance. Andres and Asongu (2013) further confirmed that good governance can decrease crime. They investigated the government’s will in battling against software piracy in 11 African countries by including similar governance measures as the Asongu and Oasis (2013) study with an additional variable of press freedom from the period 2000 to 2010. With additional control variables such as population growth, real GDP growth, gross domestic savings, foreign direct investments, and government investments, the results showed that, except for press freedom, all other governance indicators significantly reduce the occurrence of software piracy.
Neumayer (2003) conducted a study to examine whether good political governance and good economic policies decrease the rates of homicide in 117 countries. Measures of good political atmosphere included democracy, respect for human rights, and the absence of the death penalty. Indicators for good economic policies comprised welfare expenditures, economic discrimination of less privileged individuals, and income inequality. The results showed that the abolition of the death penalty, human rights, and democracy reduced the rates of homicide. In a study conducted by Habibullah et al. (2016), they utilized the ARDL model approach to test the long-run cointegration of good governance and crime rates in Malaysia for the period of 1996-2009. The findings reveal that good governance reduces crime rates (both violent and property crime), indicating a negative relationship between crime rates and good governance in Malaysia. For the purpose of this study, we used two measures of governance as indicators of good governance determined by the World Bank (in Kaufman et al., 2008). Some of these were found to be applicable by the above-mentioned studies (rule of law and political stability as a proxy).

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Rule of Law and Political Stability in Nigeria's Governance and Economic Policy. (2019, Feb 08). Retrieved from