Government Effectiveness and Ease of Doing Business: A South African Perspective
Keywords:
DOLS, Ease of Doing Business, Government Effectiveness, South AfricaAbstract
This study examined the long-run relationship between government effectiveness and the ease of doing business in South Africa, political instability, rule of law, and control for corruption were made controlled predictors. Using Transaction Cost Theory and Dynamic Ordinary Least Squares (DOLS), the study finds that government effectiveness and political stability significantly improve business conditions by reducing transaction costs. Conversely, rule of law and corruption control had no significant impact on the ease of doing business in the long term; the study provides unique, South Africa-specific insights, linking governance quality to operational constraints such as access to finance and regulatory burdens. Hence, the study recommends that policymakers should prioritize the improvement of government institutions, reducing political instability, and addressing bureaucratic inefficiencies to enhance a better business climate for SMEs. This research contributes to the literature by offering actionable insights for policy reforms aimed at improving business conditions, particularly in the context of South Africa.
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