Governance Quality and Economic Growth in the Caribbean in Times of COVID-19

This study uses panel-random effects model to investigate the possible impact of COVID-19 pandemic crisis and six governance indicators on economic growth in the Caribbean. The results reveal the existence of a significant negative relationship between all the indicators of governance and pandemic crisis. In addition, we find that several governance indicators, investment, and human capital act as a strong contributor for increasing output growth in the Caribbean economy, while the impact of the COVID-19 pandemic, inflation, and trade openness are found to be negative. Among the components of governance, voice and accountability, rule of law, political stability and absence of violence, and government effectiveness foster economic growth. Conversely, control of corruption and regulatory quality exert significant negative impact on growth. In general, these results are in conformity with the existing empirical evidence on the relationship between governance and growth. The findings suggest the need for long-term strategies that not only will enhance the quality of governance in these countries, improve the response preparedness of the governments for near future epidemic episodes, accepting the rise of a future pandemic as an inevitability, but also lead to a stable long-term sustainable economic growth. Further, this research may be particularly important for both researchers and policymakers and offers opportunities for future studies on the subject. JEL: F63, O10, C33, C01