Public Governance efficiency and macroeconomic stability: examining convergence of social and political determinants

Abstract

The purpose of this article is to propose the integrated index of Public Governance efficiency based on the Fishburne’s method, considering the impact’s power and direction of the different sub-indexes (Worldwide Government Indicators) on macroeconomic stability and eliminating the issue of multicollinearity. The object of the study was 11 European countries that had two common features: 1) in the political sphere, during 1990–1992 the countries started the political transformation process by refusing the monopoly of the communistic regime; 2) in the economic sphere, the countries experienced transformation from planned to market economy. Based on these criteria, the following countries were selected: Lithuania, Latvia, Poland, Bulgaria, Croatia, Romania, Armenia, Belorussia, Georgia, Moldova, and Ukraine. The research findings proved a connection between the political and social determinants and the macroeconomic stability for the all the countries. Moreover, the research results confirmed the existence of a cycle of social and political conflict, which depends on inter-relation of Public Governance and the society, where the efficiency of Public Governance cannot be achieved without the support from the society, and the society cannot cooperate with non-effective Public Governance.