Happiness in developing countries: can government competitiveness substitute for formal institutions?
| Author | Kee Hoon Chung,Tobin Im |
| Published date | 01 September 2022 |
| Date | 01 September 2022 |
| DOI | http://doi.org/10.1177/00208523211000421 |
| Subject Matter | Articles |
Article
Happiness in developing
countries: can
government
competitiveness
substitute for formal
institutions?
Kee Hoon Chung
Tobin Im
Abstract
Accumulated empirical studies have examined how various qualities of governance
affect happiness across countries. This study contributes to prior studies by testing a
hypothesis that when developing countries lack effective legal and political institutions,
capable government may substitute for their functions to promote happiness via effec-
tive policy planning and implementation. To test this expectation, this study compares
which qualities of governance—government capacity, democracy, and legal system—
matter for happiness in developing countries. While prior studies have overwhelmingly
relied on the World Governance Indicator to measure government capacity, we intro-
duce a new measure—government competitiveness—developed by the Center for
Government Competitiveness, which overcomes some criticisms. Using this indicator,
we employ pooled Ordinary Least Square and two-way fixed effects panel data analysis
for 80 non-Organization for Economic Cooperation and Development countries span-
ning the years 2015–2018. As a robustness test, we conduct instrumental variable
estimation, using geography as an instrument for government competitiveness. Our
analysis shows that government competitiveness has a positive and statistically robust
effect on happiness across all estimations, while quality of democracy and judicial
Corresponding author:
Email: keehoonchung@gmail.com
International Review of Administrative
Sciences
!The Author(s) 2021
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DOI: 10.1177/00208523211000421
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2022, Vol. 88(3) 899–918
International
Review of
Administrative
Sciences
Kee Hoon Chung, 93 Daehak-ro, Social Science Building 15-303, Nam-gu, Ulsan (44610), Korea.
Seoul National University, South Korea
University of Ulsan, South Korea
independence display ambivalent effects. Our instrumental variable results suggest that
judicial independence and quality of democracy display a substituting and complement-
ing relationship with government competitiveness, respectively.
Points for practitioners
This article suggests that institutional arrangements for promoting happiness in devel-
oping countries differ from developed countries. In developing countries: (1) govern-
ment competitiveness may play a more important role than judicial and democratic
institutions; and (2) government competitiveness may complement democratic institu-
tions but substitute for judicial institutions. For developing countries facing resource
constraints, this article recommends policymakers to prioritize fostering competitive
government for promoting happiness.
Keywords
democracy, developing countries, government competitiveness, happiness, judicial inde-
pendence, World Governance Indicator
Introduction
Over the last decade, accumulated empirical studies have examined how various
qualities of governance—government capacity, democracy, and legal system—
affect national happiness. Despite many studies linking governance and happiness,
we identify three interrelated areas that this study may contribute to through fur-
ther empirical investigation. First, numerous empirical studies show that quality of
governance matters for subjective well-being (SWB) but not many show which
dimension of governance matters more so than others. Second, these empirical
studies have mostly focused on developed countries or both developing and devel-
oped countries, with only a small number of studies dedicated to developing coun-
tries. Third, previous studies have overwhelmingly measured quality of
government, one of the indicators of quality of governance, by relying on the
World Governance Indicator (WGI). This is despite the fact that the WGI has
been subject to severe criticisms over recent years, especially with regards to ana-
lyzing developing countries (Andrews, 2010; Ho and Im, 2015; Im and Choi, 2018).
It is in this context that this research aims to contribute to prior studies by
comparing which dimension of governance—government capacity, legal system, or
democracy—matters more for national happiness in developing countries. These
three aspects are indeed the most discussed within the relevant literature but these
studies maintain that when developing countries lack effective legal and political
institutions, the role of government may substitute for their functions (Dixit,
2009). However, not much research has rigorously compared their effects. Thus,
900 International Review of Administrative Sciences 88(3)
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