The Impact of Government Structure on Economic Development: Cross-Country Evidence from Multilevel Regression Analysis and Structural Equation Modelling

Abstract

The impact of government structures on economic development was investigated across twenty diverse nations using multilevel regression analysis and structural equation modelling. The findings revealed that countries with presidential government structures tend to have a $5000 higher GDP per capita (p=0.002) compared to parliamentary or one-party systems. A one-percentage-point increase in education expenditure was associated with a $1200 increase in GDP per capita (p<0.001), while a one-year increase in life expectancy corresponded to a $300 increase (p=0.004). Foreign direct investment inflows showed a positive relationship, with a one-percentage-point increase associated with an $1800 increase in GDP per capita (p<0.001). The study also identified the moderating roles of corruption perception and income inequality, with a one-unit increase in the Corruption Perception Index associated with a $500 decrease in GDP per capita (p=0.048) and a one-unit increase in the Gini coefficient linked to a $1500 decrease (p=0.003). This research sheds light on the complex interplay between institutional arrangements and economic prosperity, generating valuable insights to inform context-specific policymaking and sustainable development strategies worldwide.