Philippine e-Journal for Applied Research and Development 14(2024), 64-74 ISSN 2449-3694 (Online) https://pejard.slu.edu.ph/vol.14/2024.12.11.pdf Does Governance Matter in Economic Growth: A Multi-Country Panel Data Analysis Gerry O. Gatawa 1,* and Febra C. Gatawa 2 1 School of Accountancy, Management, Computing and Information Sciences, Saint Louis University, Bonifacio St., Baguio City, Philippines 2 Department of Education, Division of Benguet, Cordillera Administrative Region, Philippines * Corresponding author (gogatawa@slu.edu.ph) Received, 20 August 2024; Accepted, 29 November 2024; Published, 11 December 2024 Copyright @ 2024 G.O. Gatawa and F.C. Gatawa. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. Abstract Several studies have called attention to the effect of governance on countries’ economic growth, using various analytical approaches. However, there is limited understanding of the longitudinal effect of governance dimensions on the economic growth of various countries as well as the effect of governance on the aggregate growth of countries as measured through gross domestic product (GDP) and gross national income (GNI). This study investigated the effect of governance on economic development using 10-year panel data across 177 counties worldwide through the years 2010-2019. A panel data analysis was used to determine the effect of the World Bank’s World Governance Indicators (WGIs) which were summarized into four governance dimensions after considering various tests. The valid estimates were provided by GMM-Difference and GMM-System. The results reveal that the areas of governance such as citizens’ participation, political freedom, quality government, and quality laws and regulations are jointly significant in affecting economic growth. Specific results emphasize the positive effect of citizens’ participation, political freedom, and quality of laws and regulations while also pointing out the diminishing impact of the perceived quality of government on economic growth. Keywords: governance and economic growth, citizen’s participation, governance dimensions, gross domestic product, static and dynamic panel, generalized method moments (GMM), longitudinal data Introduction Several studies have shown the significant effect of governance on countries’ economic growth, using various analytical approaches. A cross-sectional analysis of 215 countries found evidence that the World Governance Indicators (WGIs) can significantly impact economic growth as measured by GDP per capita, poverty, and inequality (Stojanović et al., 2016). A spatial econometric approach that looked into 116 countries claimed that governance plays a crucial and positive role in influencing economic growth (Mahran, 2023). A two-step Generalized Method Moments (GMM) approach in a study on 31 Sub-Saharan countries found out that institutional quality – specifically in areas like investment promotion and democratic and regulatory institutions – had a significant impact on economic growth (Hussen, 2023). Feyisa et al. (2023), in their study covering 34 emerging market countries in Sub-Saharan Africa, found that both the governance dimensions and the governance indexes have a significant positive impact on economic growth. Finally, Misi Lopes et al. (2023) compared the effects of governance quality on future economic growth in emerging markets versus developed countries, using panel