Analysis of the role of financial development and governance quality in industrial growth strategy in selected countries

Document Type : Original Article

Authors

1 PhD student in Financial Economics, Shahid Ashrafi Isfahani University

2 Economics/Isfahan/Shahid Ashrafi University of Esfahani

3 Head of Isfahan Provincial Management and Planning Organization

Abstract

Abstract

Today, industrial development is considered as part of the sustainable development goals. One of the effective factors in the growth strategy is the development of the financial sector. Financial development encourages investment and improves resource allocation. Another important determinant in modeling growth strategies is the quality of governance. Good governance can lead to the optimal allocation of financial resources and strengthen the effect of financial development on the selection of an appropriate growth strategy. Therefore, examining the role of financial development and the quality of governance in determining the policies used in the growth strategy and identifying the factors affecting it is of great importance. In this study, the role of financial development and the quality of governance on the industrial growth strategy in selected resource-oriented, efficiency-oriented and innovation-oriented countries was investigated using panel data and the GMM method over the period 2002-2022. The results show that in resource-oriented and innovation-oriented countries, financial development has a positive effect on growth strategy, but in efficiency-oriented countries, it has no significant effect. Based on the results obtained, the quality of governance in resource-oriented countries has a positive and significant effect on growth strategy, but in efficiency-oriented and innovation-oriented countries it does not have a significant effect on growth strategy. The results also show that the interactive effect of governance quality and financial development on growth strategy in resource-oriented and innovation-oriented countries is negative and significant. So that the lower the level of financial development, the greater the effect of good governance on strategy. The results indicate that in efficiency-oriented countries this indicator does not have a significant effect on growth strategy.

Keywords

Main Subjects

References

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Public Sector Economics Studies
Volume 4, Issue 4 - Serial Number 14
January 2026
Pages 563-594

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History

  • Receive Date: 03 June 2025
  • Revise Date: 28 September 2025
  • Accept Date: 02 October 2025

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