Investigating the Relationship between Good Governance Index and Government Size with Human Development Index in Iran

The study of the effect of government size and good governance on the index of human development is very important and there are various theories in this regard. In previous studies, the relationship between government size and good governance with the Human Development Index has been examined separately. In this paper, good governance and the size of government are examined together in a model. In this study, we examine the relationship between good governance index and government size with human development index in Iran for the period 1996 to 2016. To measure good governance index, the average of six indicators presented by the World Bank for good governance was used, government expenditure to GDP ratio was used to measure government size, and literacy rate and urbanization rate were used as control variables. The Toda-Yamamoto causality method was used to investigate the causality relationship between the variables, the Johansen-Joselius test was used to obtain long-run coefficients and the ECM was used to obtain short-run correlation. The results of Toda-Yamamoto causality method showed that there is a two-way causality relationship between independent variables of research with human development index and also the results of Johansen-Joselius method showed that the effect of good governance variables, government size, literacy rate and urbanization rate on human development. it's positive.