Planning and Budgeting

Growth and development of knowledge-based economy is the desired objective for many economies and accomplishing this purpose requires the accurate and comprehensive understanding of the variables involved in this process. The knowledge generated by innovation and technological developments has driven long-term economic development in many countries and many governments have achieved considerable success through the development of Knowledge-based Economy. This paper estimates the impact of good governance indicators on knowledge-based economy development. In this regard, we select 33 countries and try to estimate the impact of components of good governance indicators (voice and accountability, political stability, government effectiveness, regulatory quality, rule of law and control of corruption) on the selected country's knowledge economy using multiple regression. The World Bank statistical databases has been used to collect data and Smart PLS software for estimation and analysis of data. Regression results suggest significant positive impact of good governance as a key variable on the knowledge economy index (KAM) in the selected countries. Furthermore, when we regress the effect of governance sub-indexes, estimated regressions suggest that the effect of the components of rule of law, political stability and control of corruption on the knowledge economy has been stronger compared to other components.