Abstract
This research investigates the influence of variations in governance quality on economic growth in Asia-Pacific nations. The study underscores that crises, despite their disruptive nature, can act as accelerators for policy enhancement and institutional fortification. To examine this, the analysis considers crisis times as a quasi-natural experiment and uses a difference-in-differences design, facilitating causal inference by analyzing variations in the variable of interest while keeping other pertinent components relatively stable. Panel data methods are applied to data from 1996 to 2006 across several countries, using pooled OLS, fixed effects, random effects, and a difference-in-differences framework to assess the causal effects. The findings suggest that not all governance indicators significantly influence real GDP growth. Instead, two macroeconomic variables, inflation and the previous year's growth, are identified as primary determinants, with a one-point increase in inflation correlating with a 0.315-point decrease in economic growth, statistically significant at the 1 percent level. The study also shows how financial crises may be disruptive, slowing economic growth during crisis years and creating volatility in post-crisis periods. Practical implications of these results indicate that policymakers and stakeholders must emphasize strengthening governance frameworks and maintaining stable inflation rates to foster long-term economic stability and sustainable growth while promoting institutional resilience.