Does governance and foreign capital inflows affect economic development in oic countries?

The objectives of this study are to verify the impacts of governance and foreign capital inflows on economic growth in 20 countries from organization of islamic cooperation (oic) member state. governance is measured by corruption index and inflation,while,foreign capital inflows consist of foreign direct investment (fdi),workers remittances,external debt and foreign aid. to achieve objectives of the study,probabilistic econometric model based on growth theory and panel data set over the period between 1986 through 2012 are used. the random-effects and fixed-effects models based on the hausman’s test are employed as analytical techniques for parameters estimation. the results reveal that corruption index and inflation have significantly negative impacts on economic growth,indicating the prevalence of weak governance which is detrimental to economic growth. in the same way,the impacts of incoming fdi and remittances found are significantly positive,while,external debt and foreign aid have significantly negative impacts on economic growth. the empirical results of foreign capital inflows indicate that fdi and remittances are benign,whereas,external debt and foreign aid are malignant to economic growth. thus,the empirically findings indubitably vindicated the significance of good governance,and foreign capital inflows in the shapes of fdi and workers remittances in the process of economic growth and development. appropriate policy measures are also discussed. © 2017,statistical economic and social research. all rights reserved.