USING CLUSTER ANALYSIS TO CLASSIFY SOME ARAB COUNTRIES INTO HOMOGENEOUS GROUPS ACCORDING TO INSTITUTIONAL QUALITY CRITERIA

Abstract

Objective: The objective of this study is to explore the application of cluster analysis in categorizing select Arab countries into cohesive groups based on institutional quality criteria, which consist of six indicators measuring good governance in country. These indicators cover various dimensions and allow describing the quality of services provided by the state in a specific area comprehensively. These dimensions include the scope of state intervention, these dimensions are The Political Dimension, The Economic Dimension and The Legal Dimension.   Method: This study adopts a research methodology that combines both descriptive and quantitative approaches. The descriptive approach is based on presenting concepts and describing relationships among institutional quality criteria. The quantitative approach involves using cluster analysis methods: K-Means clustering and Hierarchical Clustering to classify 11 Arab countries: UAE, Bahrain, Algeria, Egypt, Jordan, Morocco, Qatar, Saudi Arabia, Sudan, Tunisia, and Yemen. This was done to conduct cluster analysis to test the homogeneity of these countries regarding institutional quality determinants, represented by the following variables: Participation and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Legislative Quality, Rule of Law, Control of Corruption.   Results and Discussion: The study reached the following results: - the K-Means Cluster Analysis Method is evident that The total number of cases classified in each cluster: Eleven countries were classified into seven countries: United Arab Emirates, Bahrain, Jordan, Morocco, Qatar, Saudi Arabia, and Tunisia in the first cluster and four countries in the second cluster: Algeria, Egypt, Sudan, and Yemen; -the variable Participation and Accountability does not significantly affect the classification of the Arab countries under study into homogeneous groups according to institutional quality indicators. However, variables such as Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Legislative Quality, Rule of Law, and Control of Corruption play a significant role in this classification; - the Hierarchical Clustering Analysis Method is evident that the Arab countries under   study are distributed into two homogeneous groups. The first group forms Cluster 1, consisting of Jordan, Morocco, Tunisia, Bahrain, Saudi Arabia, Algeria, Egypt, the UAE, and Qatar. The second group belongs to Cluster 2, comprising Sudan and Yemen. This classification is based on institutional quality criteria.   Originality/Value: This study sheds light on the importance of cluster analysis methods: the K-Means Cluster Analysis Method and the hierarchical cluster analysis method in classifying Arab countries according to the determinants of institutional quality, which are considered a determining factor for the economic growth of countries, and its consequent impact on various indicators reflecting economic, social, and political conditions. Consequently, institutional quality has emerged as a pivotal measure in highlighting developmental disparities among different countries. Many governments are endeavoring to create or adopt models to enhance the quality of their institutions, notwithstanding the similarities among Arab countries.