Introduction: This research aimed to surveying the influence and critical role that good governance might play with regard to the increasing trends in income inequality, numerous rates of unemployment, lack of economic justice in different societies especially within developing countries, and in carrying out government's duties to achieve a better distribution of income. Hitherto, income distribution has been one of the main concerns of the government. Since the income distribution and social justice are, often, alleged to be associated with poverty issues this might have led to some short-term solutions to fix the problems. On the other hand, scholars in the fields of Economists tend to claim that the phenomenon of inequality of income distribution might be shows some sorts of internal resistance and without considering the effective factors short-term solution might have adverse effects on income distribution and economic growth. In order to deal with the problem of unfair income distribution the effective factors should be identified and appropriate policies should be taken to modify income distribution. This shows the income distribution is as important in the society as almost all the economists highlight income distribution as government's critical goal and task. The presence of good governance and equal income distribution is required to reduce poverty. This signifies the need for good governance and with respect to a result of a two-state models (maximum vs. minimum), one may feel the need for such a good governance.
Method: The present research is a case study with an econometric approach aimed to put the social and economic theories in the field. The causal relationships between variables can be analyzed by using figures. As the current study conducted in some countries and data governance have been publishing since 1996, it is limited to the number of years that series econometrics could not be used for them. Econometric methods using panel data were used to estimate the models. Moreover, time series data was used to estimate the 12-year period from 1999 to 2010 via Eviews8 software.
Findings: According to the results of this research, it can be stated that indicators of good governance have a significant negative impact on the Gini coefficient. Paying attention to governance and quality of governance can increase the economists' ability of explaining the empirical facts. As the advanced countries have high indicators of good governance, transition Countries that seek to improve the economic situation, especially the improvet the income distribution in society, should pay attention to this indicator. The findings indicate that improving any component of governance will make positive changes in order to improve income distribution in selected countries in South-Western Asia and the countries of the Organization for Economic Cooperation and Development (OECD).
Discussion: This study examined the impact of the governance to reduce inequalities in two countries of South-Western Asia and countries of the Organization for Economic Cooperation and Development during the period from 1996 to 2010 and by using panel data. Many economists believe the improvement of the governance is a fundamental measure to improve income distribution and social welfare. Regarding the findings of this research the government can use such indicators in the successful countries through the improvement of the governance model of good governance (transparency, effectiveness, political stability and lack of violence and terrorism, government effectiveness indicator index terms, index, rule of law and corruption control index). These indicators lead to reducing the cost trade, increasing investment, production and employment, and contribute to reducing income inequality. Since good governance factor driving economic growth, wealth creation and ultimately increase employment and improve income distribution are required studied countries, especially the countries of South-Western Asia have to pay much attention to them. As this indicators of governance situation is not good in the countries of South-Western Asia, in the end, some suggestions offered to improve the situation in this countries. So that good governance is important to reduce inequalities in the distribution of income and long-term performance. Due to the high level of inequality in developing countries, especially the countries of South West Asia it is suggested that politicians and economic managers in these countries, pay more attention to indicators of good governance and use them in order to reduce inequality.