Ethical Human Capital and Territorial Governance: An Integrated Model for Institutional Transformation in Madagascar

Purpose – Emerging economies face a dual crisis: institutional fragility and AI-driven labor market disruption. This study investigates how ethical human capital shapes territorial governance and AI readiness in fragile institutional contexts, and introduces the Integrated Educational-Ethical Framework (IEEF), empirically tested in Madagascar. Design – A three-phase mixed-methods design operationalized IEEF through the IMRED-SPRI model across four Malagasy regions (N=1,840; 78 interviews; 16 workshops). Findings – Results show that ethical human capital significantly improves governance outcomes (β1 = 0.42, p < 0.01), generating multiplier effects (+48% participation; +39% accountability). Digital Readiness increases by 63% when embedded in civic foundations, compared to +4% for hardware-only interventions. Contributions – This research provides empirical evidence that civic ethics can be operationalized as a measurable component of human capital influencing governance outcomes and AI readiness. It proposes an integrated framework (IEEF) that jointly models these relationships within a single causal structure, supported by evidence from a mixed- method study in Madagascar.