[Show abstract][Hide abstract] ABSTRACT: Sub-Sahara African countries have had a checkered past when it comes to good governance and institutions. Increasingly, economists and policy makers are recognizing the importance of governance and institutions for economic growth and development. The New Partnership for Africa’s Development (NEPAD) has four main goals: eradicating poverty, promoting sustainable growth and development, integrating Africa into the world’s economy, and accelerating the empowerment of women. Using fixed and random effects, and Arellano-Bond models, this paper investigates the role of governance in explaining the sub-optimal economic growth performance of African economies. Our results suggest that good governance or lack thereof, contributes to the differences in growth of African countries. Furthermore, our results indicate that the role of governance on economic growth depends on the level of income. In a nutshell, our results demonstrate that without the establishment and maintenance of good governance, achieving the goals of NEPAD will be hampered in Africa.
The Journal of Developing Areas 01/2013; 47(1):91-108.
[Show abstract][Hide abstract] ABSTRACT: The objectives of this article are to revisit the critical role that foreign aid presently plays in the economic growth of
the LDCs and to examine the nature of its utilization in those countries which heavily rely on foreign aid. Other sources
of economic growth such as capital (physical and human capital), raw labor, technological changes, and the degree of political
and civil liberties will also be considered. Using average cross-sectional data for eighty countries over the 1971–1990 period,
the study shows that foreign aid has a statistically positive effect on economic growth in developing countries. Lack of political
and civil liberties is found to have a negative, but statistically marginal impact on economic growth. A policy implication
which may be drawn from the study is that foreign capital inflow can have a beneficial effect by supplementing domestic savings
rather than replacing them.
Studies in Comparative International Development 04/2012; 34(3):37-50. · 0.65 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: In view of the sizable increase in recorded migrant workers’ remittances to developing countries from $70 billion in 2000 to $167 in 2005, this study investigates the long-run relationship between remittances and financial services development (FSD) and control variables including exchange rate (ERS), the size of migrant stock (MSK), the domestic per capita income (DPC) in the receiving country and foreign per capita income (FPC) in the main host country. We use a newly developed panel fully modified OLS (PFMOLS) on annual panel data over the 1985-2007 period for 44 countries consisting of 25 from Africa and 19 from the Americas. It is found that financial development, exchange rate stability, and the size of migrant stock have positive and statistically significant effect on remittances in both regions and in each of the regions. The study has important policy implications for the role of the financial services development through domestic credit expansion by the banking industry as well as increased competition among money transfer operations and exchange rate stability in order to promote the continuation of remittance inflows as a major source of economic growth in Africa and the Americas. The study also shows that there are regional differences in the impact and magnitude of the determinants of remittances.
[Show abstract][Hide abstract] ABSTRACT: This study estimates the macroeconomic impact of remittances and some control variables such as openness of the economy, capital/labor ratio, and economic freedom on the economic growth of African, Asian, and Latin American-Caribbean countries using newly developed panel unit-root tests, cointegration tests, and Panel Fully Modified OLS (PFMOLS). We use annual panel data from 1985-2007for 64 countries consisting of 29 from Africa, 14 from Asia, and 21 from Latin America and the Caribbean region, respectively. We find that remittances, openness of the economy, and capital labor ratio have positive and significant effect on economic growth for all regions as a group and in each of the three in study. While the economic freedom index also has a positive and significant effect on growth in Africa and Latin America, however, its effect on the economic growth of Asia is mixed. Abstract This study estimates the macroeconomic impact of remittances and some control variables such as openness of the economy, capital/labor ratio, and economic freedom on the economic growth of African, Asian, and Latin American-Caribbean countries using newly developed panel unit-root tests, cointegration tests, and Panel Fully Modified OLS (PFMOLS). We use annual panel data from 1985-2007for 64 countries consisting of 29 from Africa, 14 from Asia, and 21 from Latin America and the Caribbean region, respectively. We find that remittances, openness of the economy, and capital labor ratio have positive and significant effect on economic growth for all regions as a group and in each of the three regions of the study. While the economic freedom index also has a positive and significant effect on growth in Africa and Latin America, however, its effect on the economic growth of Asia is mixed.
Journal of Economics and Finance 07/2011; 37(3). · 0.42 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: This essay investigates the effect of education on different lifestyle variables using NLSY79 panels for 1992, 1994, and 1998. The lifestyle variables are smoking, drinking, marijuana use, and cocaine use. The analysis addresses the joint determination of lifestyle variables within the framework of the Seemingly Unrelated Regression (SUR) model. Unobserved heterogeneity is controlled by the robust fixed-effects model extended to SUR model. It is found that educational attainment has no significant effect on the lifestyle choices of individuals.
[Show abstract][Hide abstract] ABSTRACT: The purpose of this study is to estimate a health production function for the 13 East European countries including Belarus, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia and Ukraine. Using panel data from 1997 to 2005 on a diverse array of economic, demographic, environmental, and lifestyles factors as inputs, we analyze a health production function at the macro level in order to determine the most efficient way of allocating limited resources for improving the overall health status of countries in the sample. To control for individual country heterogeneity, we employ panel analytic methods of fixed effects, random effects, and Arellano – Bond estimator. The results indicate that economic growth as measured by GDP per capita growth, investment in human capital formation, and residence in urban areas significantly reduce infant mortality and thus improve the health status of countries in the sample. These findings are useful, not only for serving as background for health care policy decisions, but also for a better understanding of the factors that affect the health condition of the region.
[Show abstract][Hide abstract] ABSTRACT: Location quotient (LQ) is an index frequently used in geography and economics to measure the relative concentration of activities. This quotient is calculated in a variety of ways depending on which group to use as a reference. Here, we focus on simultaneous inference for the ratios of the individual proportions to the overall proportion based on binomial data. Apparently, this is a multiple comparison problem and multiplicity adjusted location quotients have not been addressed up to now. In fact, there is a negative correlation between the comparisons. The quotients can be simultaneously tested against unity and simultaneous confidence intervals can be constructed for the LQs based on existing probability inequalities and by directly using the asymptotic joint distribution of the associated z-statistics. The proposed inferences are appropriate for analysis based on sample surveys. A real data set is used to demonstrate the application of multiplicity adjusted LQs. A simulation study is also carried out to assess the performance of the proposed methods in terms of achieving a nominal coverage probability. It is observed that the coverage of the simple Bonferroni adjusted Fieller intervals for LQs is just as good as the coverage of the method which directly takes the correlations into account.
[Show abstract][Hide abstract] ABSTRACT: Conventional growth theories in the literature explain the poor economic performance of African economies by stressing the inadequacy of savings, human capital, and poor institutional quality. However, the key question is how to enhance savings for the accumulation of both physical and human capital in order to spur growth. A common thread that runs through the existing models is that the dependency ratio, not only remains constant over time, but has no long-run negative impact on economic growth. By relaxing this rigid assumption, this paper constructs a growth estimating equation which accommodates this demographic factor. The analytic results from the modified model suggest that economies with high dependency ratio face their stable equilibrium at lower levels of their income per capita. Moreover, econometric results from analysis of panel data drawn from Sub-Saharan Africa economies suggest that the growth puzzle can be well explained in terms of the demographic factors, especially the level and dynamics of dependency ratio of the region.
Middle Tennessee State University, Department of Economics and Finance, Working Papers. 01/2010;
[Show abstract][Hide abstract] ABSTRACT: Since the 1970’s, countries of the sub-Saharan African region have experienced slow economic growth and development in comparison to other regions of the world. This paper studies the role of perceived financial risk in explaining the anemic economic growth among sub-Saharan African countries by employing regression techniques on panel data for the period of 1984 to 2000. Our findings suggest that higher ratings of a country’s investment environment (used as a proxy for reduced perceived financial risk) tend to make the flow of external funds more accessible to African countries and spur their economic growth.- Negli anni ’70 la crescita economica e lo sviluppo dei paesi dell’area subsahariana sono stati inferiori rispetto al resto del mondo. Tramite applicazioni di regressioni panel data per il periodo 1984-2000, questo studio analizza il ruolo che il rischio finanziario percepito può aver giocato ai fini della divergenza della crescita economica dei paesi dell’Africa sub-sahariana. I risultati suggeriscono che rating più alti attribuiti all’investment environment (utilizzati come indicatori di un minor rischio finanziario percepito) tendono a rendere più accessibili i finanziamenti stranieri ai paesi africani in questione, stimolandone la crescita economica.
Economia Internazionale / International Economics. 01/2010; 63(2):179-192.
[Show abstract][Hide abstract] ABSTRACT: Since the 2001 Doha Round of multilateral trade negotiations, members of the World Trade Organization (WTO) have shown a renewed interest in using a new type of aid known as aid for trade (hereafter to be simply referred as AFT) as a means for catapulting the economic growth performance of developing countries. Japan, U.S., and the United Kingdom account for a significant proportion of AFT outlays being extended to developing countries. Despite the rise in the amount of funding outlays, to date, there is little information as to what determines the allocation of the AFT funds to different countries and the impact of the aid on the economic performance of the recipient developing economies. Using data on U.S. AFT outlays extended to a panel of 54 developing countries during 1999-2005, this study identifies some salient donor and recipient specific factors that influence the propensity and intensity of AFT allocation. Our study indicates that the share of AFT given to a country is greater: the larger is the relative magnitude of the donor's exports to the recipient country, the more vulnerable the recipient country is to external economic shocks, the more politically globalized and landlocked the recipient is, the lower the level of economic freedom enjoyed by the citizens of the recipient country, and the higher the amount of the traditional Non-AFT aid per capita inflow is to the country. On the other hand, both the propensity and intensity of U.S. AFT falls with a rise in the recipient country's ability to serve as a source for U.S. import supply and the more integrated it is with the rest of the world.
[Show abstract][Hide abstract] ABSTRACT: The long-term effects of shocks are examined in the context of a traditional pastoral community. The impacts are empirically examined in connection with the micro-level poverty trap hypothesis and the associated minimum poverty threshold estimates reported in previous studies. We argue that these estimates cannot be taken as definitive and the core explanations behind them are incongruent with the institutional realities of the pastoral community for which they are reported. The reality is that shocks have implied long-term community-wide deprivation with a lasting effect of deterioration in the indigenous capacity to cushion those who slide into permanent destitution. This is evident in the empirically identified increasing loss of confidence in the indigenous social support structures. The findings rather highlight the need for policy interventions to focus on system level community-wide development issues rather than the commonly emphasized individual targeting implied by such exercises as asset-based poverty threshold estimates.
Middle Tennessee State University, Department of Economics and Finance, Working Papers. 01/2009;
[Show abstract][Hide abstract] ABSTRACT: Since the 1970’s, countries of the Sub-Saharan African region have experienced slow economic growth and development in comparison to other regions of the world. This paper studies the role of perceived financial risk in explaining the divergence of economic growth among Sub-Saharan African countries by employing regression techniques on panel data for the period of 1984 to 2000. Our findings suggest that higher ratings of a country’s investment environment (used as a proxy for reduced perceived financial risk) tend to make the flow of external funds more accessible to African countries and spur their economic growth.
[Show abstract][Hide abstract] ABSTRACT: For more than half a century, there have been heated debates on the sources of economic growth in developing economies. The perceived factors of economic growth have ranged from surplus labor to capital investment and technological change, foreign aid, foreign direct investment, investment in human capital, increasing returns from investment in new ideas and research and development. The positive or negative impacts of the above listed traditional sources of economic growth have been well documented in literature. Other researchers have also considered the importance of institutional factors such as the role of political freedom, political instability, voice and accountability on economic growth and development. Despite the increasing importance of remittances in total international capital flows, however, the direct or indirect relationship between remittances and economic growth has not been adequately studied. This study explores the aggregate impact of remittances on economic growth within the conventional neoclassical growth framework using an unbalanced panel data spanning from1980 to 2004 for 37 African countries. We find that remittances boost growth in countries where the financial systems are less developed by providing an alternative way to finance investment and helping overcome liquidity constraints.
[Show abstract][Hide abstract] ABSTRACT: Migration flows are shaped by a complex combination of self-selection and out-selection mechanisms. In this paper, the authors analyze how existing diasporas (the stock of people born in a country and living in another one) affect the size and human-capital structure of current migration flows. The analysis exploits a bilateral data set on international migration by educational attainment from 195 countries to 30 developed countries in 1990 and 2000. Based on simple micro-foundations and controlling for various determinants of migration, the analysis finds that diasporas increase migration flows, lower the average educational level and lead to higher concentration of low-skill migrants. Interestingly, diasporas explain the majority of the variability of migration flows and selection. This suggests that, without changing the generosity of family reunion programs, education-based selection rules are likely to have a moderate impact. The results are highly robust to the econometric techniques, accounting for the large proportion of zeros and endogeneity problems.
Middle Tennessee State University, Department of Economics and Finance, Working Papers. 01/2008;
[Show abstract][Hide abstract] ABSTRACT: This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
Middle Tennessee State University, Department of Economics and Finance, Working Papers. 01/2008;
[Show abstract][Hide abstract] ABSTRACT: Over the decade of the 1990s, Africa has experienced a rise in tourist arrivals from 8.4 million to 10.6 million and receipts growth from $2.3 billion to $3.7 billion, respectively. According to the World Tourism Organization (WTO, 2006), the tourism industry in Sub-Saharan Africa enjoyed a robust annual market share growth rate of 10 percent in 2006. In spite of this, there are only few empirical studies that investigate the contributions of tourism to economic growth and development for African economies. Using a panel data of 42 African countries for the years that span from 1995 to 2004, this study explores the potential contribution of tourism to economic growth and development within the conventional neoclassical framework. The results show that receipts from the tourism industry significantly contribute both to the current level of gross domestic product and the economic growth of Sub-Saharan African countries as do investments in physical and human capital. Our findings imply that African economies could enhance their short-run economic growth by strategically strengthening their tourism industries.
[Show abstract][Hide abstract] ABSTRACT: This paper examines the recently growing adoption of non-pastoral livelihood strategies among the Borana pastoralists in southern Ethiopia. A large portion of the current non-pastoral participation is in petty and natural resource-based activities. Pastoral and crop production functions are estimated using the Cobb-Douglas model to analyse the economic rationale behind the growing pastoralist shift to cultivation and other non-pastoral activities. The low marginal return to labour in traditional pastoralism suggests the existence of surplus labour that can gainfully be transferred to non-pastoral activities. An examination of the pastoralist activity choices reveals that the younger households with literacy and more exposure to the exchange system display a more diversified income portfolio preference. The findings underscore the importance of human capital investment and related support services for improving the pastoralist capacity to manage risk through welfare-enhancing diversified income portfolio adoption.
Journal of Development Studies 02/2007; 43(5):871-889. · 0.79 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: We evaluate the impact of the unilateral trade policy concession known as African Growth and Opportunity Act (AGOA) on U.S. imports from eligible Sub-Saharan African (SSA) countries. Using U.S.-SSA countries’ trade data that span the years 1991-2006, we find that AGOA has contributed to the initiation of new and the intensification of existing U.S. imports in both manufactured and non-manufactured goods and several product categories. However, compared to its import initiation impact, the import intensification effect of the Act has been marginal. Our results have important policy implication for further intensification of African exports to the U.S. markets.
Middle Tennessee State University, Department of Economics and Finance, Working Papers. 01/2007;
[Show abstract][Hide abstract] ABSTRACT: This study provides further evidence of the inflationary efects of the rates of growth of money supply, gross domestic product, efective exchange rate, and imported inflation for Egypt, Morocco, and Tunisia using quarterly data from 1964 to 1990. In addition, it examines the Granger causality between inflation and money supply as well as between inflation and the real exchange rate in the countries under consideration. Most of the results are consistent with extant theory and empirical evidence.