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on Africa |
| By: | Simplice Asongu (Yaoundé/Cameroun); Enowbi Batuo (University of Westminster); Vanessa Tchamyou (Yaoundé/Cameroon) |
| Abstract: | Purpose – The study extends the debate on finance versus institutions in the promotion of investment documented by Acemoglu and Johnson (2005), Ali (2013) and Asongu (2014). We assess the effects of various components of governance on private investment, notably: political, economic and institutional governances. Financial indicators of depth, allocation efficiency, activity and size are used. Design/methodology/approach – An endogeneity robust dynamic system GMM estimation technique is employed. Principal component analysis is also employed to reduce the dimensions of governance variables. The empirical evidence is based on 53 African countries for the period 1996-2010. Findings – The findings provide support for the quality of governance as a better determinant of private investment than financial intermediary development. Moreover, the evidence of finance and governance as substitutes in their impact on investment implies that good governance fuels private investment and this positive impact is stronger in nations with less developed financial systems. This finding is consistent with Ali (2013) and contrary to the results of Asongu (2014c). Practical implication – Policy measures for fighting involuntary and voluntary surplus liquidities are discussed. The paper provides additional support for the need of strengthening governance institutions to promote investment on the one hand and fighting financial allocation inefficiency by mitigating surplus liquidity issues on the other hand. Originality/value – The paper extends the debate on the substitution of finance and institutions in the promotion of private investment. |
| Keywords: | Finance; Institutions; Investment: Property Rights; Africa |
| JEL: | G20 G24 E02 P14 O55 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:15/051&r=afr |
| By: | Habiyaremye, Alexis (Department of Economics, Antalya International University) |
| Abstract: | Over the past decade, trade between China and Africa has rapidly expanded and has led to strong growth rates in Africa mainly buoyed by natural resource export. The boom in trade has partly been made possible by the use of resource-for-infrastructure swap agreements (the so-called "Angola-mode deals"), in which Chinese companies finance and build infrastructure in Africa in exchange for access to natural resources. The concomitant increase in resource export to China has however raised serious concerns that these trade arrangements may reinforce Africa's resource dependence rather than reduce it. In this article we use a dynamic panel data model to examine whether the Angola-mode deals have reinforced resource dependence and impeded export diversification in African countries. Our results indicate that by helping African countries reduce existing infrastructure bottlenecks, resources-for-infrastructure swap deals enabled them to increase their diversification capacity. |
| Keywords: | Africa, China, trade, resource export, resource dependence, Angola-mode, infrastructure, natural resources, export diversification |
| JEL: | F40 O13 O33 O55 Q32 |
| Date: | 2015–11–23 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2015046&r=afr |
| By: | Rasul, Imran; Rogger, Daniel |
| Abstract: | We study how the management practices bureaucrats operate under correlate to the quantity of public services delivered, using data from the Nigerian Civil Service. We have hand-coded independent engineering assessments of 4700 project completion rates. We supplement this with a management survey in the bureaucracies responsible for these projects, building on Bloom and Van Reenen [2007]. Management practices matter: increasing bureaucrats' autonomy is positively associated with completion rates, yet practices related to incentives/monitoring of bureaucrats are negatively associated with completion rates. Our evidence provides new insights on the importance of management in public bureaucracies in a developing country setting. |
| Keywords: | bureaucracy; management |
| JEL: | J33 O20 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11078&r=afr |
| By: | Nava Ashraf; Edward L. Glaeser; Giacomo A.M. Ponzetto |
| Abstract: | Cities generate negative, as well as positive, externalities; addressing those externalities requires both infrastructure and institutions. Providing clean water and removing refuse requires water and sewer pipes, but the urban poor are often unwilling to pay for the costs of that piping. Standard welfare economics teaches us that either subsidies or Pigouvian fines can solve that problem, but both solution are problematic when institutions are weak. Subsidies lead to waste and corruption; fines lead to extortion of the innocent. Zambia has attempted to solve its problem with subsidies alone, but the subsidies have been too small to solve the “last-mile problem” and so most poor households remain unconnected to the water and sewer system. In nineteenth-century New York, subsidies also proved insufficient and were largely replaced by a penalty-based system. We present a model that illustrates the complementarity between infrastructure and institutions and provides conditions for whether fines, subsidies or a combination of both are the optimal response. One point of the model is that the optimal fine is often not a draconian penalty, but a mild charge that is small enough to avoid extortion. |
| Keywords: | public health, infrastructure, institutions, subsidies, fines, last-mile problem |
| JEL: | O18 R53 O21 H41 I18 N91 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:873&r=afr |
| By: | Simplice Asongu (Yaoundé/Cameroun); Vanessa Tchamyou (Yaoundé/Cameroun) |
| Abstract: | The study assesses the role of globalization-fuelled regionalization policies on financial allocation efficiency in four economic and monetary regions in Africa for the period 1980 to 2008. Banking system and financial system efficiencies are used as dependent variables whereas seven bundled and unbundled globalization variables are employed as independent indicators. The bundling exercise is achieved by means of principal component analysis while the empirical evidence is based on interactive Fixed Effects regressions. The following findings are established. First, financial allocation efficiency is more sensitive to financial openness compared to trade openness and most sensitive to globalization. The relationship between allocation efficiency and globalization-fuelled regionalization policies is: (i) Kuznets or inverted U-shape in the UEMOA and CEMAC zones (evidence of decreasing returns to allocation efficiency from globalization-fuelled regionalization) and (ii) U-shape overwhelmingly in the COMESA and scantily in the EAC (increasing returns to allocation efficiency from globalization-fuelled regionalization). Established shapes are relevant to specific globalization dynamics within regions. ‘Economic and monetary’ regions are more prone to surplus liquidity than purely economic regions. Policy implications and measures of fighting surplus liquidity are discussed. |
| Keywords: | Globalization; Financial Development; Regional Integration; Panel; Africa |
| JEL: | A10 D60 E40 O10 P50 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:15/053&r=afr |
| By: | AfDB AfDB |
| Date: | 2015–11–26 |
| URL: | http://d.repec.org/n?u=RePEc:adb:adbwps:2321&r=afr |