nep-afr New Economics Papers
on Africa
Issue of 2019‒08‒12
four papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Foreign direct investment & petty corruption in Sub-Saharan Africa: An empirical analysis at the local level By Donaubauer, Julian; Kannen, Peter; Steglich, Frauke
  2. The human capital-economic growth nexus in SSA countries: What can strengthen the relationship? By Karambakuwa, Tapuwa; Ncwadi, Ronney; Phiri, Andrew
  3. Price Discrimination in Bribe Payments: Evidence from Informal Cross-Border Trade in West Africa By Sami Bensassi; Joachim Jarreau
  4. Drivers of Cross-Border Banking in Sub-Saharan Africa By Paul Henri Mathieu; Marco Pani; Shiyuan Chen; Rodolfo Maino

  1. By: Donaubauer, Julian; Kannen, Peter; Steglich, Frauke
    Abstract: Inspired by a recent and ongoing debate about whether foreign direct investment (FDI) represents a blessing for or an impediment to economic, social, and political development in FDI host countries this paper addresses two issues: Does the presence of foreign investors impact the occurrence of petty corruption? If so, what are the main underlying mechanisms? Geocoding an original firm-level dataset and combining it with georeferenced household survey data, this is a first attempt to analyze whether the presence of foreign investors is associated with changes in local corruption around foreign-owned production facilities in 19 Sub-Saharan African countries. Applying an estimation strategy that explores the spatial and temporal variation in the data, we find strong and consistent evidence that the presence of foreign firms increases bribery among people living nearby. When examining two potential channels, we find no support that FDI-induced economic activity leads to more corruption. In contrast, the results provide evidence that FDI affects corruption via norm transmission.
    Keywords: FDI,corruption,georeferenced data,Sub-Saharan Africa
    JEL: D1 F21 F23 O12
    Date: 2019
  2. By: Karambakuwa, Tapuwa; Ncwadi, Ronney; Phiri, Andrew
    Abstract: The World Bank has recently placed increasing emphasis on the role of human capital development in facilitating economic development in the Sub-Saharan African (SSA) region. Our study examines the impact of human capital on economic growth for a selected sample of 9 SSA countries between 1980 and 2016 using a panel econometric approach. Interestingly enough, our empirical analysis shows an insignificant effect of human capital on economic growth for our selected sample. These findings remain unchanged even after adding interactive terms to human capital which are representative of government spending as well as foreign direct investment. Nevertheless, we establish a positive and significant effect of the interactive term between urbanization and human capital on economic growth, a result which emphasizes the importance of developing urbanized, ‘smart’, technologically-driven cities within the SSA region as a platform towards strengthening the impact of human capital- economic growth relationship.
    Keywords: Human capital, economic growth; Sub-Saharan Africa (SSA) countries; foreign direct investment (FDI); Government spending; Urbanization
    JEL: C13 C23 C51 J24 O47
    Date: 2019–07–18
  3. By: Sami Bensassi (University of Birmingham); Joachim Jarreau (PSL Université Paris-Dauphine, PSL Research University, IRD, LEDa, DIAL, Paris, France.)
    Abstract: What factors explain the persistence and pervasiveness of corruption in certain parts of the world? In West Africa, many day-to-day transactions require the payment of bribes. Quantitative evidence on these bribes and their determinants is scarce. This paper sheds light on the level and the frequency of bribe payments in informal cross-border trade. It examines how bribes depend on the trade regime and on market structure. We rely on data from a survey of traders in Benin to estimate the determinants of bribe payments. We exploit variations in the trade regime across Benin's borders, as well as changes in trade restrictions over time and variations in route availability across space and time. We nd that reductions in trade barriers help to lower bribes, but do not eliminate them, with bribes remaining frequent in liberalized trade regimes. These results suggest that collusive corruption - used to circumvent regulations and taxes - coexists with coercive corruption, where ocials use their monopoly power to extract transfers from traders.
    Keywords: Informal trade, corruption, trade policy.
    JEL: O17 F14 F15
    Date: 2019–06
  4. By: Paul Henri Mathieu; Marco Pani; Shiyuan Chen; Rodolfo Maino
    Abstract: Using data collected from pan-African banks’ (PABs), balance sheets and other sources (Orbis, Fitch), this study identifies some key patterns of cross-border investment in bank subsidiaries by key banking groups in sub-Saharan Africa (SSA) and discusses some of the determinants of this investment. Using a gravity model relating the annual value of a banking group’s investment in the net equity of its subsidiaries to a set of explanatory variables, the analysis finds that cross-border banking is in part driven by a search for yield, diversification, and expansion for strategic reasons.
    Date: 2019–07–11

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