The effects of economic development and the evolution of social institutions on the level of corruption: comparing the Asia-Pacific with other regional blocs

ABSTRACT

The variation in the level of economic development across countries has been proposed as an explanation for the disparity in the level of corruption that is observed. As a country evolves from one stage of economic development to another and its social institutions as a result become more refined and sophisticated, their capacity to tackle corruption and poor governance practices becomes increasingly better. Improvements in the overall quality of institutions, including better policing and justice systems, increase their capacity to detect and deter corruption. This evolution of institutional quality improves social and economic well-being of society, which in turn pressures regulators, legislators and politicians to continue in the fight against corruption. The objective of this paper is to examine how economic development mediated by improvements in the quality of social institutions impacts on the level of corruption. Lessons from worldwide trends, including the Asia-Pacific region, provide opportunities for countries to enact strategic measures that can accelerate the fight against corruption.     

Distance Education

ABSTRACT

This article examines management of accountancy education in Zambia and Zimbabwe, two countries in Sub-Saharan Africa. Both programs are collaborative efforts to manage the link between the accounting profession, governments of emerging economies and in-country postgraduate training facilities. Both programs are designed to promote the study of accounting at a level recognized by the international accountancy profession.

The programs are being developed in the context of World Bank research, which confirms linkage between economic growth and an appropriately trained accounting profession, and recognizes the need for economic growth in Sub-Saharan Africa.

Six principal program characteristics are examined: the challenge facing the accountancy profession in Sub-Saharan Africa; funding sources; details of the programs; delivery of the programs; program costs, and graduation outcomes. This article reports on the struggle faced by the accounting profession in emerging economies to make the managers of the global accountancy profession, donor agencies, and multinational commercial enterprises aware of this aspect of the developing SSA market.     

Tobacco Business and Regulation in the Developing Markets

Abstract

This paper compares BAT's business environment in Kenya and Uganda in light of the World Health Organization's (WHO) tobacco control initiative. It also illustrates the use of tobacco tax by Sub-Saharan African countries to address tobacco related conundrums. The comparison revealed elements of government ambivalence towards tobacco business and a possible recourse to tobacco tax to mollify global pressure against big tobacco. The paper uses the partial correlations between tobacco tax and basic economic development indicators across Sub-Saharan Africa and previous World Bank data as indicative of tobacco tax efficacy in controlling consumption in the region. It suggests that Sub-Saharan Africa may find regionally designed tax-based policy guidelines a palatable strategic alternative to global firms (such as BAT) that face a hostile global business environment. A united policy front that fits within the region's institutions can reduce complexity and create efficiencies through lower administrative costs across the region. Such action will make the region relatively more attractive (than it is currently) to foreign investors.     

State of corruption in transition: case of the Czech Republic

Corruption has a negative impact on society and economy. The transition process in Central and Eastern Europe (CEE) uncovered dormant possibilities for corruption and the necessity for appropriate steps to be taken. We document on the state of corruption in the Czech Republic and the measures introduced to fight it. We cover sectors of society and economy according to their importance of a consequential corruption hazard. We also described the government's program of anticorruption and its achievements and failures. The state of corruption in the country, measured by the Corruption Perception Index, presents a serious problem since the index does not improve as the transition process advances. Numerous comparative studies, however, suggest that corruption is a more prominent feature in a number of other transition countries. We believe that the substantial change of approach to the institutional framework is necessary in order to prevent and fight corruption successfully.     

Regulating Supply Side Corruption

Abstract

Doing corruption-free business in developing countries is not easy. Government officials and politicians in developing countries demand monetary gains from multinational companies interested in seeking business deals in their nations. Multinational firms are willing to oblige them since they need the business in developing countries. Such unsavory business practices are extremely difficult to change. However, today more and more countries are concerned about corruption and are trying to combat it. Sociologists, political scientists, and economists have advanced various methods to combat corruption. Mainly, these methods are geared toward reducing the demand for corrupt practices. This paper using the case of the Republic of Kazakhstan suggests controlling the supply of corruption.     

Depth versus Breadth Strategies for Global Brand Image Management

Abstract

Developing and maintaining a brand image is vital to any successful marketing and communication campaign. An image that clearly communicates the needs satisfied by the brand contributes to brand equity and helps combat brand parity. The normative model of brand image management suggests that marketers should base their images on a single set of consumer needs (depth strategy), rather than multiple sets of needs (breadth strategy). The extent to which depth strategies outperformed breadth strategies (in terms of annual change in sales volume, profit margin, and market share) was investigated for U.S. consumer goods exported into international markets. These markets varied in terms of level of economic development, cultural context, and competition. While the results indicate that depth strategies do tend to perform best, there are conditions under which breadth strategies perform just as well.     

Influencing MNC strategies for managing corruption and favouritism in Pacific Asia countries: a multiple-theory configurational perspective

ABSTRACT

The research gap addressed here concerns how to encourage multinational corporations (MNCs) to combat corruption and favouritism. This study’s rationale is that MNCs can have a highly influential role in supporting or opposing such practices globally. The study examines how MNCs might choose flexibly among alternative strategies but could be encouraged positively. Three illustrative strategies are described in detail using theoretical propositions: (1) anti-corruption reform; (2) ‘tightrope’ balancing; and (3) tolerance for corrupt practices. A proposed multiple-theory configurational perspective is consistent with secondary data and reported cases about domestic corruption and MNC propensity to bribe focused on Pacific Asia countries.     

The African Growth and Opportunity Act (AGOA) and export diversification

This paper explores the effect of the African Growth and Opportunity Act (AGOA) on export diversification in Sub-Saharan Africa. The existing empirical studies suggest that AGOA has had a positive effect on the overall volume of trade between Sub-Saharan Africa and the United States. However, the economic development literature emphasizes the importance of export diversification for developing countries; therefore, it is important to understand the effects of AGOA on the extensive margin of trade (i.e. the number of distinct products a country exports). Our empirical results suggest that AGOA does contribute to export diversification, specifically through its apparel provision. Countries that are eligible for the AGOA apparel provision export not only more apparel products, but also more non-apparel products to the USA. Thus, AGOA contributes to export diversification at the extensive margin of trade with the USA.     

Corporate Social Responsibility and Business Value of Multinational Companies: Lessons from a Sub-Saharan African Environment

ABSTRACT

The issue of corporate social responsibility (CSR) as an approach for businesses to independently take actions that lead to better levels of societal development as well as higher value creation for the business, particularly in developing countries has gained much advocacy. Thus, the purpose of this study is to examine the relationship between CSR and business value of multinational companies (MNCs) in sub-Saharan Africa. The study adopted quantitative research methodology and using multiple regression analysis, findings show that CSR can positively and significantly predict business values in the multinational subsidiaries. These values include direct (economic value) and indirect (human capital value and reputational business value). This paper therefore contributes to a novel CSR index from the perspective of business value and sustainability of MNCs in the Sub-Saharan Africa (SSA) environment. Thus, the paper recommends MNCs operating in Africa to enhance their social investment through their CSR strategy with the aim that CSR must not be regarded as a cost center, but an investment instrument that can accrue various dividends.     

In search of an institutional framework for anticorruption: Lessons from Scandinavia

Scandinavian countries continue to build strong reputations as the world's least corrupt countries. In this case study, in a search for an institutional framework that other countries and policy makers can learn from, we explore sources of high transparency and anticorruption norms in Scandinavia. The most important lesson from this study is that legislative, normative, and cultural institutional pillars must be aligned to achieve the highest level of transparency and anticorruption. We made three main observations. First, adequate and comprehensive legislation in addition to severe noncompliance consequences contribute to an ethical business environment in Scandinavian countries. Second, a willingness to embrace integrity norms and standards through active participation in international conventions and agreements on anticorruption movements contributing to high transparency and integrity management in the Scandinavian countries. Third, a national culture that emphasizes high governmental and civic trust makes bribery and corruption less sustainable. Residents' high level of trust in public officials and police in addition to high civil and media engagement in antibribery cases results in corruption being “starved of oxygen”. The findings suggest high trust levels, enforced regulative legislation, small country size, and high human development help craft a framework that drives a transparent business environment.     

Population Health and Economic Growth in Sub-Saharan Africa: A Panel Cointegration Analysis

The article investigates the extent to which the health of the population affects the economic performance using panel data for 30 Sub-Saharan African countries for the period 1970–2010. Using a theoretical model based on an augmented Solow growth model, the authors estimate the relationship between population health capital and economic growth in Sub-Saharan Africa using panel cointegration econometric strategy. They find that the health status of the population has not significantly driven economic performance. Accounting for the effect of HIV/AIDS, however, resulted in a significant negative effect of population health on economic growth. Furthermore, the obverse seems rather plausibly the case, as economic growth significantly increases life expectancy in the region.     

Exports and economic growth in Sub-Saharan Africa: New insights from innovative econometric methods

This study examined the relationship between exports and economic growth in Sub-Saharan Africa. It employed innovative econometric methods, including the Fourier ADF with structural break test, a comparative analysis of three causality tests and a rolling causality test procedure. The findings suggested that there was a statistically significant relationship between exports and economic growth in several Sub-Saharan countries. However, the causal linkages between exports and economic growth in these countries were found to be weak and unstable. These empirical results have some notable policy implications.     

Corruption and FDI: Does the Use of Distinct Proxies for Corruption Matter?

Abstract

The relationship between FDI and corruption/institutional quality in host countries has been widely analyzed. However, the use of distinct samples and indicators for corruption tends to hinder the interpretation and outcomes of econometric assessments. The aims of this paper are to assess the extent to which the use of distinct proxies for corruption provides diverse evidence regarding the relationship between corruption and FDI, and to assess whether controlling for other indicators of institutional quality reinforces the effect of corruption indicators on FDI inflows. In order to accomplish these goals, we estimate a set of multivariate logistic models using 96 countries over the period 2000 to 2010. The results evidence that using distinct proxies for corruption variables, as well as controlling for other types of the countries’ institutional quality, generate distinct outcomes. In isolation, a country’s transparency and its citizens’ corruption perceptions fail to impact on FDI whereas a bribe-free environment is conducive to FDI inflows. When we control for the human, social and economic development of the countries, the impact of a transparent and bribe-free context on FDI attraction is enhanced. Overall, it is clear that in order to become a large recipient of FDI a country has to guarantee a transparent and bribe-free environment, characterized by low income taxes, high literacy rates and generalized economic freedom (own labor and property control by citizens).     

Credit risk and bank competition in Sub-Saharan Africa

This paper investigates the relationship between bank competition and stability in Sub-Saharan Africa. Using financial statements on 221 banks from 33 countries over the period 2000–15, we provide evidence for a U-shaped relationship between bank competition and credit risk. Up to a certain threshold, higher levels of bank competition are associated with lower credit risk. Above this threshold, more competition increases credit risks as the positive effects of competition are outweighed by the adverse effects of rising competition. The optimal threshold appears to be higher for African banks compared to banks from developed countries. We also find that credit risk in Sub-Saharan Africa is not only related to macroeconomic determinants, such as growth, public debt, economic concentration and financial development, but also to the business and regulatory environment. In particular, bank risks appear to be lower in countries where credit registry coverage is higher and the tenure of supervisors is shorter.     

Investment Flows,Economic Growth,and Corruption in African Countries: An Analysis

ABSTRACT

The analysis of corruption in international business is a relatively new phenomenon, and for the past two decades, many studies have attempted to capture the economic impact of the corruption in a country. However, most of these studies have concentrated their analysis to the experiences of the developed countries. None or very few of the current works have addressed the corruption issue in the context of foreign direct investment and economic growth in the developing countries. This work examines theoretically, as well as empirically, the incidence of corruption in the context of foreign direct investment in the developing countries, especially several African countries that signed a treaty to reduce the incidence of corruption in their respective countries.     

Do anticorruption efforts affect banking system stability?

This paper examines whether the level of anticorruption efforts in a country affects the stability of its banking system. After analyzing banking system stability in a large international sample of 26,865 of bank-year observations across 40 countries during 1987–2013, we argue that the following factors are involved: (1) anticorruption efforts, (2) inflation rate, (3) transparency, and (4) adoption of International Financial Reporting Standards. Our results support the idea that having a high anticorruption rating is related to high banking system stability. We also find that this relationship depends on a country’s inflation rate and level of country-level investor protection, supporting the notion that anticorruption is relatively more important in poorer information environments. In addition, given that anticorruption has a stronger effect on financial stability when banks are within a corrupt environment, we posit that corruption may have insider marginal effects.     

Targeting strategy for technological acquisition in the Sub-Saharan oil exporting states of Africa: The Nigerian experience

During the last two decades, economic development has been slow in most of the countries of Sub-Saharan Africa (World Bank, 1981). In the middle of the 1970s when the world economy experienced inflation and recession, no where did the crises hit with greater impact than in Sub-Saharan Africa. This region shows slow overall economic growth, sluggish agricultural performance, rapid rates of population increase, and a balance of payment crises. Between 1960 and 1979, per capita income in 19 countries grew by less than 1% per annum. During the last decade 15 countries recorded a negative rate of income growth per capita (World Bank, 1981).The economic state of the oil exporting countries (Angola, Congo and Nigeria) in Sub-Saharan Africa is not any different. The average annual growth rate of GNP per capita from 1960–1979 shows Angola at –2.1%, Congo at 0.9% and Nigeria at 3.7%.Using Nigeria as a case study, this paper postulates that since over 80% of the total revenue yield in foreign exchange comes from crude petroleum export alone, it has become urgent to ensure; (a) that the techniques in oil technology are acquired by Nigerians so as to conserve the foreign exchange cost arising from foreign personnel drawings, such as salaries and perquisites; (b) that Nigerians become immersed in the techniques of oil technology in order to make maximum use of the by-products of crude oil in a conscious exploitation of the industry's potential directed towards the economic development of Nigeria.Bedford A. Fubara is Senior Lecturer of Business Policy and Head of the Department of Business Administration at the Rivers State University of Science and Technology, Port Harcourt, Nigeria.He had the Columbia University Fellowship 1970/72 and the UNESCO Research Award 1981/82.He is the author of several articles on business concerning Nigeria and the developing countries.Paper presented at the Strategic Management Conference at the Wharton School, The University of Pennsylvania, Philadelphia, U.S.A. October, 1984.This research is financed by the University of Science and Technology, Port Harcourt, Nigeria, under Project SRPC/1983/014.     

Impact of Corruption on the Development of Information and Communications Infrastructures in Bulgaria and Romania

Abstract

Bulgaria and Romania joined the European Union in January of 2007. Joining the EU is expected to promote the candidate country's economic growth, provide access to western technology, increase employment and attract foreign investments, the collective result of which is expected to be social, economic and technological advancement. In a perfect world where all factors contribute favorably those goals can be achieved. However, the detrimental impact of corruption on achieving national goals must also be addressed. This article examines linkages between information infrastructures and social development in Bulgaria and Romania as well as investment needs and financing were addressed with the objective to improve National Information Infrastructures (NII), expected payoffs from NII improvements were identified; the role of corruption in retarding information infrastructure development was also investigated. Using regression analysis the relationship between information infrastructures, social development, corruption, and economic development in Bulgaria and Romania were compared to those of the EU10 countries admitted into the EU in 2004 as well as to those in the original EU15 countries. It is concluded that given present conditions in Romania and Bulgaria development financing will have to come from internal and from World Bank sources rather than from foreign direct investment.     

Explaining Firm Internationalization in Africa Using the Competence Approach

Abstract

The purpose of the study was to explore, through secondary research, the potential influence of the top management (key decision makers) of firms on the degree of internationalization of firms in sub-Saharan Africa.

More specifically, an attempt was made, firstly, to characterize the problem of low exports and low firm internationalization in Sub-Saharan Africa with a view to discussing the potential influence of the characteristics of key decision makers on firm internationalization. Secondly, to explore the competence theory and determine whether it could provide a viable analytical framework to facilitate future empirical investigations into the influence of key decision makers (top management) on firm internationalization focusing on sub-Saharan Africa.

Previous studies on firm internationalization from different parts of the world including Sub-Saharan Africa were examined. The characteristics and behaviors of top management reported to relate strongly to high levels of firm internationalization and export performance were extracted. The literature on competence then was examined with a view to obtaining theory that would be used to integrate the various managerial variables, which strongly related to high levels of firm internationalization.

The process of analysis and integration resulted into the development of the Competence Model of Firm Internationalization, which has been proposed. The analysis indicated that the top managers of firms had profound influence on the level and intensity of export activities mainly through the firms' production and marketing functions. The managerial implications of the findings and future research directions are discussed along with the limitations of the study.