External Debt,Labour Productivity Growth and Convergence: Evidence from Sub‐Saharan Africa

Sub‐Saharan Africa (SSA) has long suffered from lagging productivity and excessive levels of indebtedness. Using both parametric and non‐parametric techniques, this paper examines the impact of external debt on labour productivity growth and convergence across SSA economies over the period 1970–2010. The results indicate the presence of debt‐overhang effects, regardless of model and sample specification. Debt reduction through the Heavily Indebted Poor Countries and Multilateral Debt Relief initiatives enhanced growth but was not successful in offsetting the debt‐overhang effects. Moreover, excessive levels of external debt were responsible for divergence in output per worker over the early 1990s. Although this trend was reversed over the 2000s, reduction in debt through the debt relief initiatives seems to have been insufficient in helping heavily indebted countries in SSA catch up with the labour productivity levels of the best‐performing economies in the region.     

The role of sovereign credit ratings in fiscal discipline

This paper investigates several aspects of the relationship between sovereign credit ratings and fiscal discipline. The analysis of over one thousand country–year observations for 93 countries during the 1999–2010 period reveals that a country's debt level is likely to increase with higher ratings, confirming the existence of pro-cyclicality and path dependence of ratings. In addition, the study finds no evidence to support the theory of Political Business Cycle, which implies that political ambitions may lead to fiscal worsening following a rating upgrade. The study findings further demonstrate that institutional quality is an important factor in the ratings–fiscal discipline nexus.     

Aid,Aid Volatility and Sectoral Growth in Sub-Saharan Africa: Does Finance Matter?

This article examines the impact of aid and its volatility on sectoral growth by relying on panel dataset of 37 sub-Saharan African (SSA) countries for the period 1983–2014. Findings from the system-generalized methods of moments show that, while foreign aid significantly drives sectoral growth, aid volatility deteriorates sectoral value additions impacting heavily on non-tradable sectors with no apparent effect on the agricultural sector. The deleterious effect of aid volatility on sectoral value additions in SSA is weakened by a well-developed financial system with significant impact on the tradable sector. Evidently, development of domestic financial markets enhances aid effectiveness.     

The impact of regulations on the FDI-growth nexus within the institution-based view: A nonlinear specification with varying coefficients

The impact of Multinational Enterprise (MNE) activities on economic development and poverty reduction constitute a specific field of study within International Business (IB) scholarship during the last decade. Extending the institution-based view that “institutions matter”, we shift the focus of interest on the effect of institutions in the FDI-growth nexus which, surprisingly, have been overlooked by respective literature. A profound understanding of the FDI impact on economic growth cannot neglect institutions that shape the macro environment where MNEs operate. Within this rationale, this paper examines the effect of FDI on growth under different formal institutions placing emphasis to credit and labour market regulatory systems in both advanced and developing countries. Most empirical studies stemming mainly from the economics perspective, assume that the FDI growth effect is linear and incorporate specific functional forms for their regression relationships. We rely on more advanced econometric methods that allow for the regression coefficients to vary as smooth functions of other variables, allowing for more plausible empirical results. Our findings strongly support our suggestion that the host institutional context shape the strategies, structures and competitiveness of MNEs’ activities which they then affect differently economic growth. We thus provide useful insights regarding the long-lasting debate on the FDI-growth nexus.     

Foreign direct investments,institutional quality,and economic growth

Institutional quality is considered to be an important factor in boosting economic growth of a country. This paper explores the role of institutional quality in economic growth and more specifically the role it plays via the channel of foreign direct investments. This paper uses a larger dataset of 104 countries and applies GMM estimation method to a dynamic panel data to evaluate the direct impact of institutional quality on economic growth and the indirect impact of institutional quality on economic growth through enhancing the FDI-induced economic growth. This paper provides evidence that both FDI inflows and institutional quality cause stronger economic growth. The FDI-led growth, however, was only experienced in the low and middle-income countries. In these countries, better institutional quality was also found to be enhancing the FDI-led economic growth. An important finding of this paper is that in the high-income countries, FDI was found to slow down the economic growth. The results are robust and consistent for individual institutional quality indicators and controlling for endogeneity.     

How do emerging debt market participants recognize firm internationalization?Evidence from effects on credit ratings

We explore the firm internationalization's impact on firm credit ratings in emerging economies. Adopting Chinese data from 2009 to 2018, we document that firm internationalization varies negatively with its credit ratings, indicating that emerging debt market participants are risk averse and prioritize the risks involved in firm internationalization endeavors. This association is amplified for firms operating in host countries with lower institutional quality, decreased cultural distance from home countries, and when firms do not hold tax haven subsidiaries. We observe that the main association is consistent when alternative dataset (India, Russia, and Brazil) or proxy (cost of debt) is applied.     

The economic growth and foreign direct investment nexus: Does democracy matter? Evidence from African countries

This article investigates the impact of democracy on the foreign direct investment (FDI)–economic growth nexus by considering both a country's current and past political regimes. We apply a linear dynamic panel data model to data from 53 African countries over the period 1989–2014. Standard errors of the estimates are Weidmeijer corrected, following an orthogonal deviations transformation. The results show that the direct impact of FDI on growth is positive and significant. Likewise, the stock of democracy plays a positive and significant role in the growth process. However, the positive impact of FDI on growth decreases with the improvement in the historical experience of a country with democracy. These findings imply that with contemporary efforts to expand political rights in Africa, it is critical to identify alternative channels that facilitate the transmission of the flow of FDI into further and sustainable growth.     

外部审计、债务期限结构选择与审计治理效应

外部审计通过鉴证可以降低委托人与代理人之间的信息不对称,能够在一定程度上缓解各方的代理冲突,是公司治理机制的重要组成部分。以2007—2010年中国上市的A股非金融类公司为样本,实证研究外部审计对上市公司债务期限结构选择的影响,结果表明:外部审计对上市公司债务期限结构选择产生了显著影响,当上市公司被出具无保留意见时,更容易得到长期债务;被四大事务所审计的上市公司,更容易获得长期债务;中国的外部审计发挥了应有的公司治理职能,保护了债权人的利益。     

The Asian Drivers and Africa: Learning from Case Studies

(1248) Andrea Goldstein, Nicolas Pinaud, Helmut Reisen and Dorothy McCormick When the OECD Development Centre launched research in 2005 to document the economic, political and social impacts of China’s and India’s economic growth on sub‐Saharan African (SSA) countries, the arrival (or resurgence) of new important players had triggered concerns among traditional donors. Accusations ran from free riding on Western debt relief over violation of governance standards and unfair company competition to fragmentation of aid delivery. At the same time, there was a tendency to neglect the diversity of SSA in terms of resource endowments, trade links and industrial development. It was time then to promote African voices from various backgrounds to reflect Africa’s heterogeneity. The introductory section presents a summary of findings about the economic impact of the two Asian giants in SSA countries by Africa‐based economists, with three practical conclusions. First, African countries should favour strategies that minimise areas of direct competition with the Asian giants. Second, industrialisation strategies are required to exploit opportunities complementary to the Asian development path. Third, sectors of mutual interest should be identified in order to develop long‐term views on how to cooperate with China and India and these views should be mainstreamed into national development plans.     

The external debt situation of the least developed countries

While the external debt of the least developed countries (LLDCs) is no threat to the international financial system, its adverse impact on the development efforts of many of these countries is severe. The following article examines their debt and economic situation and reviews major elements of the current international debt strategy with regard to their adequacy in bringing the LLDCs back to sustainable debt burdens and growth. The article was written while the author was working at the OECD. The views in the article are those of the author and do not reflect those of the World Bank or its affiliates or of the OECD.     

Capital Flows and Economic Growth in Ghana

ABSTRACT

The study examines the differential effects of capital flows on economic growth in Ghana over the period 1970–2014 using autoregressive distributed lag (ARDL). Breakpoint unit root tests are employed to cater for structural change and breaks in time series. Afterwards, these break dates are fed into the ADRL model as dummy variables to allow for the computation of a more robust cointegrating vector. The findings indicate that in both the short and long run capital flows (i.e. FDI, aid, and external debt) have negative effects on economic growth. However, remittances exhibit positive insignificant elasticity in all the regressions. Further, the empirical results show that while the impact of trade, gross capital formation and population growth on growth are mixed, that of inflation is negative. The results of the study are consistent with the idea that the impact of capital flows in Africa has been exaggerated.     

债权治理评价、企业特征与成长性——基于中国中小上市公司的实证研究

债权治理处于公司治理体系的内核,债权治理评价是公司治理系列评价的重要受体。本文在对国内外文献进行评述的基础上,从债权治理视角构建中国中小上市公司债权治理评价指数,并籍此从偿债能力、债务融资、资产期限、债务期限四个基本纬度以及不同企业特征因素等视角对205家中小上市公司样本进行治理状况实证研究。同时,结合中小上市公司成长性评价体系,对两种评价指数进行综合相关性和回归研究。结果显示债权治理状况总体偏低,不同所有制下有较大差异,债权治理水平与公司成长性呈现倒U型关系。高偿债、低债务融资不利于公司成长,债务期限和资产期限结构的不平衡使其对成长性影响不显著。公司规模、质量和实际所得税率是影响债权治理水平和企业成长性的重要特征因素。     

Does foreign direct investment promote institutional development in Africa?

Foreign direct investment (FDI) inflows into Africa have increased since the turn of the millennium, mainly due to FDI growth into African countries by multinational enterprises (MNEs) from developing economies. While African governments view this growth as a positive development for the continent, many governments in the West have raised concerns regarding the institutional impact of investments from developing economies. This paper examines the impact of FDI flows on institutional quality in African countries by distinguishing investments from developed versus developing economies. Previous empirical studies have found a significant relationship between FDI flows and institutional quality in African countries but regard the relationship as MNEs rewarding African countries for adopting institutional reforms. However, little attention has been paid to the reverse causality, i.e. that FDI can cause an institutional change in African countries. Using bilateral greenfield FDI flows between 56 countries during 2003?2015, we find no significant FDI effect from developed and developing economies on institutional quality in host countries. However, aggregate FDI flows from developed and developing economies have a significant positive effect on host country institutional quality but differ concerning the impact's timing. In contrast, we find no significant effect of FDI flows from China on host country institutional quality. Our results are robust to alternative measures of institutional quality.     

The gravity model,African Growth and Opportunity Act (AGOA) and US trade relations with sub-Saharan Africa

The United States of America enacted the African Growth and Opportunity Act (AGOA) in 2000 to grant sub-Saharan African countries (SSA) a preferential treatment in their exports to the USA. With this Act, most of the exports from SSA can now enter the USA duty-free, and this is expected to boost the exporting and manufacturing sectors in SSA. Hopefully, this singular act of assistance from the USA will spur entrepreneurship in SSA, thereby creating jobs and jump starting meaningful economic growth in the region. Since trade is a major catalyst in economic development, AGOA is arguably the most meaningful intervention from a developed country to an under-developed region such as SSA in recent times. Has AGOA had any impact on US trade with SSA? This paper sheds some light on this issue by examining the flow and composition of trade between the USA and AGOA countries. The analysis uses trade data (US imports) for 36 countries over 12 years. Empirical estimations based on the gravity model show that receiving AGOA status has a strong positive and significant impact on overall trade with the US. Interestingly, however, the analysis also shows a disproportionate impact of crude oil imports from the oil-producing countries of Angola, Gabon, and Nigeria, which is clearly not the intent of the Act.     

Foreign direct investment and civil violence in Sub-Saharan Africa

Despite the steady growth in foreign direct investment (FDI) flow into Sub-Saharan Africa (SSA), which is facilitated by the United Nations "2030 Agenda for Sustainable Development", economic development in SSA countries remains relatively weak, due in part to frequent incidents of civil violence. The critics of FDI inflow into SSA posit that the cross-border capital flow fuels civil conflict and unrest, whilst the proponents maintain that FDI inflow helps developing countries raise their economies. To reconcile these two views, this paper considers the impact of FDI on civil violence in SSA by distinguishing recipient industries of FDI. The results from a new general equilibrium theory suggest that an increase in resource-directed FDI inflow to countries where the resource sector is skilled labour (unskilled labour) intensive reduces (increases, respectively) the risk of violence. Using a panel data consisting of 34 SSA countries for 1972–2013, the dynamic panel estimates provide support for our theoretical findings. In particular, an increase in FDI inflow reduces the risk of civil violence for skilled labour intensive fuel-resource-rich SSA countries. However, the likelihood of violence can increase in FDI inflow for countries that are rich in unskilled labour intensive non-fuel, ore and other mineral resources.     

How does CSR disclosure affect dividend payments in emerging markets?

This article examines the nexus between corporate social responsibility disclosures (CSRD) and dividend payout decisions in the context of emerging markets. Using hand-collected sample of listed firms from India, China, Indonesia, Pakistan, Malaysia, Korea, Turkey, and Russia over the period 2010–2018, our results show that CSR disclosures exert a negative impact on corporate dividend payments. Further, this effect is more prevalent for firms having higher institutional ownership. However, the results remain unaffected by the differences in legal origin i.e. civil law or common law, of the sample countries. Further, our main results are supported by a number of sensitivity tests, including reduced sample size, alternative dividend payment measures, and estimation techniques.     

Institutions and corporate capital structure in the MENA region

This paper provides novel evidence on firm- and country-level determinants of firm capital structure decisions in the MENA region. Using a sample of 444 listed firms from ten countries, over the 2003–2011 period, we find that MENA firms have target leverage ratios towards which they adjust over time. Yet, the speed of adjustment varies from one country to another. Our findings also suggest that some firm-level factors are associated with leverage consistent with the trade-off and pecking order theories of capital structure. We further find robust evidence that better institutional quality leads firms to use more debt.     

Government ownership and the cost of debt for Chinese listed corporations

This study investigates the impact of government controlling ownership on the cost of debt of Chinese listed corporations. We find that corporations under government control have a lower cost of debt compared to corporations under private control, and that government ownership is most beneficial when firms exhibit financial distress, have high excess shareholder control, or operate in provinces with low institutional development. Our evidence that government ownership plays an important role in reducing Chinese firms' cost of debt may help explain why government involvement in business corporations remains prevalent in China after decades of economic reform.     

Government quality determinants of ICT adoption in sub-Saharan Africa

This study investigates government quality determinants of ICT adoption using Generalised Method of Moments on a panel of 49 sub-Saharan African (SSA) countries for the period 2000-2012. ICT is measured with mobile phone penetration, internet penetration and telephone penetration rates while all governance dimensions from the World Bank Governance Indicators are considered, namely: political governance (consisting of political stability and “voice & accountability”); economic governance (entailing government effectiveness and regulation quality) and institutional governance (encompassing the rule of law and corruption-control). The following findings are established. First, political stability and the rule of law have positive short-run and negative long-term effects on mobile phone penetration. Second, the rule of law has a positive (negative) short-run (long-term) effect on internet penetration. Third, government effectiveness and corruption-control have positive short-run and long-term effects on telephone penetration. Institutional governance appears to be most significant in determining ICT adoption in SSA.     

Das europäische Verfahren zur Vermeidung und Korrektur von Leistungsbilanzungleichgewichten

The Macroeconomic Imbalance Procedure (MIP) is part of a institutional framework known as the so-called “sixpack“, which has come into effect on December 13th 2011 in response to the European financial and debt crisis. The crisis has shown that internal and external imbalances (in particular current account deficits) are strongly intertwined. The MIP should identify external imbalances at an early stage and thus compel countries to correct these imbalances to forestall potential crises. Methodological questions are discussed, which are to be resolved to ensure the effectiveness of the MIP.