Sub-Saharan Africa thirty years hence

By the year 2015, Sub-Saharan Africa's population will probably rise from a 1985 level of about 460 million to about 1.1 billion. Today Africa's population is growing at a rate of roughly 3% a year, with exceptionally high growth rates in some countries. The leaders of Africa, and those who wish to help Africa, confront difficult and urgent problems of drought, political and military conflict, accumulated debt, lower commodity prices, and other factors of immediate and important concern. Africa has given education a high priority and should be as well known for its success in increasing school enrollment as it is for its relative failures in other areas. A projected population of 1.1 billion people and a fertility rate down to 30/1000 by the year 2015 suggests that the number of children old enough to enter primary school will be of the order of 30 million a year at this time. The working-age population will grow from 235 million now to perhaps 600 million in 30 years. The urban population has been growing at about 6% a year--twice the pace of population increase. All of these situations will have an effect on environment, water, and health. Coping with Africa's burgeoning population in terms of children in school, the demand on health systems, the need for jobs, achieving an adequate diet, the provision of basic urban services, and all the rest, is an extraordinary challenge. While the government's role is critical, success at the sectoral level almost always means cost recovery, administration decentralized to the community or to the private sector, and program implementation that does not burden the budget.     

The exchange rate system and macroeconomic fluctuations in Sub-Saharan Africa

In this paper, we investigate the sources of macroeconomic fluctuations in Sub-Saharan African (SSA) countries with particular attention to the exchange rate system. We use a structural Vector Autoregression (VAR) model with limited capital mobility and long run restrictions to identify the shocks. Supply and terms of trade shocks tend to dominate output movements in the CFA and non-CFA countries alike. However, terms of trade shocks tend to influence the CFA zone to a greater extent and there seems to be a higher influence of demand shocks on output and the real exchange rates in the non-CFA countries.     

Corruption, economic growth, and income inequality in Africa

This paper uses panel data from African countries and a dynamic panel estimator to investigate the effects of corruption on economic growth and income distribution. I find that corruption decreases economic growth directly and indirectly through decreased investment in physical capital. A unit increase in corruption reduces the growth rates of GDP and per capita income by between 0.75 and 0.9 percentage points and between 0.39 and 0.41 percentage points per year respectively. The results also indicate that increased corruption is positively correlated with income inequality. The combined effects of decreased income growth and increased inequality suggests that corruption hurts the poor more than the rich in African countries. Received: March 19, 2001 / Accepted: December 14, 2001 RID="*" ID="*" An earlier version of this paper was presented at the first AmFiTan International Conference on Development Ethics in February 2000, Dar er Salaam, Tanzania. I thank two anonymous referees of this Journal for helpful suggestions. I am, however, solely responsible for any remaining errors.     

The role of the informal sector in investment in Sub-Saharan Africa

For a long time economic researchers condemned the existence of a huge informal sector in economies, viewing it as a deterrent to investment, growth and development. This view is however being confronted with intense criticism particularly in developing countries where formal unemployment is rapidly growing and poverty widely spreading, which in turn is leading to an expanding informal sector. Thus alternative schools of thought that view the informal sector as a source of livelihood to the unemployed and poor have subsequently been developed. However, not much empirical work has been carried out to validate any of these theoretical claims, particularly in African economies. This paper attempts to fill this gap. The findings of the study indicate that there is a positive relationship between informal sector activities and investment. These results suggest a review of the standard thinking towards the role of the informal sector in development.     

Political Instability and Economic Growth: Implications of Coup Events in Sub-Saharan Africa

The study examines the differential roles of various elite political instability (PI) events—successful coups d'etat, abortive coups, or coup plots—in the growth of Sub-Saharan Africa. It analyzes World Bank economic statistics and data on the incidence of coups d'etat for 31 countries in a cross-country augmented production function framework that incorporates PI events as well as labor and capital as arguments. It finds that abortive coups, rather than successful coups, had the greatest adverse impact on economic growth over the 1960–1986 period. Coup plots were also observed to be growth-inhibiting. This deleterious "direct" effect of PI is observed to be channeled via the deterioration in the marginal productivity of capital, regardless of coup event. While abortive coups negatively influenced economic growth monotonically, however, the impacts of successful coups and coup plots appeared to be non-monotonic: negative generally but positive at very low levels of investment.     

Foreign direct investment and economic growth in Sub-Saharan Africa: A nonlinear analysis

Using the threshold regression model, we examine the effects of Foreign Direct Investment (FDI), and the mediating role of FDI absorptive capacity, on economic growth in Sub-Saharan Africa. We find that the threshold level of FDI inflows per person is approximately US$ 44.67 per annum. For FDI to have an appreciable impact on economic growth, countries must have minimum capacity to absorb the growth-enhancing benefits of FDI. For instance, the technology gap between the hosted foreign enterprises and domestic enterprises should be no less than 0.6904. Thus, achieving the FDI threshold level is a necessary, but not sufficient, condition for economic growth. Some countries use tax incentives to improve FDI inflows. We argue that such incentives may be counterproductive at low levels of FDI inflows: FDI coefficient estimates below the lowest threshold level are negative, implying that the higher costs of such incentives exceed the potential benefits availed by FDI’s direct contribution to economic output and spillovers.     

The role of governance in mobile phones for inclusive human development in Sub-Saharan Africa

This study assesses the synergy effects of governance in mobile phone penetration for inclusive human development in Sub-Saharan Africa with data for the period 2000–2012. It employs a battery of interactive estimation techniques, namely: Fixed effects, Generalised Method of Moments and Tobit regressions. Concepts of political (voice and accountability and political stability/no violence), economic (government effectiveness and regulation quality) and institutional (corruption-control and rule of law) governance are employed. The following findings are established. The previously apparent positive correlation between mobile phones and inclusive development can be extended to a positive effect. Although political governance is overwhelmingly not significant across estimated models, the average effects from economic governance are higher relative to institutional governance. On the interactions between mobile phones and governance variables, while none are apparent in Fixed effects regressions, there are significant synergy effects in Generalised Method of Moments and Tobit estimations, notably, from: regulation quality in the former and political stability, voice and accountability and rule of law in the latter. There is consistent evidence of convergence in inclusive human development. Policy implications are discussed.     

The role of the separation of democratic powers on structural transformation in Sub-Saharan Africa

The objective of this paper is to assess the effects of the separation of democratic powers on structural transformation in sub-Saharan Africa (SSA). Indeed, reducing the dependence of the judiciary and the legislature on the executive branch is likely to promote labor reallocation, innovation, and human capital and thus improve structural change and intra-industry productivity, which are the two components of structural transformation. Data from the Varieties of Democracy (V-Dem) Project (Ziblatt and al., 2021) and Mensah and Szirmai (2018) allow us to illustrate our points using a vector auto regression (VAR) model on a panel of 18 SSA countries. Our results show that both legislative dependence and judicial dependence on the executive branch have a negative effect on structural change and intra-industry productivity in the short and long run; but the effect of the judiciary is more decisive than that of the legislature in the short and long run. On the other hand, judicial dependence causes legislative dependence, while public sector corruption and educational inequalities cause judicial and legislative dependence on the executive. Our results argue for the independence of these two branches from the executive, especially the judiciary.     

Cities,Creativities and Urban Creative Economies: Re-descriptions and Make+Shifts from Sub-Saharan Africa

The aim of this symposium is to examine the situation of the creative economy in cities—specifically cities of sub-Saharan Africa. In this introduction we set out the case for the need to ‘re-describe’ the (much derided) phenomenon of the creative city. This task requires clarification of what is understood in academe and policy communities by the term ‘creative economy’, the pronounced growth of this sector, particularly in the global South, and its particular urban character. Secondly, in the face of conceptual and policy confusion we argue for the actually existing, and growing, importance of the urban creative economy. Thirdly, with this ground clearing achieved, we seek to frame, and focus on, the emergence of new research on the urban creative economy. Finally, we use the evidence from the symposium contributions to argue for a reformulation of the creative economy within African sub-Saharan urbanization.     

Governance, Democracy and Poverty Reduction: Lessons Drawn from Household Surveys in Sub-Saharan Africa and Latin America

Public statistics face quite a challenge when it comes to measuring new dimensions of development (institutions, governance, and social and political participation). To take up this challenge, modules on Governance, Democracy and Multiple Dimensions of Poverty have been appended to household surveys by National Statistics Institutes in twelve African and Latin American developing countries. This paper presents the issues addressed and the methodological lessons learnt along with a selection of findings to illustrate this innovative approach and demonstrate its analytic potential. We investigate, for instance, the population's support for democratic principles, the respect for civil and political rights and the trust in the political class; the ‘need for the State’, particularly of the poorest; the extent of petty corruption; the reliability of expert surveys on governance; the perception of decentralization policies at local level; the level and vitality of social and political participation, etc. The conclusive appraisal made opens up prospects for the national statistical information systems in the developing countries. The measurement and tracking of this new set of objective and subjective public policy monitoring indicators would benefit from being made systematic.     

An integrative analysis of external debt,capital accumulation and production in Latin America,Asia-Pacific and Sub-Saharan Africa

This paper estimates the nexus of inter-relationships between public and private external debts accumulation, capital accumulation and production with panel data for the period 1970–1988 from highly indebted developing countries clustered into three distinct regions: Latin-America, Asia-Pacific and Sub-Saharan Africa. The simultaneous equations' estimation results indicate that the full effects of the public and private external debts on GNP are small and of an opposite sign, whereas an increase in the GNP level raises substantially the public and private external debts. These findings support Bulow-Rogoff's (1990) proposition that the external debts of developing countries are not a primary cause of economic slowdown.     

地区腐败、企业性质与高管腐败

企业所处的外部环境对企业高管腐败行为的影响日益引起学者的关注,地区腐败作为企业所处外部环境的重要特征,对企业高管腐败行为会产生何种影响?通过手工搜集2007-2013年我国各省市地方官员腐败和上市公司高管腐败的数据后发现:地区腐败越严重,所在地区的企业高管发生腐败的可能性越高;进一步研究发现,地区腐败对民营企业高管的影响作用更加明显,而2012年开始的反腐行动尚未对地区腐败影响高管腐败产生实质的约束作用。研究有助于深化对企业高管腐败环境诱因的理论认知,同时,将政府官员腐败的经济后果拓展至企业管理层面。     

Corruption in dictatorships

In this paper, we consider a simple model capable of explaining why some dictatorships choose to extract rents via seemingly inefficient institutions. In particular, this paper focuses on institutions associated with high levels of corruption and examines the conditions under which such institutions could serve the interests of a dictatorship. Developing such a model requires that we pose alternative institutions that dictators can choose to extract rents. Using this framework, this paper builds a model providing a theoretical basis for some stylized facts about the observed crosscountry variation in corruption levels. Specifically, the model motivates a rationale for the finding that higher levels of corruption are observed in countries characterized as having more heterogeneous populations, longer expected dictator tenure, and more severe punishment norms. The model is then estimated using international country level data.     

Corruption and auctions

We investigate how corruption affects the outcome of a first-price auction (bidding behavior, efficiency and the seller’s expected revenue). The auctioneer approaches the winner to offer the possibility of a reduction in his bid in exchange for a bribe. The bribe can be a percentage of the difference between the winning and the second-highest bid or a fixed amount. We show that there exists a symmetric bidding strategy equilibrium that is monotone, i.e., higher valuation buyers bid higher. Corruption does not affect efficiency but both the auctioneer’s expected bribe and the seller’s expected revenue depend on the format of the bribe payments. We also find the optimal bribe scheme.     

The effect of economic growth on banking system performance: An interregional and comparative study of Sub-Saharan Africa and developed economies

As an important part of the financial sector, banking systems play a critical role in economic development as well as in improving the quality of life of the people of sub-Saharan Africa (SSA). However, little evidence exists in the literature about the performance of the banking systems in SSA compared with developed economies. This paper investigates the effects of economic development on banking performance across 23 SSA countries and 14 developed countries between 1981 and 2018. Using estimation models such as feasible general least squares, fixed-effects estimation with Driscoll-Kraay standard errors, and system and difference generalized method of moments, our findings show that in SSA as a whole, economic development has a positive impact on commercial bank lending, raises lending rates, increases the amount of domestic credit to the private sector (DCPS), and reduces the number of nonperforming loans (NPLs). In developed countries, economic development has a positive impact on lending rates, DCPS, and the number of NPLs. However, although economic development in developed economies has mostly positive effects on banking performance, SSA countries have more performance issues in banking as a whole and in regional pockets. A careful reassessment of SSA’s interregional banking system is therefore highly recommended. An increase in the number of NPLs in East and Southern Africa, a decline in deposit rates offered in Southern, West, and Central Africa, and increasing real interest rates in SSA despite economic growth are some of the concerns that require careful reassessment and policy adjustments.     

高管权力与高管腐败——基于内部控制与外部市场环境的双重视角

上市公司的高管腐败及其治理是我国反腐败的重要领域。因此,高管权力与高管腐败的关系日益受学者的关注。本文运用逻辑斯蒂模型,基于内部控制与外部市场环境的双重视角分析了高管权力诱发高管腐败行为的影响。研究发现:高管权力越大,越可能诱发高管腐败行为;内部控制质量越好,高管腐败概率越低,且高质量的内部控制可以抑制高管权力过大诱发的高管腐败行为;上市公司所在地市场化进程水平越高,高管腐败概率越低,且市场化进程水平越高越能抑制企业高管权力过大诱发的高管腐败行为。研究结果表明:良好的内部控制与外部环境是可以约束高管权力减少腐败,降低权力进行寻租的空间。     

Collusive Market Sharing and Corruption in Procurement

This paper investigates links between corruption and collusion in procurement. A first-price multiple-object auction is administered by an agent who has legal discretion to allow for a readjustment of (all) submitted offers before the official opening. The agent may be corrupt, that is, willing to "sell" his decision in exchange for a bribe. Our main result shows that the corrupt agent's incentives to extract rents are closely linked with that of a cartel of bidders. First, collusive bidding conveys value to the agent's decision power. Second, self-interested abuse of discretion to extract rents (corruption) provides a mechanism to enforce collusion. A second result is that package bidding can facilitate collusion. We also find that with corruption, collusion is more likely in auctions where firms are small relative to the market. Our main message to auction designers, competition authorities and criminal courts is that risks of collusion and of corruption must be addressed simultaneously. Some other policy implications for the design of tender procedures are discussed.     

Corruption,development and demography

This paper presents an analysis of the joint, endogenous determination of bureaucratic corruption, economic development and demographic transition. The analysis is based on an overlapping generations model in which reproductive agents mature safely through two periods of life and face a probability of surviving for a third period. This survival probability depends on the provision of public goods and services which may be compromised by corrupt activities on the part of public officials. The dynamic general equilibrium of the economy is characterised by multiple development regimes, transition between which may or may not be feasible. In accordance with empirical evidence, the model predicts that low (high) levels of development are associated with high (low) levels of corruption and low (high) rates of life expectancy. The authors are grateful for the comments of two anonymous referees on an earlier version of the paper. The usual disclaimer applies.     

Corruption, institutions and trade

The economics literature describes various factors that affect trade between countries, which, in addition to the standard economic and geographic factors, also include cultural, ethnic and historical factors. The present study is apparently one of only a few attempts in the literature to examine directly the effects of corruption on trade and the first attempt to examine trade over time in a specific country whose level of corruption changed significantly. Israel was chosen as the subject of the study mainly because of the fact that, according to international indexes, the country’s status as a civil society has declined significantly over the past decade. According to the corruption index of Transparency International, Israel was ranked 33rd in the world, at the end of the sample period in 2008, having fallen from 14th in 1995. The results of the research can serve as the basis for comparison to similar studies of other Western countries. The study’s conclusions support the hypothesis that the effect of corruption on trade of any given country is significant, stable and negative.     

Corruption, institutions and regulation

We analyze the effects of corruption and institutional quality on the quality of business regulation. Our key findings indicate that corruption negatively affects the quality of regulation and that general institutional quality is insignificant once corruption is controlled for. These findings hold over a number of specifications which include additional exogenous historical and geographic controls. The findings imply that policy makers can focus on curbing corruption to improve regulation, over wider institutional reform.