Economics
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Item External debt accumulation and economic growth: evidence from West African countries(Faculty of The Social Sciences, University of Ibadan, Ibadan, 2015-03) Lawanson, A. O.This paper investigates how indebtedness has affected the growth of 14 West African countries directly, and via investment and fiscal balance mechanisms, using data from 1970 to 2012. This task was approached through a standard growth framework through which debt indicators were incorporated. Two econometric specifications (linear and non-linear.) were used, and evaluated with the fixed effects and GMM estimation techniques on the relationship between debt and growth. The hypothesis that external debt affects growth is well-supported by the results. All debt variables have the expected signs and were statistically significant. The results reveal that debt appears to have a non-linear effect on growth. The debt overhang hypothesis is affirmed, given the existence of a threshold beyond which debt negatively contributed to growth. The average impact of debt on per capita growth becomes negative for debt levels above 60% to 74% of GDP. Thus, increasing debt beyond this threshold yields a negative marginal contribution to growth. There is a pressing need to take measures to not only stabilize external debts, but to place them on a downward trajectory in the future.Item Economic growth experience of West African region: does human capital matter?(Center for Promoting Ideas (CPI), USA, 2015-12) Lawanson, A. O.This paper empirically investigates the relevance of educational and health components of human capital to economic growth, using a panel data from sixteen West African countries over the period 1980 to 2013. GDP per capita is linked to health and education capital while accounting for population growth, physical capital, trade openness, and other growth control variables. To correct for endogeneity and other estimation problems this paper employs Diff-GMM dynamic panel technique. Empirical findings indicate that coefficients of both education and health have positive statistically significant effects on GDP per capita. The paper affirms the strong relevance of human capital to economic growth of West Africa. It is recommended that increased resources and policy initiatives to motivate and enhance access to both health and education by the population should be pursued by policy makers.Item ANALYSIS OF THE IMPACT OF ECONOMIC AND POLITICAL INSTITUTIONS ON ECONOMIC GROWTH IN AFRICA(2012-10) KILISHI, A. A.The importance of economic and political institutions to economic growth has been demonstrated in the literature. However, little is known on how such institutions impact on growth and what determine the quality of economic institutions in Africa. Therefore, this study was aimed at examining the impact of economic and political institutions on growth as well as the impact of political transition on the quality of economic institutions. Game theory was used to develop a political economy model that incorporated institutional variables into the neoclassical Solow growth model. This model described the interactions among political power (de-jure and de-facto powers), institutions and economic growth. The model was empirically tested using data drawn from 29 African countries covering the period 1996 to 2009. The selection of countries was guided by availability of data and they spread across the continent. Indexes of economic and political institutions were computed from the World Bank’s governance indicators and the Polity IV database. The Ordinary Least Squares (OLS), fixed effect and Generalized Methods of Moments (GMM) techniques were used to test the impact of economic and political institutions on economic growth. A treatment analysis was also employed to test the impact of political transition on the quality of economic institutions and growth. Strong economic and political institutions had significant and positive impacts on economic growth. Countries with higher institutional qualities are found to be growing faster while those with lower quality grow slower. Generally, a 1.00% increase in the indexes of economic and political institutions led to 0.44% and 0.55% increase in economic growth respectively. However, the impacts of the two indexes differed across different sub-regions. The impact of economic institutions on growth was highest in the Southern African countries with a coefficient of 0.78% and lowest in West Africa with a coefficient of 0.20%. An increase in the index of political institution had the highest impact in the Central African countries and lowest in North Africa. Specifically, political institution was found to aid growth in Central Africa by 1.19% while it slowed down growth in North Africa by 0.49%. Countries that transited to democracy recorded 1.28% improvement in their quality of economic institutions and they grew about 0.51% faster than their pre-transition era. However, for countries where political elites persisted in power after the transition, the quality of economic institutions declined by 1.10% and they experienced a lower growth rate of 0.16%. Improvement in the quality economic institutions promote growth. Competitiveness of political system improved the quality of economic institutions and growth, while elites’ persistence in power reduced the two. Economic growth in Africa can be improved by building and strengthening institutions as well as promoting competitive democracy.