Africa’s tourism development, political stability, and economic growth using the GMM econometric appraisal technique

The study explores Africa's regional integration models with a view to determining their suitability or otherwise for rapid economic growth. Using annual data spanning 1980–2012, the study employs the Johansen () and the Johansen and Juselius () method of cointegration and Vector Error Correction Mechanism (VECM) to test for the presence of long‐run equilibrium relationships among the variables and estimate their static and dynamic coefficients. The study found a significant positive role for infrastructure financing, and human and physical capital accumulation both of which significantly influenced Africa's economic growth. Intra‐African trade, though positive and significant, was found to be less effective in inspiring growth compared to the above growth fundamentals. Trade openness and government spending were the only variables discovered to significantly influence Africa's economic growth in both the short and long run. The study concludes that the traditional approach to regional integration may not provide the best alternative for Africa's economic growth. It, thus, recommends the adoption of a mixed policy approach to regional economic integration to foster Africa's economic growth in the 21st century. The contribution of the study lies in its ability to subject Africa's models of regional integration to practical examination using modern approaches.

Political instability, especially when it is of a violent nature, diminishes the productive, as well as the transactional capacities of the economy. This has adverse consequences for investment and thus future economic growth, a situation which in turn creates a fragile socio-political environment. The relationship between political instability and economic growth flows in either direction; political instability resulting in low economic growth (PI → LEG) and low economic growth resulting in political instability (LEG → PI). From the PI → LEG point of view, political instability influences the latter through a number of channels including the tax system, government spending and fiscal deficit, and inflation, all of which affect the level of investment, and thus influence future economic growth rates. From the LEG → PI point of view, low economic growth rates create conditions favourable for political instability. Reviewing economic and political stability data from 52 African countries for the period 1980 to 2013, the analysis demonstrates through some scenarios that higher and relatively more stable long-term (1980–2013) average growth rates correlate with lower levels of political instability in most of the pairwise comparisons of the countries. This is shown to be especially true for less resource-dependent countries. Empirical analyses of the data comprising all the countries under investigation find there to be a strong bi-directional direct relationship between political stability and the level of growth, and it is even more so the case for conflict-affected countries, unlike the non-conflict-affected countries. Further analyses using three-year averages of the data from 1981 to 2013 find that greater fluctuations in the growth rate adversely affect the level of political stability in especially conflict-affected countries, thus indicating a correlation between economic instability and political instability.

Since generating sustained economic growth in Africa remains one of the most pressing challenges to development, it is imperative that Africa-specific determinants of economic growth are investigated. At the same time, in spite of recent slight slowdown, China's economic growth and its capacity to move in thirty years from underdevelopment and extreme poverty to an emerging global economic power had attracted the attention of many developing countries, including those in Africa. Some key questions arise: Can China serve as a growth model for Africa? And what lessons can we draw from the Chinese experience of soaring economic growth? We therefore investigate the determinants of economic growth in Africa (North and sub-Saharan Africa), using an Africa-only sample with five non-overlapping three-year averages of cross-sectional data between 1996 and 2010. We also do the same for China for the period, 1980 to 2010, while discussing recent trade, investment and aid/debt relations between Africa and China. Our results suggest that domestic investment, net ODA inflows, education, government effectiveness, urban population, and metal prices positively and significantly affect Africa's economic growth. For China, the key factors driving its economic growth are domestic investment, trade openness, initial income, and rural share of the population. Factors driving down China's growth include inflation rate, domestic credit to the private sector, net ODA inflows, population growth, telephone density, and oil and agricultural/raw materials prices. One key finding is that while Africa is almost twice as open as China, openness does not positively and significantly affect Africa's growth, unlike in China. A principal source is that Africa imports (mainly consumer goods) more than it exports while the reverse is true for China. Moreover, the structure of Africa's exports is biased towards traditional primary commodity exports unlike China that has rapidly shifted towards manufactures. In addition, Chinese domestic investment is about double that of Africa. The key lessons for Africa from the soaring Dragon's experience are discussed.

This paper empirically investigates the relationship between health expenditures, health outcomes and economic growth in Africa using data from 48 African countries over the period 2000-2015 in a panel data regression framework. In line with wider literature on economic growth as well as health economics, the paper first finds that maternal, infant and child mortality rates are all negatively and significantly associated with economic growth in Africa. In addition, life expectancy at birth is positively associated with economic growth. A 9.4-year increase in life expectancy leads to 1 per cent increase in real GDP per capita. Second, the paper finds that health expenditures have direct and indirect effects on economic growth that are positive and economically meaningful. In particular, a 10 per cent increase in health expenditures leads to an increase in annual average real GDP per capita by 0.24 per cent. Third, education emerges as a strong determinant of both economic growth and health outcomes in Africa, particularly when female education is considered. The main policy implication of this paper is that governments should aim at spending more and efficiently on the overall health system to progress over health outcomes and benefit from the positive externalities leading to economic growth. In addition, it is crucial that governments partner with private sector for resource mobilization and effective service delivery.

This study uses the Vector Error Correction (VEC) technique and secondary quarterly time-series data to examine the nexus between public debt and economic growth in South Africa. The findings confirm classical economists' ideology, since this study found a long-term negative relationship between economic growth and both domestic and foreign debt, with economic growth and domestic debt being causally related. Inflation, economic growth, and fiscal deficits also have negative long-term relationships. The Impulse Response Functions (IRFs) show that shocks to inflation and domestic debt have a negative reaction on South Africa's economic growth rate, whereas shocks to gross fixed capital formation have a partially positive reaction. The shocks to South Africa's fiscal deficit and foreign debt have also had a mixed reaction on the country's economic growth rate. Variance decomposition analysis show a significant decline in South Africa's economic growth rate variance, with domestic debt and inflation increasing and the fiscal deficit declining marginally, while foreign debt declined marginally before increasing significantly. This study recommends that South Africa should enhance its fiscal management strategies, including financial repression, debt restructuring, cost cutting, and improved capital spending. Enhancing these strategies could boost the economy's productive capacity.

Since 1960’s, many African countries have experienced anemic growth and high levels of acute poverty, even in the presence of natural resources abundance. Ending this poverty trap has been the goal of the 2015 UN Millennium Project. There are a myriad of reasons cited for this trend. The explanations include the inward looking policies adopted by the African countries since 1960s, poor policy management or other socio/political issues, macroeconomic issues such as inflation, exchange rate volatility, poor governance, and institutions. While many previous studies have analyzed the determinants of economic growth of African countries, they fail to consider the possible impact of the economic performance of proximate countries. Results from such studies may be biased as stated in Greene, 2003. It is, therefore, important to properly investigate the determinants of economic growth in Africa and propose appropriate policy directions. In this study, we estimate a spatial economic growth model with spatial correlations in the dependent variable and the error terms by using a panel data on 48 African countries for the years spanning 1980 to 2011. The model controls for some of the conventional sources of economic growth such as gross capital formation, openness of the economy, overseas development assistance, and inflation. We use a variety of proximity matrices including cultural, ecological, developmental, economic, and regional to explore the effect of the rate of economic growth of one country on the growth rates of its proximate countries. We find significant positive spatial linkages in the dependent variable and negative ones in the error terms, indicating that proximate sub-Saharan African countries experience similar levels of economic growth due to the cluster effects and the fact that they compete intensively for growth sources when shocks such as global capital retreats occur. Based on this result, the implication is that the policy makers in Africa should consider planning and implementing strategic and comprehensive regional growth agenda for all proximate countries and consider growth forecasts of proximate nations in the process of making fiscal and monetary policy decisions. Further, our result indicates that without correcting for spatial linkages in determining growth rates, the estimation results may be downward biased. The only significant determinants of economic growth are the gross fixed capital formation as a percent of GDP and gross secondary school enrollment with larger magnitudes for the spatial model. This result, perhaps, indicates that the most important driver of economic growth and development in Africa is fixed capital formation and infrastructure development. In a continent where capital is scarce and the availability and quality of infrastructure is for the most part pathetic, it is a very important for decision makers to implement policies that improve the availability and quality of capital formation and infrastructure development.

Using panel data on 47 African countries from 1980–2013, this paper investigates the effects of aid on Africa's economic growth from the perspective of political stability. We find that international aid can promote economic growth in Africa, but the effectiveness of aid depends on countries’ political stability. Further, the intensity of aid affects its effectiveness. When the aid–GDP ratio is between 0 and 69 per cent, aid can promote economic growth in recipient countries, and when this ratio is 27 per cent, the marginal impact of aid on economic growth is maximized. The findings of this paper suggest that providers of aid should avoid providing a substantial amount of aid to countries at risk of political unrest, and they must determine the optimal scale of aid based on the economic development of recipient countries in order to enable aid to generate better results. Recipient countries should maintain social and political stability and ensure that they do not develop an excessive dependence on aid so that they can achieve the self‐sustainable development of their own economies.

Stabilization seeks to achieve internal and external equilibrium that is, to control the demand side of the economy, with the purpose of reducing size of government, inflation and quickly achieving a sustainable balance of payment position. In this paper, I investigated the impacts of HIPC initiative and debt relief on economic growth and economic stability in Africa. I also identify the determinants of economic performance using the World Bank data for the period 1990–2015 with 5-year panels. The results show that this initiative causes economic instability in Africa. The results also indicate that the long run effect of debt relief on economic growth is positive but in the short run debt relief has no significant effect on GDP per capita growth. However, in both the short run and the long run, debt relief reduces external balance on goods and services deficit and has no effect on inflation. The main determinants of economic performance in Africa are control of corruption, political stability, regulatory quality and education. In this perspective, governments of African countries should promote good governance, educate their population and revise trade agreements to provide insurance for economic growth and economic stability.

The objective of this paper is to analyze the role of institutional quality in the relationship between military spending and economic growth in sub-Saharan Africa. For this purpose, a dynamic panel model was specified and estimated by the generalized method of moments (GMM) in system. Using World Bank data (WDI) over the period 2002–2021, the model results showed that military spending has a positive and significant influence on economic growth in Africa. In addition, the estimation results reveal that institutional quality reinforces the positive influence of military spending on economic growth in Africa. Also, the estimation results of the interaction model by region show that the interaction between military spending and institutional quality is significantly positive on economic growth in the Economic Community of West African States (ECOWAS) and the Southern African Development Community (SADC). The study therefore suggests the implementation of austerity policies in order to improve institutional quality, a guarantee of better orientation of military expenditure towards productive sources.

There is growing emphasis on the role of institutions on explaining Africa’s economic growth ahead of the traditional factors such as capital accumulation. However, it is not clear which of the institutions and governance indicators namely control of corruption, government effectiveness, political stability, regulatory quality, rule of law and voice and accountability matter most. This paper empirically examines the impact of institutions on economic growth in Africa. The paper uses a sample of 48 countries for the1996-2016 period. The overall number of observations is 912. The paper applied generalized methods of moment (GMM), fixed effects (FE) and random effects (RE) models. However, due to the fact that GMM is well suited to deal with potential endogeneity problems in the model, inferential statistics of this paper are drawn from GMM regression results. Results of the FE and RE regressions are presented in appendix. Empirical results show that institutions really matter for Africa’s economic growth. Among the institutional quality indicators political stability appears to be the most significant factor in explaining real GDP per capita growth in Africa. However, it is worth noting that, the quality of institutions alone may not be sufficient. Along with institutions, the paper reveals that structural factors such as liberalization of trade, fixed capital formation, labour force and foreign direct investment have a significant effect on Africa’s economic growth. The implication is that, a policy mix with the aim of improving the quality of institutions as well as reducing trade restrictions, enhancing both domestic and foreign investment and improving the quality of labour force would enhance economic growth in Africa.

Introduction More than a decade ago, the World Bank argued that “underlying the litany of Africa’s development problems is a crisis of governance.” Poor quality institutions, weak rule of law, an absence of accountability, tight controls over information, and high levels of corruption still characterize many African states today. Aid levels have been reduced in many parts of Africa during the past decade. Yet in many of the countries with poor governance records, aid continues to contribute a very high percentage of government budgets. This article explores the institutional impact of these high levels of aid and the way that large amounts of aid are delivered. There are many reasons why governance is poor in much of sub-Saharan Africa. Colonialism did little to develop strong, indigenously rooted institutions that could tackle the development demands of modern states. Economic crisis and unsustainable debt, civil wars, and political instability have all taken their toll over the past 2 decades and more. It is difficult to separate the impact of these problems from the possible impact of foreign aid, which is often high in countries that suffer from precisely these problems. Theory provides conflicting guidance here. On the one hand, aid can release governments from binding revenue constraints, enabling them to strengthen domestic institutions and pay higher salaries to civil servants. Aid can provide training and technical assistance to build legal systems and accounting offices. In many countries, aid personnel (sometimes expatriate) manage important government programs, and the infusion of resources and technical assistance can give an important boost to the efficiency and effectiveness of governance, if only in a partial sense. Yet despite these likely benefits, it is also possible that, continued over

This study examines the effects of trade policies on economic growth in Africa. The econometric methodology follows the cross-country studies by Barro (1991) and Kandiero and Chitiga (2003) with empirical application to a panel of 36 African countries observed over the period 1980 to 2009. Panel regressions are carried out using the fixed-effects models. The aim is to provide an empirical evidence for the driving force of Africa's economic growth. The results illustrate that openness in trade and investment is positively related to economic growth significantly. However, foreign aid, gross national savings and investment have negative relationships to both Gross Domestic Product (GDP) growth and GDP. Using South Africa as benchmark, the regional performance indicates that North Africa is the best one in generating positive GDP growth from Foreign Direct Investment (FDI), followed by Middle Africa whilst East Africa and West Africa compete for the third and fourth positions.

Korean Abstract: BRICs 이후 새로운 성장유망시장으로 아프리카 경제권이 주목받고 있다. 미국, 중국, 일본 등 거대국가들은 이미 아프리카 경제권을 신흥시장으로 받아들이고 있다. 우리 나라 역시 교역시장의 다변화 및 새로운 수출동력 확보 차원에서 아프리카의 다중적 가치를 재인식하기 시작하였다. 그러나 53개국의 이질적인 시장으로 구성된 아프리카 지역 을 대상으로 경제협력 기반을 조성하고 효율적으로 시장진출하는 것은 쉽지 않다. 이에 정부 부처 및 전문가 그룹에서는 아프리카 접근전략으로 소위 ‘3 plus 2 거점국가’ 선정방식을 제시하고 있는데, 본 연구는 이러한 시각을 바탕으로 아프리카 거점국가 선정과 관련된 논의에 기여하고자 한다. 거점 후보 국가로는 아프리카 최대 경제규모인 남아공과 나이지리아를 선정하였다. 또한 아프리카 지역의 경제력이 일부 국가에 집중되어 있고 경제통합체별 시장 특성이 상이하다는 점을 고려하여 아프리카 지역과 경제통합체별 경제성장 결정요인이 상이한가를 함께 분석하였다. 실증분석 결과, 남아공 경제가 아프리카 지역 및 SADC(남아공의 경제통합체)에 미치는 파급효과가 나이지리아의 경우보다 훨씬 큰 것으로 분석되었다. 즉 남아공의 1인당 실질 GDP 성장률이 10% 증가할 때 아프리카 지역의 1인당 경제성장은 2.2~2.5%로, 나이지리아의 경우는 0.7~0.8%로 분석되었다. 이러한 실증분석 결과는 남아공을 최우선적 거점전략국가로 선정하는 것이 바람직하다는 점을 간접적으로 시사한다. 한편 아프리카 지역과 경제통합체별 경제성장 결정요인도 매우 상이하다는 것을 확인하였다. 아프리카 지역의 경제성장을 결정하는 변수는 인구증가율인 반면 SADC의 경제성장은 GDP 대비 무역규모인 것으로 분석되었다. 이러한 경제성장의 결정요인 차이는 주로 아프리카 국가의 산업구조에서 기인된다. 가령 석유가격에 크게 의존하는 산업구조를 갖는 대다수의 아프리카 국가와 달리 남아공은 선진국형 경제구조를 갖고 있어 역내무역규모가 경제성장을 주도했을 것이다. GDP 대비 투자 비중은 아프리카 지역과 SADC의 경제성장을 결정하는 중요한 공통 변수로 확인되었다. English Abstract: Major countries, such as the United States, Japan, and China have already recognized the potential of Africa’s markets. Korea has also taken notice of Africa's diverse export markets recently. However, Africa is comprised of 53 different countries and, as a result, entry into the region poses a formidable strategic challenge. Korean authorities and export groups have suggested a “3 plus 2 Country Strategy” in order to make inroads into the African region. This paper contributes to discussions of this strategy by comparing the effects of economic growth in South Africa and Nigeria on Sub-Saharan Africa. In addition, because economic power in Africa is concentrated in a small number of countries, whose market characteristics are different from those of integrated unions, the determinants of economic growth in Africa as a whole and unions may be different. This paper investigates whether or not this is, in fact, the case. The empirical results can be summarized as follows: First, the effects of South Africa's economic growth on Sub-Saharan Africa and the SADC (a representative union of South Africa) is much larger than the effects of Nigeria’s growth on Sub-Saharan Africa and the ECOWAS (a representative union of Nigeria). These empirical results imply that the preferred country to pursue economic cooperation with is South Africa. Second, we confirm that determinants of economic growth are different for Africa and the unions. The main determinant of growth in African countries may be the population ratio, but in the SADC, growth appears to be determined by ratio trade volumes of GDP. Finally, we also find that the ratio investments of GDP has a positive influence on the economic growth of both Africa and SADC.

Major countries, such as the United States, Japan, and China have already recognized the potential of Africa's markets. Korea has also taken notice of Africa's diverse export markets recently. However, Africa is comprised of 53 different countries and, as a result, entry into the region poses a formidable strategic challenge. Korean authorities and export groups have suggested a 3 plus 2 Country Strategy in order to make inroads into the African region. This paper contributes to discussions of this strategy by comparing the effects of economic growth in South Africa and Nigeria on Sub-Saharan Africa. In addition, because economic power in Africa is concentrated in a small number of countries, whose market characteristics are different from those of integrated unions, the determinants of economic growth in Africa as a whole and unions may be different. This paper investigates whether or not this is, in fact, the case. The empirical results can be summarized as follows: First, the effects of South Africa's economic growth on Sub-Saharan Africa and the SADC (a representative union of South Africa) are much larger than the effects of Nigeria's growth on Sub-Saharan Africa and the ECOWAS (a representative union of Nigeria). These empirical results imply that the preferred country to pursue economic cooperation with is South Africa. Second, we confirm that determinants of economic growth are different for Africa and the unions. The main determinant of growth in African countries may be the population ratio, but in the SADC, growth appears to be determined by ratio trade volumes of GDP. Finally, we also find that the ratio investments of GDP have a positive influence on the economic growth of both Africa and SADC.

This chapter chronicles neoliberalism and economic growth in Africa. It assesses pre-neoliberalism growth initiatives championed by Africans and African institutions. The chapter reviews the thrust of neoliberalism in Africa, focusing on its tenets and history. It then examines recent African economic growth performance. The chapter also focuses on the effects of neoliberalism on economic growth in Africa. The poor state of African economies gave rise to the policy of neoliberalism initiated by the Bretton Woods Institutions (BWIs) as a potential solution to addressing the challenges faced by many African countries at the time. Despite the usual challenge of attribution, it seems likely that greater institutional democracy that has accompanied neoliberalism in the region has helped to reduce the capricious nature of the executive branch of government that may have spawned the policy syndromes to begin with.