Economic Growth In African Countries Research Articles

The Impact of Moroccan Banks on Economic Growth in African Countries: Analyzing the Synchronization between the Financial and Business Cycles in WAEMU

The strategic choice of Moroccan banks to conquer the African market has accelerated since the mid-2000s. According to the Banking Commission of the West African Economic and Monetary Union (WAEMU), Moroccan banks concentrate 29.6% of the market share in the WAEMU region in 2015, and more than 30% of the share of global net income in the region. The article is devoted to the research of the role of Moroccan banks in the economic development in African countries. Can Moroccan banks affect real economic activity and act as catalysts for financial and economic development in African countries? To answer this question, we examine the co-movements between loans granted by Moroccan banks in African countries and real activity in those countries. Therefore, we use the synchronization index proposed by Hading and Pagan (2002). The cycles were obtained with a Hodrick-Prescott (HP) filter. The concordance index values, cross-correlation values were used to identify the characteristics of the relationships between the cyclical components. The study covers the period 2006-2015 and focuses on three Moroccan banking groups (Attijariwafabank, BMCE Bank of Africa and Banque Centrale Populaire BCP) set up in seven countries: Benin, Burkina Faso, Cote d'Ivoire, Mali, Senegal, Togo and Niger. The empirical results revealed that the financial (credits granted by Moroccan banks) and business (real activity) cycles are highly synchronized in WAEMU. The study concluded that the bank credits have a positive impact on real activity in WAEMU countries within the period examined.

Technological progress, worker efficiency, and growth in Africa: Does China's economy matter?

In the 21st century, the Sino–Africa relations are characterized by increasing levels of trade and investment. Additionally, African governments consider China a vital stakeholder in their plans to transform their economies through technology. This study empirically examines whether China's exports of information and communication technology and high-technology goods and foreign direct investment outflows stimulate growth in Africa. The results demonstrate that China's engagement in trade could lead to a positive and negative shift of steady-state position of real gross domestic product and technological progress, respectively, in Africa. These results predict that China's engagement will contribute to economic growth in African countries through increasing capital per worker efficiency but cause stagnation in their technological progress. Finally, one of the choices that African countries could make as they create policies to increase their technological progress is discussed.

The Impact of China – African trade on economic growth of African countries

The Impact of China – African trade on economic growth of African countries

Foreign direct investment and economic growth in Africa: a comparative analysis

This paper investigates the effect of foreign direct investment on economic growth in selected African economies (South Africa, Nigeria, Egypt, Kenya, and Central African Republic) from 1980 to 2014, using a modified growth model by Agrawal and Khan (2011). The paper examines how country-specific factors can explain variations in the growth benefits of FDI. Ordinary least squares (OLS) and dynamic panel estimation were used as the estimation techniques. The only unusual results of the study were the inability of gross capital formation, human capital, and international technology in the Central African Republic to influence economic growth. In general, the impact of FDI on economic growth in African countries is limited or negligible for both OLS and dynamic panel estimations. The findings also revealed that South Africa's growth is more affected by FDI than in Nigeria, Egypt, Kenya, and Central African Republic. The paper therefore finds that government policies on FDI play significant roles in facilitating improved economic growth in African countries during the study period.

Impact of foreign direct investment on economic growth in Africa

Several studies have been conducted to examine the influence of foreign direct investment (FDI) inflow on economic growth. Indeed, the overall evidence is best characterized as mixed. This paper investigates the effect of FDI on economic growth in some randomly selected African economies from 1980 to 2013, using a modified growth model by Agrawal and Khan (2011). This model consists of Gross Domestic Product, Human Capital, International Technology Transfer, Labor Force, FDI and Gross Capital Formation (GCF). Ordinary least squares and generalized method of moments were used as the estimation techniques. Of all the results, only Gross Capital Formation, Human Capital, and International Technology Transfer in the Central African Republic were found not to have any statistically significant influence on economic growth. In general, the impact of FDI on economic growth in African countries is limited or negligible. Consequently, this study observes that a 1% increase in FDI would result in a 0.12% increase in GDP for South Africa, a 0.05% increase in Egypt, a 0.03% increase in Nigeria, a 0.02% increase in Kenya, and a 1% increase in GDP in the Central African Republic. The findings also reveal that South Africa’s growth is more affected by FDI than the other four countries. The study also provides possible reasons behind South Africa’s great show of FDI and the lessons other African countries could learn from South Africa better utilization of FDI. This study integrates the related drivers of the effectiveness and success of FDI

The spatial effects on the rate of economic growth: Evidence from Sub-Saharan Africa

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.

The Need to Further Imbibe the Culture of Insurance in Africa

Insurance has been with man for ages: there are different accounts regarding the exact origin of insurance but there is universal agreement that the earliest insurance schemes were in maritime trade, properties and, later, life assurance. In Africa, the history of insurance is even more distorted but one fact which remains unchallenged is that South Africa took the lead. Generally speaking, insurance is alien to the African culture: it is imported from European and other developed countries that colonized Africa, and perhaps that development explains the apathetic attitude of an average person of African extraction. Were the thriving insurance businesses not legally mandatory, the most common being motor insurance, there is doubt that people would ever bother to insure. Be that as it may, this paper argues that life is concomitant with dangers, and such events are far beyond human control. While some of the dangers are natural, others are man-made: either way, for the protection of self, family and properties, it is incumbent on the average man to insure in order to cushion the effects of mishaps, which are incidental to life. This paper adopts the Boy Scout Motto: “Be prepared,” which stated otherwise means that it is more strategic to plan for vicissitudes of life by taking out insurance policies, than to run helter-skelter when calamities strike. Fortunes acquired through the years could perish in one day as a result of many factors; insurance is the veritable means by which such unanticipated consequences of life could be mitigated. The object of this paper is to sensitize Africans regarding the advantages of insurance and it is of the view that it behooves African governments to enact relevant laws and regulations which prompt the citizens to take out policies of insurance because of the benefits derivable thereof, not only for the people, but also for the economic growth of African countries, given the multiplier effect generated as a result of insurance.

EDUCATION, HEALTH AND ECONOMIC GROWTH IN AFRICAN COUNTRIES

This paper provides new empirical evidence concerning the relationship between human capital (measured by education and health related variables) and economic growth for a large sample of 49 African countries over the period from 1996 to 2010. Using traditional cross-section and dynamic panel techniques, we find that public expenditures on education and health have a negative impact on economic growth, whereas human capital stock indicators have a slight positive effect. Furthermore, our empirical investigations suggest that education and health spending are complementary. Then, public investment in education and health should be jointly increased and their efficiency in order to expect positive impact of human capital on growth in African countries.

Private Capital and Investment Climate for Economic Growth: Empirical Lessons based on ARDL bound test technique

Using time series, autoregressive distributed lags (ARDL)-bound test approach and error-correction model (ECM), this paper aims to analyze how private capital and investment climate contribute to economic growth in African countries: Cameroon, Cote d’Ivoire, Tunisia, South Africa and Zambia. We find that in short-run there is a significant relationship between private capital, economic freedom and economic growth in Cameroon, in Cote d’Ivoire, in South Africa and in Zambia. In long run, we establish that a long term relationship exists between the variables. This implies that there is a long run cointegration relationship among the variables in some equations in Cameroon, Cote d’Ivoire, South Africa and Zambia. Employing the appropriate order of the ARDL specification and multidimensional economic freedom proxies to examine this linkage, the results obtained are not all significant. JEL Classifications : C13, C22, E22, F43, O11, O47 Key-Words : Private capital, Investment climate, Economic freedom, Economic growth, Time series, ARDL bound test approach, Error-Correction Model. Normal 0 14 false false false IT X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:Tabella normale; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:Calibri,sans-serif; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:Times New Roman; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:Times New Roman; mso-bidi-theme-font:minor-bidi;}

Financial development, trade openness and economic growth in African countries: New insights from a panel causality approach

This paper examines the causal relationship between financial development and economic growth for 21 African countries within a framework which also accounts for international trade. We develop a financial development index based on four different financial development indicators and apply the panel bootstrapped approach to Granger causality. The empirical results show limited support for the finance-led growth and the trade-led growth hypotheses. The results imply that recent attempts at financial development and trade liberalization do not seem to have made a significant impact on growth.

Mobile Phones, Financial Inclusion, and Growth

This paper assesses the impact of mobile phone rollout on economic growth in a sample of African countries from 1988 to 2007. Further, in light of the large financial infrastructure gap in African countries, we investigate whether mobile phone development fosters economic growth through better financial inclusion. In estimating the impact of mobile phone development on growth, we use mobile penetration rate as well as the cost of mobile local calls to capture mobile phone diffusion, while financial inclusion is measured by the number of deposits or loans per head. Using the System Generalized Method of Moments (GMM) estimator to address endogeneity issues, the results confirm that mobile phone development contributes significantly to economic growth in African countries. Part of the positive effect of mobile phone penetration on growth comes from greater financial inclusion.

ICT, Financial Inclusion, and Growth Evidence from African Countries

This paper studies the impact of information and communication technologies (ICT), especially mobile phone rollout, on economic growth in a sample of African countries from 1988 to 2007. Further, we investigate whether financial inclusion is one of the channels through which mobile phone development influences economic growth. In estimating the impact of ICT on economic growth, we use a wide range of ICT indicators, including mobile and fixed telephone penetration rates and the cost of local calls. We address any endogeneity issues by using the System Generalized Method of Moment (GMM) estimator. Financial inclusion is captured by variables measuring access to financial services, such as the number of deposits or loans per head, compiled by Beck, Demirguc-Kunt, and Martinez Peria (2007) and the Consultative Group to Assist the Poor (CGAP, 2009). The results confirm that ICT, including mobile phone development, contribute significantly to economic growth in African countries. Part of the positive effect of mobile phone penetration on growth comes from greater financial inclusion. At the same time, the development of mobile phones consolidates the impact of financial inclusion on economic growth, especially in countries where mobile financial services take hold.

ICT, Financial Inclusion, and Growth Evidence from African Countries

This paper studies the impact of information and communication technologies (ICT), especially mobile phone rollout, on economic growth in a sample of African countries from 1988 to 2007. Further, we investigate whether financial inclusion is one of the channels through which mobile phone development influences economic growth. In estimating the impact of ICT on economic growth, we use a wide range of ICT indicators, including mobile and fixed telephone penetration rates and the cost of local calls. We address any endogeneity issues by using the System Generalized Method of Moment (GMM) estimator. Financial inclusion is captured by variables measuring access to financial services, such as the number of deposits or loans per head, compiled by Beck, Demirguc-Kunt, and Martinez Peria (2007) and the Consultative Group to Assist the Poor (CGAP, 2009). The results confirm that ICT, including mobile phone development, contribute significantly to economic growth in African countries. Part of the positive effect of mobile phone penetration on growth comes from greater financial inclusion. At the same time, the development of mobile phones consolidates the impact of financial inclusion on economic growth, especially in countries where mobile financial services take hold.

Energy consumption and economic growth: The experience of African countries revisited

The aim of this paper is to re-examine the causal relationship between energy consumption and economic growth for seventeen African countries in a multivariate framework by including labor and capital as additional variables. We apply the variance decomposition analysis due to Pesaran and Shin [Pesaran M.H. and Shin, Y. Generalised impulse response analysis in linear multivariate models, Economics Letters, 1998; 58; 17–29.] to evaluate how important is the causal impact of energy consumption on economic growth relative to labor and capital. The results of our multivariate modified Granger causality analysis due to Toda and Yamamoto [Toda, H.Y. and Yamamoto, T. Statistical inference in vector autoregressions with possibly integrated process, Journal of Econometrics, 1995; 66; 225–250.] tend to reject the neutrality hypothesis for the energy–income relationship in fifteen out of the seventeen countries. In contrast, results of our variance decomposition analyses show that in eleven out of the seventeen countries, energy is no more than a contributing factor to output growth and not an important one when compared to capital and labor. Labor and capital are the most important factors in output growth in fifteen out of the seventeen countries. However, these results should be interpreted with care as they may not be sufficiently robust enough to support the inference that energy consumption plays a minor role in the economic growth of African countries.

Learning from others within the landscape of “transitional economies” and the challenge in ICT development for African countries

This paper presents the experience of good practices and bench learning in the EU for sustainable development in transitional economies. In exploring key issues of ICT development for economic growth in African countries, it will showcase how information and experience from different geographical/economic sectors within the EU have been collated into a comprehensive knowledge system, and shared among users, using both electronic and traditional methods—see The BEEP Project http://www.beep-eu.org. It will then discuss how this good practice model could be developed further as a Pan-African Initiative, as part of the IST Africa Programme for participating countries, to enable them share experience and information in their attempt to narrow the digital divide for sustainable growth.

Higher education and economic growth in Africa

This paper uses panel data over the 1960–2000 period, a modified neoclassical growth equation, and a dynamic panel estimator to investigate the effect of higher education human capital on economic growth in African countries. We find that all levels of education human capital, including higher education human capital, have positive and statistically significant effect on the growth rate of per capita income in African counties. Our result differs from those of earlier research that find no significant relationship between higher education human capital and income growth. We estimate the growth elasticity of higher education human capital to be about 0.09, an estimate that is twice as large as the growth impact of physical capital investment. While this is likely to be an overestimate of the growth impact of higher education, it is robust to different specifications and points to the need for African countries to effectively use higher education human capital in growth policies.

Determinants of human capital formation and economic growth of African countries

Rapid economic growth and improving living standards have benefited almost all regions of the world since the industrial revolution. Africa stands out as one regional exception. While several factors such as civil wars and rampant corruption have been associated with poor economic performance of the African region in the international community, the main focus of this research is to explore the role that human capital should play in improving the region's economic productivity. The study identifies the two-way links between human resource development produced by formal schooling and economic growth, measured in per capita terms, and between investment in physical capital and growth. It then estimates this three-equation structural system by two stage least squares (2SLS). The study concludes that the sources of labor productivity growth in the medium term in African nations are high investment in physical capital and in human capital. This is consistent with the hypothesis that both human and physical capital investments are necessary if Africa is to attain industrial development. The hypothesis that per capita growth is a determinant in turn of investment in education is consistent with the ordinary least squares and 2SLS estimates, implying a two-way causal flow. Also confirmed is the hypothesis that human resource development is a determinant of investment in physical capital, which contributes significantly to per capita growth in the next round.