World Bank Development Research Articles

Priorities for the COVID-19 pandemic at the start of 2021: statement of the Lancet COVID-19 Commission

Priorities for the COVID-19 pandemic at the start of 2021: statement of the Lancet COVID-19 Commission

Impact of Financial Intermediaries on Nigerian Economic Growth

This paper empirically investigated the impact of financial intermediation of economic growth in Nigeria. Quarterly time series data generated from the World Bank Development indicator and the Nigerian Bureau of Statistic for the periods 1994Q1 to 2018q4 were used for the analysis, and Ordinary Least Squares (OLS) regression technique was adopted for the estimation of the hypotheses. Per-capita GDP was used as a measure of economic growth, while bank deposit, bank credit and bank reserves are measures of financial intermediation. Further investigation also show that bank deposit is positively and significantly related to GDPpc, suggesting that increase in bank deposit brings about 0.244193 increases in economic growth. We further observed that bank credit impacted positively on economic growth. Though, the impact was found to be insignificant. Hence, we also found bank reserve to assert significant and positive impacted on economic growth. From the findings, we suggest for good policy reforms that may promote the efficiency and the development of bank which serve as a critical factor for economic growth in Nigeria.

EFFECT ANALYSIS OF BANKING SECTOR REFORM AND GROSS MANUFACTURING OUTPUT IN NIGERIA: IMPLICATIONS FOR ACHIEVING SUSTAINABLE DEVELOPMENT GOAL 9

No doubt, structural transformation lies at the heart of economic progress of any nation. Most significantly, the industrial sector, especially manufacturing, is a key engine of growth and development. Unfortunately, manufacturing development in Nigeria, over the years have not improved despite the banking sector reforms. This paper empirically investigated the shock effects of the banking sector reform on gross manufacturing output in Nigeria between the period 1970-2018. The variables used in the paper include gross manufacturing output, bank credit to the manufacturing sector, interest rate spread, nominal exchange rate, market capitalization, manufacturing capacity utilization and a dummy variable. The data were sourced from the Central Bank of Nigeria Statistical Bulletin, International Monetary Fund Financial Reports and the World Bank Development Indicator (2019). The Vector Autoregressive Model (VAR) estimation techniques were employed to achieve the objective of the paper. The results showed that gross manufacturing output responded negatively to bank credit during all the reforms phases. It further revealed that it responded negatively to a unit shock in exchange rate during the pre-SAP and bank recapitalization periods, but positively during the deregulation, regulation and liberalization periods. It showed also that gross manufacturing output responded negatively to shock in interest rate spread during all reform phases in Nigeria. The policy implication of these findings attested to the fact that the linkage between the banking sector and real sector is weak in Nigeria. Hence for Sustainable Development Goal 9, in particular 9.2, to be achieved, the linkage between both critical sectors must be integrated and strengthened via improving on the banking sector fundamentals and introduction of shock measures from the reform.

Is Gender Inequality a Barrier to Economic Growth? A Panel Data Analysis of Developing Countries

This study provides empirical evidence about the effects of various dimensions of gender inequalities (education, labour market and institutional representation) on economic growth. We use data from the World Bank Development Indicators database for the period 1990–2017. We initially use a large panel of 105 developing countries. Subsequently we study a panel with the sub-Saharan African (SSA) countries since this region is one of the poorest regions in the world. We estimate cross-country and panel regressions. The results suggest that gender equality in education contributes to economic growth and this is a common feature in developing countries. The contribution of equality in education to growth seems to be greater in the SSA countries than in the entire sample of developing countries. The female–male ratio of labour market participation is not statistically significant. We also find a significant link between the presence of women in parliaments and growth in the sample of all developing countries, while this relationship is negative for the SSA countries. It is likely that despite the increased participation of women in the political arena in these countries, women may still encounter major obstacles to altering political priorities and affecting economic growth.

The Reality of Youth Unemployment and Unsuitable Development Models in the Global South: Evidence from Morocco

This article draws on the existing literature to critically analyse the issue of youth unemployment in Morocco. The author argues that youth unemployment policy has to be understood in the context of neoliberalism and its austerity policies, as youth unemployment can never be overcome while the state keeps decreasing public expenditure and privatising public resources. And more importantly, it is the World Bank and other international development agencies that design and control models of development, establishing rankings, metrics, norms, and best practices of development in Morocco. They look at the Global South through their eyes rather than through local eyes. These models, unsuitable for the realities of the Global South, have always resulted in a distorted development model, due to the failure to take into consideration the conditions of the Global South's societies, cultures, and history.

FDI and domestic investment in Africa: Evidence on the role of local conditions

This paper investigates the impact of foreign direct investment on domestic investment and the role of local conditions. Local conditions determine the extent to which host countries can absorb and hence benefit from FDI. We assess conditions under which FDI is likely to be beneficial or inimical to development in Africa. We apply the fixed effects and the two-step system GMM estimation techniques for 48 African economies from 1980 to 2016. We use gross fixed capital formation (GFCF) as a percentage of GDP as a proxy for domestic investment (DI) as our dependent variable. We use the following control variables: growth rate in real GDP (RGDP); savings as a percentage of GDP; and inflation. We also control for openness, financial sector development and institutional quality. We use annual data from the World Bank's World Development Indicators (WDI), the International Monetary Fund's (IMF) International Financial Statistics, the UNCTAD database and the Freedom House database. We find that there is a negative relationship between FDI and domestic investment, suggesting that FDI has a crowding-out effect. The negative association may also imply that countries with lower domestic investment attract more FDI because there are more domestically unsatisfied opportunities for foreign investors. However, the negative relationship between FDI and domestic investment does not necessarily imply that FDI has no benefits. It could as well be that the positive benefits from FDI in Africa may be as a result of an increase in total factor productivity (TFP) which more than compensates for the decline in domestic investment. The study also finds that improved institutions and trade openness mitigate the negative effect of FDI on domestic investment while financial market development exacerbates the negative effect. Policy efforts aimed at attracting FDI should be balanced with the imperative of strengthening institutions and domestic firms. A number of scholars have shown that that even in those countries where FDI has been more productive, domestic investment is more effective than FDI in promoting growth. Investment incentives should therefore not discriminate against domestic investors. Market regulations to dismantle the monopolistic tendencies of some foreign investors must be strengthened.

Central Bank Independence and Economic Growth of Ghana: What Inflation and GDP Per Capita Growth Rates Matter?

The study analyzed data from the World Bank's World Development Indicators, Worldwide Governance Indicators, and Heritage Foundation's Monetary freedom index from 1996 to 2017 to determine the GDP per capita growth and inflation rates require total independence of the central bank of Ghana with threshold regression method. Per the analysis, it was observed that the impact of central bank independence is positively related to economic growth when the inflation threshold is less than 26.1% at a significance level of 5% with an elasticity coefficient of 0.07. On the other hand, when the inflation threshold is greater than or equal to 26.1% with an elasticity coefficient of 0.142 at a significance level of 1%, central bank independence is positively related to economic growth. Nonetheless, the GDP per capita (PPP) growth rate witnessed a decline from 5.8% in 2017 to 4.1% in 2018 and 4.0 in 2019, respectively. Evidently, the regression threshold was pegged at 5.8% or above to significantly impact economic growth when central bank independence is relatively improved. Furthermore, there is an inverse relationship between inflation variability, economic growth variability, and central bank independence. The earnest responsibility of politicians is to persistently safeguard, protect and ensure the implementation of central bank independence over time; perhaps the able requirement of government and politicians is to understand and explain ultimate reasons regarding the entrustment of power and authority to an independent monetary body to see to the well-being of forthcoming generations and present ones as well

International Organizations, Institutions and the Indigenous people

The paper explains the role of international institutions and international organizations which usually have been working for the rights, freedom, survival, livelihood and financial assistances of the indigenous people since the inception of peoples’ democracy in India and abroad. The possible policies that can be helpful for indigenous people in the present world have been also discussed here. How do international financial institutions assist the indigenous people to maintain their social livelihood through their projects, how UNFCCC, IIPFCC, GFC, IAITPTF, IWGIA, IPLP have been working with tribal people in climate change, forest policies and assisting laws and other social and economic activities have been discussed in this paper. Generally, UNFCCC recommended policies on the victimized tribes due to climate change calamities. Since 2019, GFC with their 99 indigenous and non-indigenous member groups from 65 countries have been supporting the struggles of indigenous people by bringing their views, positions and proposals to the forefront of local, national, and global forest-related decision-making processes. IAITPTF has been protecting the tribal people of tropical forest areas in Africa and Latin America. IWGIA in collaboration with ECOSOC have been working for indigenous people in Amazon Basin, Asia, Africa, Latin America and Russia enacting of REDD+ and rights in forests in context of climate change. Since 1999, IPCB protects tribal genetic resources, knowledge, culture, human right and negative effects of biotechnology. The IITC has been organizing tribes to participate in local, regional, national and international events on their survival through human rights agendas. IPACC which consists of 135 tribal organisations in 20 African countries, has been fighting for human rights, legal rights and social inclusion of tribes. The World Bank and African Development Bank took various policies and projects for financing tribal development such as OD4.20. UNDP, ILO and IITC nourish the human rights in the process of development in education and health of tribal people.

Is Foreign Direct Investment the Way Forward for Manufacturing Sector Renaissance in Nigeria?

The study was an attempt to investigate the relationship between foreign direct investments (FDI) and the manufacturing sector contribution to GDP in Nigeria. Specific objectives included finding out the direction of causality between FDI and the growth of the manufacturing sector; and establishing the relationship between FDI net inflows and manufacturing sector contribution to GDP. To achieve the objectives, two research questions and hypotheses were formulated. Secondary data sourced from World Bank Development Indicators were used. The Granger causality model and linear regression model were employed to test the hypotheses. The empirical implementation of the model made use of macro-economic data covering the period of 30 years (1990-2019). The result showed that there is a unidirectional causality from FDI to manufacturing sector contribution to GDP. This implies that manufacturing sector contribution to GDP was not as a result of FDI inflows to Nigeria. Further findings revealed a statistically no significant linear relationship between FDI net inflows and manufacturing sector contribution to GDP in Nigeria. The implication of the study is that the little contribution made by the manufacturing sector in Nigeria is not as a result of FDI net inflows, hence there is need for government and policy makers to consider policy options that will attract FDI to the manufacturing sector.

Empirical Analysis of External Debt Exposure to Exchange Rate Risk in Nigeria

The study investigates external debt exposure to exchange rate risk in Nigeria. The Secondary data used were sourced from World Bank Development Indicators for all the variables from the period 1981 to 2019. By employing the Augmented Dickey-Fuller Unit root test and OLS estimation technique, the study found that external debt service payment (EXTDSP), total payment on external debt (TPEXTD), and trade openness (TROP) is significant. While External debt service payment (EXTDSP) and trade openness (TROP) is negatively impacting the exchange rate (EXCHR). TPEXTD has a positive significant impact on EXCHR at a 5% level of significance. The rest of the explanatory variables: external debt stock (EXTDS), gross domestic product growth rate (GDPGR), and real interest rate (RINTR) are all positive and insignificant at all levels of significance. The study, therefore, recommends that the government should go for concessional loans which has low-interest rate and are long-term in nature and as well encourage international trade with other countries of the world.

Demographic determinant of primary school repeater in Indonesia

The development of a country is supported by its education development. In general, education is financed by the government. It is expected that all school-age population can participate in education. Indonesia has implemented the nine-year compulsory basic education program. The aim of this study is to examine the demographic factors that affect the primary school repeater in Indonesia. The data source was from the World Bank Development Indicator of the World Bank. The data coverage was from 1971 to 2018. The dependent variable was the primary school repeater rate. The independent variables were the population growth rate and fixed telephone subscription. The data were analyzed using multiple regression analysis. The results of the study indicate that higher primary school repeater was associated with higher population growth rate and lower fixed telephone subscription. Therefore, Indonesia needs to manage its population growth rate and improve infrastructure development, in particular information technology infrastructure.

Effect of demographic factors and economic development on carbon intensity in nigeria: an insight into the environmental Kuznets curve hypothesis

This paper sought to examine the effect of urbanisation, population growth and economic development on carbon intensityin Nigeria from 1961 to 2014. The study utilised secondary data from the World Bank Development Indicators. The data were analysed using ordinary least squares regression, vector autoregressive model, and threshold regression. Findings from the study revealed that economic development had an inverse and significant effect on carbon intensity in line with the prediction of the Environmental Kuznets Curve. Meanwhile, population growth and urbanisation exerted a positive and significant effect on carbon intensity in Nigeria. The VAR regression result indicated that urbanisation, carbon intensity, and economic development were strongly endogenous in predicting themselves. The threshold regression revealed that the optimal urbanisation level that will not propelcarbon intensity in Nigeria is 14.444%. As such, rural development policies should be encouraged to curb massive rural-urban migration, which can drive up the degree of urbanisation in Nigeria

Determinants of Intra Sub-Saharan African Trade: Evidence from ECOWAS and CEN-SAD Countries

This study investigates the determinants of intra-regional trade in the Economic of West African States (ECOWAS) and the Community of Sahel-Saharan Sates (CEN-SAD) over the period of 1995-2018.The study employs the modified Poisson models, which captures the source of zero counts. Data on the real exchange rate, population, and gross domestic product were sourced from World Bank Development Indicators. Import flow, time of import, and time of export were computed from WITS (COMTRADE). Further, the study obtained data on voice and account, law and order, government effect, regulatory quality, reduction in political violence, control of corruption from World Wide Governance indicator. The results of the study indicated that imports within ECOWAS are driven by one governance variable or the other either in the importing countries or the partner countries. Besides, trade facilitation is a binding constraint to imports, while population and GDP are important drivers of intra-ECOWAS trade. For CEN-SAD, it is evident that the gravity variables are responsible for imports, whereas governance variables have no significant effect on imports. The implication of these results is that authorities in ECOWAS and CEN-SAD should strengthen governance institutions as doing so will boost trade within the region. Also, it is necessary for government, particularly in CEN-SAD, to come up with policies that will allow for accountability and transparency.

PENERAPAN AUTOREGRESSIVE DISTRIBUTED LAG DALAM MEMODELKAN PENGARUH INFLASI, PERTUMBUHAN EKONOMI, DAN FDI TERHADAP PENGANGGURAN DI INDONESIA

This study aims to examine the effect of inflation, economic growth, and foreign investment on unemployment in Indonesia. Using the autoregressive distributed lag (ARDL) analysis method to analyze the 1991-2018 time series data collected from the World Bank's World Development Indicators database. The results found that inflation has a negative and significant effect in the short term but not significant in the long term in Indonesia. Economic growth has a negative and significant effect on both short and long-term unemployment in Indonesia, and foreign investment has a negative and significant effect on both short and long-term unemployment in Indonesia. Through the ARDL model, this research is able to prove that inflation, economic growth, foreign investment, and budgeting are proven to have long-term cointegration or move together in the long term. The four variables also have a dynamic short-term relationship that has a fairly high speed of adjustment towards equilibrium per year. Based on the results, policymakers, in this case the government must provide a conducive investment environment by eliminating the structural rigidity that exists in the economy to attract investment, both foreign and domestic investment, to encourage economic growth and create jobs in Indonesia.

Estimators and Economic Growth Nexus in Financial Deepening: Perspectives from a Small Open Economy

The study covered four (4) selected financial deepening estimators as it affects the economy as a whole. To carry out the study, data were sourced through Statistical Bulletin 2018 and World Bank Development Indicators (2018) from 2003 to 2018. Group of low-income countries have continued to find the need for adequate financial deepening in a bid to enhance their economic growth. Though they are operating a modern type of economy, yet they are mostly mono-economy, relying more on either oil or agricultural products and heavily depending on oil. Hence, Nigeria is a small open economy. In analyzing the data obtained, linear regression analysis was used through SPSS 22.0. The study formulated four (4) hypotheses and the findings showed that the ratio of money supply, credit ratio in private sector, savings ratio and investment have impact significantly on Gross Domestic Product in Nigeria because the p-value t-statistics are 0.0481, 0.027, 0.046 and.000 respectively are all less than 5% significant level. The study, therefore, identified the nexus by concluding that financial deepening has significant impact on Nigeria’s economic growth. This study recommends that government policies should be geared towards increased money supply and well-organized capital market that can improve general economic efficacy.

Law and land conflict in emerging market economies: Ethiopia, 2014–2018

Abstract Since the end of the Cold War, the World Bank and other Western development agencies have prescribed restructuring land rights in post-communist economies to promote land markets, with the goal of alleviating poverty and social conflicts. But restructuring land rights in such settings is more difficult than it may seem. Ethiopia’s efforts in this area have produced disparate laws that have exacerbated both the intensity and the frequency of land conflicts. This article analyzes all land cases decided by the Council of Constitutional Inquiry (CCI) and the House of Federation (HoF), Ethiopia’s constitutional review bodies, from 1998 to 2018. It shows that from 1998 to 2014, the trial and appellate courts were favorably disposed toward the policies of international financial agencies, and that the CCI and the HoF acquiesced. However, starting in 2014, following a countrywide protest connected to land dispossession, the CCI and the HoF have reversed the lower courts’ judgements by invoking constitutional clauses declaring that land belongs to the Ethiopian nations and that it cannot be alienated. The country’s experience reveals the perils of restructuring land rights without paying close attention to distributive concerns and the needs of those who end up being excluded from property access.

An Econometric Analysis on the Relationship between Globalisation and Inequality in South Africa

Globalisation has had an unprecedented impact on the development and well-being of societies across the globe. Whilst the process has been lauded for bringing about greater trade specialisation and factor mobility many have also come to raise concerns on its impact in the distribution of resources. For South Africa in particular this has been somewhat of a contentious issue given the country's controversial past and idiosyncratic socio-economic structure. Since 1994 though, considerable progress towards its global integration has been made, however this has largely coincided with the establishment of, arguably, the highest levels of income inequality the world has ever seen. This all has raised several questions as to whether a more financially open and technologically integrated economy has induced greater within-country inequality (WCI). This study therefore has the objective to analyse the impact of the various dimensions of globalisation (economic, social and political) on inequality in South Africa. Secondary annual time series from 1990 to 2018 were used sourced from the World Bank Development indicators database, KOF Swiss Economic Institute and the World Inequality database. By using different measures of inequality (Palma ratios and distribution figures), the study employed two ARDL models to test the long-run relationships with the purpose to ensure the robustness of the results. Likewise, two error correction models (ECM) were used to analyse the short-run dynamics between the variables. As a means of identifying the casual effects between the variables, a Toda-Yamamoto granger causality analysis was utilised. Keywords: ARDL, Inequality, Economic Globalisation; Social Globalisation; South Africa

English

This article assesses the link between the four pillars of gender equality and extreme poverty in sub-Saharan Africa. Accordingly, the objective of the paper is to empirically examine whether the four pillars of gender equality, namely women’s health, women education, political participation of women and economic participation facilitate extreme poverty alleviation in sub-Saharan Africa. Data were collected from the World Bank development indicators and World Economic Forum Global Gender Gap Index for 25 sub-Saharan African countries whose data appear on both indexes for three years into the SDGs era. Th e paper applied a quantitative approach with secondary data on poverty gap index drawn from the World Economic Forum Poverty Gap Index for sub-Saharan Africa. Data for twenty-fi ve sub-Saharan African countries were analysed using the fi xed-eff ect panel data regression approach using the Hauseman model selection test. Findings from the analysis indicate that, ceteris paribus, an increase in the threegender equity variables namely economic participation of women, education of women and political participation and leadership of women in sub-Saharan Africa has a signifi cant potential to reduce extreme poverty in sub-Saharan Africa within the sample of study. Since the fi ndings of this study have shown that extreme poverty can be reduced through increased women participation in economic activity, education and leadership, the SDG of poverty alleviation can be improved in sub-Saharan Africa through better government provision of economic, educational and leadership opportunities for women such as providing women with free-interest small business start-up funds, free education for women and supporting women to ascend and survive in political and leadership positions in sub-Saharan Africa through a balanced quota for female leadership positions. Given that the women’s health variable did not prove to be signifi cant on extreme poverty, further research is recommended to separate the health variable into rural health and urban health variables in order to examine the possibility that either of the health clusters might contribute signifi cantly to reducing extreme poverty. Th is paper contributes to existing literature by providing an empirical evidence to show that gender equality in sub-Saharan Africa is a viable policy strategy for achieving the SDGs 2030 Agenda of extreme poverty eradication in sub-Saharan Africa; the paper also provides empirical model for future study.

‘We’ll Help Ourselves, but What’s in It for Us?’ Conflict, Development and Social Mobility among Roma in Romania

AbstractRoma-related development and policy discourse often represents the Roma development ‘subjects’ as disempowered victims. Against the pervasiveness of such narratives, a close look at the local level conflicts arising during the implementation of a World Bank development project in destitute Roma communities from Romania lays bare the strategies of unassisted social mobility in which a group of Roma engage. Not large or well-defined enough to be constituted into a real ‘class’ in sociological terms, this strategic group is made up of Roma civil servants (mediators, local experts, Romani language teachers) who negotiate their engagement in development projects on their own terms and use the material and immaterial resources that projects offer to enact their own upward social mobility. Often, though, this comes at the cost of a growing socio-economic gap between themselves and the most destitute parts of Roma communities, which complicates their involvement in development projects. The article underlines the necessity of taking into account both the strategies of unassisted social mobility of Roma development brokers, and the internal power imbalances that the development apparatus inevitably ends up producing in Roma communities.

Autoregressive Distributed Lag Modeling of the Effects of Some Macroeconomic Variables on Economic Growth in Nigeria

Abstract Research background: The relationship between inflation rate, unemployment rate, interest rate and real gross domestic product per capita in Nigeria. However, there seems to be a short-run or long-run relationship among the macroeconomic variables. Purpose: This study investigated the long and short run impacts of the inflation rate, unemployment rate and interest rate on real gross domestic product per capita (RGDPPC) (proxy for economic growth). Research methodology: This study applied a linear dynamic model Autoregressive Distributed Lag (ARDL) modeling technique to analyze the short-run dynamics and long-run relationship of economic growth in Nigeria over the sample period between 1984 and 2017 using annual secondary data extracted from the World Bank Development Indicators Report. Results: The empirical results showed that there was a long-run relationship between the inflation rate, unemployment rate and interest rate on real gross domestic product per capita (proxy for economic growth) in Nigeria. The results further revealed that only the unemployment rate had a significant positive impact on real gross domestic product per capita in the long-run and the inflation rate had a significant negative impact on real gross domestic product per capita in the short-run. Novelty: Therefore, the study concluded that the unemployment rate and inflation rate proved to have significant impacts on economic growth in the long-run and short-run respectively. The formulation of policies to reduce unemployment through the adoption of a labour concentrated technique of production, entrepreneurship development and policy to keep the inflation rate a single digit.