This study investigates the link between infrastructure and structural transformation in Africa as well as the mediating role of financial development on the nexus. We employ data from 24 African countries for the period 2003 to 2019 and adopt the system Generalized Method of Moments (sGMM) estimation technique. Our empirical results suggest that infrastructure and financial development foster structural transformation. However, our results show varying effects of ICT, electricity, and transport on sectoral value-added. Specifically, ICT infrastructure spurs the agricultural and manufacturing sectors value-added, electricity infrastructure aids all sectoral value-added, and transport infrastructure is important to the development of the manufacturing and services subsectors. Also, the agricultural and manufacturing sectors benefit more than the services sectors from financial-sector development. Overall, we find that infrastructure stimulates structural transformation. The net effect of the interaction of financial development and infrastructure on structural transformation appears to be zero, suggesting that financial development does not augment the nexus between infrastructure and structural transformation in Africa.
Since the inception of the novel coronavirus, immense research efforts have been made to understand how several economic indicators, including food security, would be affected. With India racing behind the United States in terms of daily infection rate and being a country with challenging food security issues, it is important to investigate how the presence of the pandemic has influenced the dynamics of food prices in the country. This paper considers seven price series from 167 markets across the five regions in India as well as the growth rate of COVID-19 infection. The paper uses a time-varying autoregressive model to investigate the nonlinear dynamics of food prices in relation to the pandemic in India. The resultant models reveal strong asymmetric properties with shock-inflicted persistence, which appear not to converge over the simulation period. Moreover, in terms of the location of the burden of the pandemic impact, we find a food product divide.
Purpose The purpose of this paper is to determine how macroeconomic performance work with institutional quality influences divestment of foreign direct investment (FDI) in Sub-Saharan Africa, in the short and long run. Design/methodology/approach This paper investigates divestment of FDI in Sub-Saharan Africa, within the period 1980–2020. The investigation is undertaken by first comparing the trend with what is obtained in other economic regions of the world. The factors behind the divestment are subsequently investigated, using the vector error-correction model. Findings In the comparative analysis, Sub-Saharan Africa and other regions are observed to have witnessed sustained divestment in recent years. The estimation results of the model reveal that macroeconomic performance and institutional quality are the predominant drivers behind the divestment. Research limitations/implications The findings, however, do not conform to the neoclassical theory that lays emphasis on investment return as the fundamental factor influencing investment. Long-run structural stability is also established; hence, the results may be considered suitable for predicting future divestment in the region. Practical implications In view of the empirical findings, macroeconomic performance and institutional quality need to be improved to ameliorate FDI divestment in Sub-Saharan Africa. Originality/value There is paucity of research works on divestment of FDI in Sub-Saharan Africa. Again, there is paucity of works on how macroeconomic and institutional conditions work together to influence divestment. This study provides some evidence to bridge the perceived gaps.
Does the quality of institutions affect economic growth in West African countries? Which institutional variable aids or harms economic growth in the region? Is the effect of institutions on economic growth in former French-colonised countries different from that of British-colonised countries? This study addresses these questions. Specifically, we first examined the effect of six institutional variables on economic growth for each of the 13 West African countries. Then, we employed panel data estimation techniques to examine the overall effect of the quality of institutions on the economies of the region. Finally, we grouped the 13 countries into French-colonised and British colonised countries following the argument of Acemoglu, Johnson and Robinson (2001,2005) and then examined the impact of institutional quality on the economic growth of these subgroups. Our findings reveal that the effect of institutional variables on the economy of each country varies. Overall, we find that government stability and democratic accountability have a positive and significant influence on economic growth, while control of corruption and socioeconomic conditions have deleterious effects on economic growth. Finally, institutions contribute positively to economic growth in French-colonised countries compared to British-colonised countries. The results imply that there is a need to strengthen institutions in West Africa, especially in former British colonies.
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