Using Kauffman, Kraay, and Mastruzzi governance indicators, this article analyzes the impact of formal institutions on the knowledge economy-by assessing how the enforcement
We argue that there exists an indirect link between globalization and the knowledge economy of African countries in which globalization influences 'peace and stability' and peace and stability affects governance, and through governance the knowledge economy. We model the link as a three-stage process in four testable hypotheses, which permits an empirical analysis without sacrificing economic relevance for statistical significance. The results indicate that the impacts on governance of peace and stability from globalization defined as trade are stronger than those of peace and stability resulting from globalization taken to be foreign direct investment. We conclude that foreign direct investment is not a powerful mechanism for stimulating and sustaining the African knowledge. However, since the effects of globalization on peace and stability can influence governance both positively and negatively, we also conclude that the prospect for the knowledge economy in African countries may be realistic and attainable, as long as these countries continue to engage in the kind of globalization that enhances peace and stability.
The notion that lack of knowledge undermines the economic performance of African countries is deeply and widely held to be true. Yet quantitative evidence for the basis of that truth is few and far in-between. This article first describes a conventional production function approach to the creation of knowledge of African countries in terms of a relative and indirect measure of the quantity of dissertations (D). Second, it assesses the imputed values of knowledge. In the first instance it finds that relative income (Y), population (N), openness (Z), and technical factors (A) are central to the production of knowledge of African countries. In the second instance, the imputed values of knowledge are positive, but of modest magnitude. The results recommend more investment in the production of knowledge of African countries, improved openness, and especially reduced opportunity cost of knowledge creation which now differs widely across countries, and averages 10.7%. For further research the results suggest that dissertations may be useful proxies for human capital in economic growth regressions.
Purpose Agriculture is the major source of livelihood for the majority of population in Sub-Saharan Africa but its productivity is not only low it has started showing signs of decline since 2012. The purpose of this paper is to find out whether official development assistance for agriculture is effective. Design/methodology/approach The data for development assistance for agriculture are broken down into the major agricultural sectors in receiving countries. The empirical evidence is based on the two-step system, i.e. generalized method of moments, to assess the degree of responsiveness of agricultural productivity to development assistance. Findings There is a positive relationship between development assistance and agricultural productivity in general. However, when broken down into the major agricultural recipient sectors, there is a substitution effect between food crop production and industrial crop production. Better institutions and economic freedom are found to enable agricultural productivity growth, and to increase the effectiveness of development assistance. The structural economic transformation associated with agricultural development assistance is also found to be weak. Practical implications Allocation of development assistance for agriculture is primarily determined by need, although expected effectiveness also increases the assistance receipts. Agricultural assistance policies could focus more on building productive capacity to reduce the need while boosting effectiveness. Originality/value Breaking down data into agricultural recipient sectors and controlling for the potential spurious correlation under the assumption that more development assistance could be allocated, where agricultural productivity is already increasing due to some other factors.
A previous analysis of the impact of formal institutions on the knowledge economy of 22 MiddleEastern and Sub-Sahara African countries during the 1996-2010 time period concluded that formal institutions were necessary, but inadequate, determinants of the knowledge economy. To extend that study, this paper claims that globalization induces peace and stability, which affects governance and through governance the knowledge economy. The claim addresses one weakness of previous research that did not consider the effects on the knowledge economy of globalization.We model the proposition as a three-stage process in four hypotheses, and estimate each hypothesis using robust estimators that are capable of dealing with the usual statistical problems without sacrificing economic relevance and significance. The results indicate that globalization has varying effects on peace and stability, and peace and stability affect governance differently depending on what kind of globalization induces it. For instance, the effects on governance induced by globalization defined as trade are stronger than those resulting from globalization taken to be foreign direct investment. Hence, we conclude that foreign direct investment is not a powerful mechanism for stimulating and sustaining the knowledge economy in our sample of countries. However, since globalization-induced peace and stability have both positive and negative effects on governance simultaneously, we also conclude that while the prospect for knowledge economy in African countries is dim, it is still realistic and attainable as long as these countries continue to engage in the kind of globalization that does indeed induce peace and stability. We further conclude that there is a need for a sharper focus on economic and institutional governance than on general governance as one possible extension of this paper.
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