Drivers of income inequality in Africa: Does institutional quality matter?

Kunawotor, Mark Edem; Bokpin, Godfred A.; Barnor, Charles

doi:10.1111/1467-8268.12473

Cited by 57 publications

(62 citation statements)

References 43 publications

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“…This reinforces the position of Acemoglu and Robinson (2012) and Acemoglu, Johnson, and Robinson (2004) that strong institutions are imperative for achieving, sustaining and sharing growth gains or opportunities. This finding aligns with Kunawotor et al (2020) who find that improving governance quality is essential for reducing income inequality in African.…”

Section: System Gmm Results On the Effect Of Tourism Development And ...supporting

confidence: 89%

“…This evidence is reechoed by Chi (2021) who find that tourism receipts reduce the income inequality gap in developing countries, it does not matter in the case of the developed world. Their recommendation on the need for effective systems and stricture to propel the tourism sector foster shared income distribution is seen in Kunawotor et al (2020) who employed a panel of 44 African countries to examine whether governance quality equalises incomes. The authors provide robust empirical evidence to shows that governance quality contribute to equitable income distribution.…”

Section: Empirical Survey On Tourism Development Governance and Incom...mentioning

confidence: 99%

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Towards the quest to reduce income inequality in Africa: is there a synergy between tourism development and governance?

Ofori

Dossou

Akadırı³

2022

Current Issues in Tourism

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Despite the growing attention on the tourism development-income inequality nexus, a conspicuous gap in the literature is that rigorous empirical works examining how good governance moderates the relationship is hard to find. Anchoring on the trickle-down theory and the tourism-led growth hypothesis, this study fills this void in the literature based on data for 48 African countries for the period 1996 -2020. We provide strong evidence robust to several specifications from the GMM estimator to show that, though unconditionally both tourism development and governance reduce income inequality in Africa, the effect of the former is amplified in the presence of quality economic, political and institutional governance.Particularly, we find that control of corruption and political are keys for propelling Africa's tourism sector contribute to policymakers' quest of fostering shared prosperity in the continent.Policy recommendations are provided in line with SDG 10 and Aspiration 1 and 3 of Africa's Agenda 2063.

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Section: System Gmm Results On the Effect Of Tourism Development And ...supporting

confidence: 89%

Section: Empirical Survey On Tourism Development Governance and Incom...mentioning

confidence: 99%

Towards the quest to reduce income inequality in Africa: is there a synergy between tourism development and governance?

Ofori

Dossou

Akadırı³

2022

Current Issues in Tourism

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“…Fiodendji (2014) finds a positive association between FDI and institutional quality whereas Aregbeshola (2014) reports that the institutions devoted to fiscal and monetary policies are more important for attracting FDI to SSA. Gossel (2017) further shows that FDI is affected by the long-run accumulation of democratic capital to a greater extent than by short-run democratic reforms or by the components of democracy (civil liberties and political rights) and Kunawotor et al (2020) find that only the control of corruption and the rule of law reduce inequality while the other common measures of institutional quality are insignificant.…”

Section: Literature Reviewmentioning

confidence: 94%

FDI and inequality in Sub-Saharan Africa: does democracy matter?

Gossel

2022

IJOEM

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PurposeThis paper investigates whether democracy plays a mediating role in the relationship between foreign direct investment (FDI) and inequality in Sub-Saharan Africa (SSA).Design/methodology/approachThe empirical analysis is conducted using fixed effects and system GMM (Generalised Method of Moments) on a panel of 38 Sub-Saharan African countries covering the period of 1990–2018.FindingsThe results find that FDI has no direct effect on inequality whereas democracy reduces inequality directly in both the short run and the long run. The sensitivity analyses find that democracy improves equality regardless of the magnitude of FDI, resource endowment or democratic deepening whereas FDI only reduces inequality once a moderate level of democracy has been achieved.Social implicationsThe results discussed above thus have four policy implications. First, these results show that although democracy has inequality reducing benefits, SSA is unlikely to significantly reduce inequality unless the region purposefully diversifies its trade and FDI away from natural resources. Second, the region should continue to expand credit access to reduce inequality and attract FDI. Third, policymakers should undertake reforms that will reduce youth inequality. Lastly, the region should focus on long-run democratic reforms rather than on short-run democratization to improve governance and investor confidence.Originality/valueAlthough there are existing studies that examine the association between FDI and inequality, FDI and democracy and democracy and inequality, this is the first study to explicitly examine the effect of democracy on the association between FDI and inequality in SSA, and the first study to separately consider the possible varied effects of contemporaneous democratization versus the long-run accumulation of democratic capital. In addition, rather than measure inequality by income alone, this study uses the more appropriate Human Development Index to account for SSA's sociological, education and income disparities.

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“…To find out the effect of institutional quality on income inequality in Africa, Kunawotor et al (2020) used a dynamic GMM regression and discovered that institutions do not have a significant role in driving income inequality. However, enforcement of rule of law and control of corruption plays a vital role in promoting even income distribution in Africa.…”

Section: Overview Of Income Inequalitymentioning

confidence: 99%

What drives income inequality in sub‐Saharan Africa and its sub‐regions? An examination of long‐run and short‐run effects

Gimba

Seraj

Özdeşer

2021

African Development Review

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This paper contributes to the understanding of the long-run and short-run drivers of income inequality in sub-Saharan Africa (SSA) and its sub-regions based on the evidence from bootstrap cointegration and autoregressive distributed lag (ARDL) model. The findings from the bootstrap cointegration test reveal a long-run relationship exists for almost the entire SSA and its sub-regions for the dependent variable, independent variables and the overall models. The exception being West Africa where the dependent variable was not statistically significant but the independent variables and overall model were cointegrated. The results from the ARDL show that for SSA, in the long run, economic growth decreases the uneven distribution of income whereas in the short run economic growth increases inequality. A reduction in corruption in the short run and long run makes inequality fall. Population growth in the long run and short run aggravates the distribution of income. A rise in the rate of unemployment in the short run and long run has a positive relationship with income inequality. Trade globalization in the long run heightens inequality but is not significant in the short run.

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Drivers of income inequality in Africa: Does institutional quality matter?

Cited by 57 publications

References 43 publications

Towards the quest to reduce income inequality in Africa: is there a synergy between tourism development and governance?

Towards the quest to reduce income inequality in Africa: is there a synergy between tourism development and governance?

FDI and inequality in Sub-Saharan Africa: does democracy matter?

What drives income inequality in sub‐Saharan Africa and its sub‐regions? An examination of long‐run and short‐run effects

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