Towards Building Shared Prosperity in Sub-Saharan Africa: How Does the Effect of Economic Integration Compare to Social Equity Policies?

Abstract

The debate on the need for Sub-Saharan African (SSA) countries to foster inclusive growth has intensified following the coming into force of the African Continental Free Trade Area (AfCFTA), and the emergence of the coronavirus pandemic. A conspicuous lacuna in the literature is a lack of rigorous empirical work(s) exploring: (1) the joint effect of economic integration and resource allocation, and (2) social equity policies on inclusive growth in SSA.Using data from the World Bank's World Development Indicators and the Global Consumption and Income Project for 43 SSA countries, I provide evidence robust to several econometric techniques the fixed-effect, random-effect, and the system generalized method of moments estimators to show that: (1) though economic integration induces inclusive growth, the effect is higher in the presence of greater financial deepening and productive government expenditure; (2) relative to economic integration, social equity policies are rather remarkable in enhancing inclusive growth. Policy recommendations are provided in line with the AfCFTA and the reversals of welfare gains due to the coronavirus pandemic.

Repackaging FDI for Inclusive Growth: Nullifying Effects and Policy Relevant Thresholds of Governance

“…This evidence aligns with previous empirical works such as Adeleye et al (2021), Tchamyou et al (2019a);Andrès et al (2017) and Ofori and Asongu (2021). Consistent with our results in Table 3 and similar to Ofori (2021), we find that vulnerable employment and inflation are deleterious to inclusive growth efforts in SSA.…”

“…Though in this case, the dynamic ordinary least squares, for instance, can be applied to test our hypotheses as Stock and Watson (1993) argue, we opt for the dynamic system GMM of Arellano and Bond (1995) on grounds of some endogeneity concerns, which if unresolved can bias our estimates. The endogeneity concern arises since (i) past values of income inequality could have a strong relationship with present income inequality values (Ofori et al, 2021a;Ofori, 2021), and (ii) there is an established simultaneity between shared growth and financial development as spelt out in the finance-led hypothesis (Schumpeter, 1911;Levine, 2005) and growth-led hypotheses (Robinson, 1952). Regarding the former, the endogeneity problem arises because >?…”

Bridging Africa’s Income Inequality Gap: How Relevant Is China’s Outward FDI to Africa?

“…This is also a major concern for African leaders who look forward to making giant headways towards the achievement of SDG 10 and the Africa Agenda 2063. It is in this regard that empirical contributions such as this present study are imperative for guiding policy actions on how African leaders can address income inequality, which can go a long way to foster social cohesion, human resource development, and the quality of life (Ujunwa et al, 2021;Ofori, 2021) In this study, we identify two key channels in line with Africa's Agenda 2063 and United Nation's Agenda 2030 on how developing countries such as those of Africa can spur industrialisation and shared opportunities. The first is the momentous rise in foreign direct investment (FDI), which as UNCTAD (2021) and Cornia and Martorano (2012) point out is key for promoting sustainable income growth and distribution.…”

“…Though in this case, the dynamic ordinary least squares, for instance, can be applied to test our hypotheses as Stock and Watson (1993) argue, we opt for the dynamic system GMM of Rodman ( 2009) on grounds of endogeneity. The endogeneity concern arises since: (i) past values of income inequality could have a strong relationship with present income inequality values Ofori, 2021), and (ii) there could be a possible simultaneity between income inequality and economic growth (Aghion et al, 1999). Regarding the former, the authors (ibid) argue that the endogeneity problem stem from the conventional econometric wisdom that 5678 78−: depends on Q 78−: , which also depends on the country-specific effect P 7 .…”

The Synergy between Governance and Economic Integration in Promoting Female Economic Inclusion in Sub-Saharan Africa

“…The explanatory variables of interest in this study are: first, economic integration which is captured as trade openness because it is a widely used proxy for economic integration (Ofori 2021;Cooray et al2012;Ofori and Grechyna 2021). Trade openness is the sum of exports and imports as a ratio of GDP of a country sourced from the World Development Indicators of the World Bank (2020).…”