Ibukun Beecroft

Inclusive Human Development in Pre-Crisis Times of Globalisation-Driven Debts

The paper verifies the Azzimonti et al. (2014) conclusions on a sample of 53 African countries for the period 1996-2008. Authors of the underlying study have established theoretical underpinnings for a negative nexus between rising public debt and inequality in OECD nations. We assess the effects of four debt dynamics on inequality adjusted human development. Instrumental variable and interactive regressions were employed as empirical strategies. Two main findings were established which depend on whether debt is endogenous to or interactive with globalisation. First, when external debt is endogenous to globalisation, the effect on inclusive human development is negative, whereas when it is interactive with globalisation, the effect is positive. This may reflect the false economics of pre-conditions. The magnitudes of negative estimates from endogenous related effects were higher than the positive marginal interactive effects. Policy implications were discussed.

FDI, Aid, Terrorism: Conditional Threshold Evidence from Developing Countries

We investigate how foreign aid dampens the effects of terrorism on FDI using interactive quantile regressions. The empirical evidence is based on 78 developing countries for the period 1984-2008. Bilateral and multilateral aid variables are used, while terrorism dynamics entail: domestic, unclear, transnational and total number of terrorist attacks. The following findings are established. First, while the effects of multilateral aid are consistently significant with positive threshold evidence, bilateral aid is only positively significant in bottom quantiles. Second, with the slight exception of transnational terrorism in bilateral aid regressions, the impacts of terrorism dynamics are unexpectedly positive, in: (i) bottoms quantiles with domestic terrorism and the 0.25th quantile with total terrorism, for bilateral aid regressions, and (ii) the 0.25th quantile with domestic terrorism and bottom quantiles of transnational terrorism, for multilateral aid regressions. Third, interactions between terrorism and foreign aid dynamics unexpectedly yield negative effects in: (i) bilateral aid and domestic terrorism in bottom quantiles and (ii) multilateral aid and domestic (transnational) terrorism in the 0.25th(bottom) quantile(s). The modifying threshold value of bilateral aid is higher than that of multilateral aid. Fourth, there is positive threshold evidence from GDP growth, infrastructural development and trade openness. Policy implications are discussed.

Foreign Aid and Corruption: Clarifying Murky Empirical Conclusions

This note reconciles an on-going debate on the effect of foreign aid on corruption by introducing a previously missing heterogeneity dimension of aid. The relationship was estimated using dynamic system GMM and quantile regressions (QR). Results show that both narratives in the debate are correct, contingent on the type of development assistance. The QR results are robust to endogeneity when the independent variables of interest are instrumented with their first-lags.

Foreign Direct Investment, Aid and Terrorism: Empirical Insight Conditioned on Corruption Control

This study checks the effect of foreign aid on terrorism and FDI, conditioned on domestic levels of corruption-control (CC). The empirical evidence is based on a sample of 78 countries for the period 1984-2008. The following findings are established: the negative effect of terrorism on FDI is apparent only in higher levels of CC; foreign aid dampens the negative effect of terrorism on FDI only in higher levels of CC; when foreign aid is subdivided into its bilateral and multilateral components, the result is mixed. While our findings are in accordance with the stance that bilateral aid is effective in reducing the adverse impact of transnational terrorism, the position that only multilateral aid is effective at mitigating the adverse impact of domestic terrorism on FDI is not confirmed because multilateral aid also curbs the adverse effect of transnational terrorism on FDI. Moreover, multilateral aid also decreases the adverse effect of unclear and total terrorisms on FDI. Policy implications are discussed.

Women’s Access to Land and Economic Empowerment in Selected Nigerian Communities

Despite various land policies that prescribe rights to land in many societies, women remain marginalized in access to and economic utilization of land. This is widespread in rural communities where informal institutions such as customs and traditions subsist. In most of these communities, the patriarchal structure of families is championed by the informal institutions that support male dominance. This study focuses on economic empowerment of women as it encapsulates sustainable wealth of women. It provides answers to two main research questions: (a) what kind of relationship exists between land access and empowerment of women? And (b) how important are individual and household attributes in informing women’s empowerment through land rights? The empirical results of this study provide some new insights as they demonstrate how land rights influence women’s economic empowerment. The study also finds that women’s earning capacity reduces when they take up the responsibility of becoming the heads of households and that their income increases as they become more educated.

Global trade and trade protection in a globalised world

Abstract While the World Trade Organisation and Regional Trade Agreements work for boosting the global trade, trade protection remains prevalent. This contradiction took a new turn during the 2007/2008 global financial and economic crisis. There has been an argument that trade protectionist activities are influenced by diverse factors, including social, economic and institutional factors. This study examines what determines trade protectionist actions, taking into consideration some macro-economic variables. The data were sourced from the Global Trade Alert and World Development Indicators. The authors find that a countrys level of economic growth is not a crucial factor for engaging in trade protection. It is also interesting that as a countrys institutional quality improves, there might be the less protectionist tendencies. This implies that a countrys magnitude of protection is determined by its level of institutional development. The other finding includes that the more a country trades, the higher its tendency to protect.

Institutions, Fiscal Performance, and Development Trajectories in ECOWAS: Implications for Sustainability

This chapter examines the extent to which institutions affect fiscal performance in 15 West African countries (1996–2012). Employing the Feasible Generalized Least Squares (FGLS) estimator, and using institutional indicators of government effectiveness, political stability, rule of law, regulatory quality, and control of corruption, the main argument of this chapter is that, among other issues, there is a significant relationship between institutions and fiscal performance in West Africa. Further, regulatory quality plays the most significant role in improving fiscal performance, and thus development. The reason adduced for the observed relationship is that institutional quality confines the tendency of political capture by public agents, which in many instances are the originators of reckless spending that adds to the debt stock of the respective countries. The findings of the study are fundamental as the prevalence of weak institutional framework can make the governments maneuver public spending to increase their political logrolling, which will lead to soaring fiscal deficits and ultimately put these economies on the path of a weak development trajectory. Thus, the study recommends the need for fiscal discipline that anchors on strong institutional framework in managing fiscal affairs in West Africa, inter alia. It further explains that strong institutions and improved fiscal performance are useful tools for development.

Aid in Modulating the Impact of Terrorism on FDI: No Positive Thresholds, No Policy

We investigate how foreign aid dampens the effects of terrorism on FDI using interactive quantile regressions. The empirical evidence is based on 78 developing countries for the period 1984-2008. Bilateral and multilateral aid variables are used, while terrorism dynamics entail: domestic, unclear, transnational and total number of terrorist attacks. The main finding is that foreign aid cannot be used as a policy tool to effectively address a hypothetically negative effect of terrorism on FDI. The positive threshold we cannot establish is important for policy makers because it communicates a cut-off point at which foreign aid completely neutralizes the negative effect of terrorism on FDI. From the conditioning information set, we also establish for the most part that the effects of GDP growth, infrastructural development and trade openness are an increasing function of FDI. Policy implications are discussed.

On the Solvency of Firms: Can Government’s Intervention Reduce External Financing of Firms’ Working Capital in Nigeria?

Abstract Purpose This chapter intends to examine the relationship between government incentives and the mode of firms’ finance of their operation in Nigeria. Specifically, it does relate the solvency of the firm with the quality of their financing decisions and observed if government incentives such as creation of export processing zones and industrial parks will affect the firm’s decision of depending on external versus internal financing. Methodology/approach The results presented in this chapter are based on analysis of a firm-level data taken from the 2014 firm-level survey of the World Bank’s Enterprise Survey project for Nigeria. Different estimation techniques are applied for robustness and sensitivity. They include both the parametric and non-parametric regression approach. Findings The robust estimations show that firms that benefit from the government incentives tend to use more of internal funding to finance their operation unlike firms that are non-beneficiaries. In addition smaller firms are going to benefit more from the incentives than older firms, and less profitable firms are also going to use more of internal financing if they benefit from government incentives. Practical implications This chapter will be helpful for both research and teaching for undergraduate and post-graduate students. Importantly, its analysis and result will be useful for policy makers and their allies. Originality/value This chapter discusses solvency issues by considering the financing decision of firms, which is an important aspect in the going concern of firms.

Exploring Multidimensional Financial Inclusion and Manufacturing Firms Performance in a Developing Country: The Case of Nigeria

This study used the matching technique to explore the impact of financial inclusion on the performance of manufacturing firms in Nigeria. Most studies that have considered financial inclusion have largely focused on household access to the services of financial institutions, but have inadvertently underexplored the impact on the performance of firms, especially in developing countries like Nigeria. On the one hand, financial inclusion is measured using a multidimensional measure, which includes (i) firms having between 20-40 percent of their working capital financed through borrowing from the bank; (ii) firms having an overdraft facility to finance their operation and (iii) firms having a line of credit or loan from a financial institution. On the other hand, firm performance is measured using the lag total annual sales value of the firm in local currency unit. From the matching estimation, we find that whereas firms perform better with the aid of access to bank services, the extent differs in relation to the type of access they have. We interpret these results as showing that financial deepening increases firms’ performance only dependent on the type of financial inclusion that is being observed.