ECONOMIC FREEDOM AND PERFORMANCE IN ECOWAS COUNTRIES: A DYNAMIC PANEL DATA APPROACH
Felix Fofana N’Zue
Economic Policy Analysis Unit, ECOWAS
The objective of this study is to contribute to the understanding of the relationship between economic freedom and economic performance as it applies to ECOWAS countries. It used the Heritage Foundation measure of economic freedom and analysed the impact of change in economic freedom on economy-wide, agricultural, industrial and service sectors’ performances. A dynamic panel data estimation approach was used. Results suggested that change in economic freedom was positively related to economy-wide performance, inclusive of agricultural and service sectors’ in the ECOWAS countries. Change in economic freedom often preceded agricultural sector’s enhanced performance but not the other way round. However, change in economic freedom has been detrimental to the industrial sector’s performance.
Keywords: Economic freedom, Economic performance, Panel data, causality
JEL classification : O10, O40, C23
COMPLEMENTARITY EFFECT OF FDI AND HUMAN CAPITAL ON ECONOMIC GROWTH: EVIDENCE FROM SUB-SAHARAN AFRICA
M. Adetunji Babatunde
Department of Economics, University of Ibadan,
R. Adetunji Adefabi
Department of Economics, Oyo State College of Education,
This study examined the argument that FDI spillovers were dependent on the host country’s absorptive capacity such as the accumulation of a substantial amount of human capital in stimulating economic growth in SSA. Using a panel of 24 countries, over the period 1970 to 2005, the study estimated a fixed effect model on different levels of human capital, capable of interacting with FDI to increase growth. The major finding of the study - the existence of weak complementary effect of FDI and different measures of human capital on economic growth in SSA.
Keywords: Foreign direct investment, Human capital, Economic growth, Panel data, Sub-Saharan Africa.
JEL Classification: C23, F43.
NATURE AND DIMENSIONS OF SOCIAL CAPITAL IN RURAL KENYA: CASE STUDY OF NYERI DISTRICT
Gabriel N. Kirori
Catholic University of Eastern Africa
This study investigated the nature and dimensions of social capital in rural Kenya. It examined five different social capital dimensions and aggregate employing primary data from Nyeri district. Using principal factor analysis, indices were constructed as proxy indicators for each social capital dimension and aggregate. These dimensions were groups and networks, trust and solidarity, collective action and cooperation, social cohesion and inclusion, as well as empowerment and political action. Descriptive method was used in the analysis of the results and to achieve the objective of the study. Results from descriptive analysis showed that the nature of social capital was distinct over the rural-urban and gender divides, being higher among rural than urban dwellers and men than women. The results further revealed that the ownership of social capital in the district was high among the poorest groups of households but low among the richest socio-economic groups. An important policy implication of the study was the knowledge of the extent to which rural households can use social capital to improve their lot and to avoid poverty.
Keywords: Social capital dimensions, rural livelihoods, principal factor analysis, social capital endowment
INFLATION AND ECONOMIC GROWTH IN SIERRA LEONE: A THRESHOLD REGRESSION APPROACH
Abu Bakarr Tarawalie
Director of Research and Statistics
West African Monetary Institute (WAMI)
Gulf House, Accra, Ghana.
In this study, the relationship between inflation and economic growth in Sierra Leone was examined using annual data for 1970 to 2008. Specifically, the study used the conditional least square econometric technique to estimate the threshold level of inflation conducive for growth, as well as identifying the key determinants of economic growth in Sierra Leone. In addition, the Granger causality test was employed to test the causal relationship between inflation and economic growth. The granger causality result showed a unidirectional causality, running from inflation to real GDP, with no feedback from output growth to inflation. The findings from the threshold model clearly revealed a negative relationship between inflation and growth. The estimated threshold regression model suggested ten per cent as the threshold level of inflation, above which inflation retarded economic growth. The study also revealed that investment, population growth and political instability (proxy by civil war) were the major determinants of growth during the review period. Based on the results, monetary authorities should maintain inflation at its threshold level, as it may be helpful for the achievement of sustainable economic growth.
Keywords: Economic growth, Granger causality, inflation, Sierra Leone, Threshold model.
JEL Classification: C13, C51, E31, O40
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