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The Okada & Samreth (2012, EL) and Asongu (2012, EB; 2013, EEL) debate on ‘the effect of foreign aid on corruption´ has had an important influence in policy and academic circles. This paper provides a unifying framework by using investment and fiscal behavior transmission channels in 53 African countries for the period 1996-2010. Findings unite the two streams of the debate and broadly suggest that while the ‘government´s final consumption expenditure´ channel is consistent with the latter author, the investment and tax effort channels are in line with the former authors. Justifications for the nexuses are provided. Policy implications on how to use foreign aid constraints in managing fiscal behavior as means of reducing (increasing) corruption (corruption-control) are discussed.

The goal of this paper is to assess how knowledge economy (KE) plays out in financial sector competition. It suggests a practicable way to disentangle the effects of different components of KE on various financial sectors. The variables identified under the World Bank´s four knowledge economy index (KEI) are employed. An endogeneity robust panel instrumental variable fixed-effects estimation strategy is employed on data from 53 African countries for the period 1996-2010. The following findings are established. First, education and innovation in terms of scientific and technical publications broadly bear an inverse nexus with financial development. Second, the incidence of information and communication technologies is positive on all financial sectors but increases the non-formal sectors to the detriment of the formal sector. Third, economic incentives have positive implications for all sectors though the formal financial sector benefits most. Fourth, institutional regime is positive (negative) for the semi-formal (informal) financial sector. The findings contribute at the same time to the macroeconomic literature on measuring financial development and respond to the growing fields of informal sector importance, microfinance and mobile banking by means of KE promotion. Policy implications and future research directions are discussed.


Africa´s overall knowledge index fell between 2000 and 2009. South Korea´s economic miracle is largely due to a knowledge-based development strategy that holds valuable lessons for African countries in their current pursuit towards knowledge economies. Using updated data (1996-2010), this paper presents fresh South Korean lessons to Africa by assessing the knowledge economy (KE) gaps, deriving policy syndromes and providing catch-up strategies. The 53 African frontier countries are decomposed into fundamental characteristics of wealth, legal origins, regional proximity, oil-exporting, political stability and landlockedness. The World Bank´s four KE components are used: education, innovation, information & communication technology (ICT) and economic incentives & institutional regime. Absolute beta and sigma convergence techniques are employed as empirical strategies. With the exception of ICT for which catch-up is not very apparent, in increasing order it is visible in: innovation, economic incentives, education and institutional regime. The speed of catch-up varies between 8.66% and 30.00% per annum with respective time to full or 100% catch-up of 34.64 years and 10 years. Based on the trends and dynamics in the KE gaps, policy syndromes and compelling catch-up strategies are discussed. Issues standing on the way to KE in Africa are dissected with great acuteness before South Korean relevant solutions are provided. The paper is original in its provision of practical policy initiatives drawn from the Korean experience to African countries embarking on a transition to KE.

The Kangoye (2013, TDE) findings on the negative nexus between foreign aid unpredictability and governance could seriously affect debates in academic and policy making circles. Using the theoretical underpinnings of the celebrated Eubank (2012, JDS) literature, we first confirm Kangoye´s findings. Then extend the concept of governance from corruption to political, economic, institutional and general versions of the phenomenon. Findings from the extension run counter to those of Kangoye. It follows that in the presence of foreign aid uncertainty, governments could be constrained to improve governance standards in exchange for or anticipation of more dependence on local tax revenues. The empirical evidence is based on 53 African countries for the period 1996-2010. Two direct policy implications result. First, the Kangoye findings for developing countries are relevant for Africa. Second, when the concept of governance is not restricted to corruption, the findings become irrelevant for the continent.

This paper qualitatively and quantitatively assesses the degree of resilience in the financial intermediary sector of the Economic and Monetary Community of Central African States (CEMAC) to macroeconomic shocks and discusses the relevant policy implications. Using GMM and a battery of estimations techniques, the panel-based investigations broadly show that the sub-region is vulnerable to macroeconomic shocks. Lower bank provisions result on the one hand from shortages or decreases in long-term financing, real exchange and GDP per capita growth rate on the other hand from increases of interest rates. Whereas the change in interest rate increases net income commission, the effect is negative from lower levels of short-term financing. The incidence of changes in interest rates on the interest rate margin of banks is ambiguous. The findings broadly confirm the need to incorporate macroeconomic shocks in financial policy decision making. The paper contributes at the same to the knowledge on stock management in monetary zones and the need to: (1) timely intervene to mitigate potential shocks and; (2) increase control to sustain the credibility of the banking system.


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