Foreign aid’s impact on domestic business climates

2016 ◽  
Vol 5 (3) ◽  
pp. 365-382 ◽  
Author(s):  
Nabamita Dutta ◽  
Russell S. Sobel ◽  
Sanjukta Roy
Keyword(s):  
Middle East ◽  
Foreign Aid ◽  
Political Institutions ◽  
North American ◽  
Negative Impact ◽  
Political Elite ◽  
Economic Institutions ◽  
Business Climate ◽  
Government Regulations ◽  
Content Type

Purpose Existing literature has expressed significant pessimism about the outcomes of foreign aid received by developing nations. Foreign aid can lead to negative outcomes by generating greater rent-seeking opportunities and creating aid dependence. While aid’s negative impact has been explored in the context of growth, political institutions, and economic institutions, the literature has not investigated the effect of aid on business climate of recipient nations. The purpose of this paper is to explore foreign aid’s impact on government regulations on the business climate in Sub-Saharan African (SSA) and Middle East and North American countries. Design/methodology/approach The authors consider a panel of 64 countries over six years. Since foreign aid is most likely to be endogenous, as identified in most studies, the identification strategy follows two methodologies – system GMM estimator, that creates its own instruments via moment generating conditions and instrumental variable approach that relies on an external instrument. Findings The authors find that aid worsens the business climate by increasing government restrictions. Foreign aid provides the recipient governments and the political elite resources to strengthen their power and reinforce predatory policies that are harmful for the business climate. The results further show that in the presence of long-lasting and sustainable democratic regimes, the negative impact of foreign aid on business climate mitigates to a certain extent. Originality/value While aid’s negative impact has been explored in the context of growth, political institutions, and economic institutions, the literature has not investigated the effect of aid on business climate of recipient nations. The authors explore the impact of foreign aid on government regulations on the business climate in SSA and Middle East and North American countries.

scholarly journals Aid effectiveness: when aid spurs investment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Felicitas Nowak-Lehmann ◽  
Elena Gross
Keyword(s):  
Middle East ◽  
Least Squares ◽  
Foreign Aid ◽  
Negative Impact ◽  
Institutional Quality ◽  
Sub Saharan Africa ◽  
Domestic Investment ◽  
Content Type ◽  
Long Run ◽  
Country Characteristics

Purpose This paper aims to analyze the effectiveness of aid in stimulating investment using different measures of aid and up-to-date panel time-series techniques. This study controls for endogeneity by using dynamic ordinary least squares (DOLS) and minimizes the risk of running a spurious long-run relationship by using series that are cointegrated. This paper finds evidence that aid promotes investment in countries with good institutional quality and gain interesting insights on the influence of country characteristics and the amount of aid received. Aid is ineffective in countries with unfavorable country characteristics such as a colonial past, being landlocked and with large distances to markets. Aid can boost investment in regions that receive high (above-median) amounts of aid such as Africa and the Middle East but not in regions that receive low amounts of aid. Investment-targeted aid is effective but non-investment-related aid can also enhance investment. Design/methodology/approach Regressions on the aid-investment nexus are based on either a rather simple (115 countries) or an extended/augmented investment model (91 countries). The data covers the period of 1973–2011 and 1985–2011 if the institutional quality is included. This study estimates the relationship between aid and investment by applying the DOLS/dynamic feasible generalized least squares technique which is based on a long-run relationship of the regression variables (cointegration). In this framework, this paper incorporates country-fixed effects, control for endogeneity, autocorrelation and take heteroscedasticity and cross-country correlation of the residuals into account. Findings This study finds empirical evidence that aid promotes investment in countries with good institutional quality and gain interesting insights on the role played by country characteristics and the amount of aid received. Aid is ineffective in countries with unfavorable country characteristics such as the colonial past, being landlocked, distant from markets. Aid can boost investment in regions that receive high (above-median) amounts of aid such as Africa and the Middle East. Investment-targeted aid is effective but non-investment-related aid also able to enhance investment. Research limitations/implications The study looks at the investment to gross domestic product (GDP) ratio (including domestic investment and foreign direct investment (FDI)) and, hence does not disentangle these factors. It looks at the net effect (positive and negative impact together) and, therefore does not allow to identify the direct crowding out the impact of aid. Of course, if this paper finds that aid has a negative impact on investment, it is clear that aid must have crowded out either domestic investment or FDI or both. Practical implications The authors think that it is relevant to have identified the circumstances and settings in which foreign aid can be particularly effective and in which foreign aid needs accompanying measures that improve the effectiveness of aid. Also, it is relevant that the relative amount of aid received (aid-to-GDP ratio) must be quite high so that aid can increase investment. Social implications This study sees that the least developed, low-income countries and (in terms of regions) the sub-Saharan Africa countries benefit from aid. This is very desirable. This paper further sees that higher relative amounts of aid do help more and that it is helpful to care about a better institutional quality in developing countries. Hence, this study provides some support for the desirability of aid. Originality/value The paper was done very diligently, and this study is very confident that the results are robust. This paper is also confident that this study has studied the long-run (which is of special importance) nexus between aid and investment. The estimation technique used is original, as it combines regular DOLS with corrections for autocorrelation and cross-section dependence.

scholarly journals Women’s political representation in the local governance of Azad Jammu and Kashmir, Pakistan

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tasmia Matloob ◽  
Malik Shahzad Shabbir ◽  
Noreen Saher
Keyword(s):  
Political Parties ◽  
Political Institutions ◽  
Negative Impact ◽  
Local Governance ◽  
Political Representation ◽  
Political Agenda ◽  
The Political ◽  
Jammu And Kashmir ◽  
Content Type ◽  
Political Processes

Purpose The purpose of this study to identify the role of women in political agenda at Azad Jammu Kashmir. The political parties are always considered main gatekeepers to women’s political representation. Existing scholarship highlights the significance of centralized political institutions (parties) with structured set up for the effective representation of women at different levels. However, the functioning of these institutions is greatly influenced by the social and cultural context of a country in which they operate. Design methodology/approach This paper mainly analyzes social and cultural practices and those informal ways that operate within the exited democratic government setup and creates serious obstacles for women’s effective political representation at the party level. For this purpose, a qualitative research methodology is used to get the full insight of the issue at hand. The authors conducted 25 in-depth interviews with women members of three different political parties. Findings The results revealed that both (social context and political structure) have a significant impact on women’s nature and level of participation in the political processes in Azad Jammu and Kashmir. Originality value Prevailing social and political context of Pakistan does not support a truly democratic and centralized political system. Parties are weak entities with the less democratic organizational structure, which ultimately have a negative impact on women’s political representation.

The relationship between foreign aid and corruption: a case of selected Asian countries

2019 ◽  
Vol 26 (3) ◽  
pp. 692-704
Author(s):  
Muhammad Ali ◽  
Lubna Khan ◽  
Amna Sohail ◽  
Chin Hong Puah
Keyword(s):  
Least Squares ◽  
Foreign Aid ◽  
Negative Impact ◽  
Panel Cointegration ◽  
Ordinary Least Squares ◽  
Foreign Assistance ◽  
Asian Countries ◽  
Causality Test ◽  
Content Type ◽  
Long Run

Purpose The purpose of this study is to examine the effect of foreign aid (FA) on corruption in selected Asian countries (Pakistan, India, Srilanka and Bangladesh) using the panel data from 2000 to 2014. Design/methodology/approach The author used Levin-Lin-Chu and Im-Pesaran-Shin panel unit root tests to check the stationary properties of the variables. The Pedroni’s and Kao panel cointegration approach was applied to analyze the variable’s long-run relationship. The author used panel dynamic ordinary least squares (PDOLS) and fully modified ordinary least squares (FMOLS) framework to estimate the coefficients of cointegrating vectors. Additionally, the panel granger causality test was performed to check the causal relationship between the variables. Findings The results from PDOLS and FMOLS indicate that FA has a significant negative impact on the level of corruption. This infers that the foreign assistance decrease the level of corruption perception index, hence, more corruption in the country. Originality/value Overall, the study fulfills the need to understand the aid-corruption nexus, particularly in the case of the Asian region.

Huawei dispute risks escalating reprisals from China

2019 ◽  
Keyword(s):  
East Asia ◽  
North American ◽  
Global Value Chains ◽  
Value Chains ◽  
South East Asia ◽  
Business Climate ◽  
Chinese Firms ◽  
Content Type ◽  
Fast Growing ◽  
Lower Wage

Significance The development raises the prospect of retaliation against North American companies from Beijing, which is already incensed by US tariffs and restrictions on technology exports and investment. This fear is reinforced by the recent arrest in China of two Canadians and an Australian. Impacts Lower-wage countries have an incentive to streamline their domestic business climate, but reforms will be slow. Chinese firms will increase their investment in fast-growing South and South-east Asia. This will accelerate the trend towards fewer global value chains and more regional ones.

After Islamic State, Middle East fissures will deepen

2017 ◽  
Keyword(s):  
Middle East ◽  
Negative Impact ◽  
Middle Eastern ◽  
Arabic Language ◽  
Islamic State ◽  
Content Type ◽  
Middle East Conflict ◽  
Local Support ◽  
Almost All ◽  
Recent Attack

Significance The salafi-jihadist group has lost almost all the territory it formerly held in Iraq and Syria. The recent attack on a mosque in Egypt’s Sinai also significantly reduced its local support. Arabic-language media are already looking to the next stages of Middle East conflict. Impacts The negative impact of IS losing its Raqqa propaganda centre on its efforts to control the narrative will be temporary. Following IS's loss of the Syria-Iraq border, Arabic press focus on the confrontation between Iran and US-linked forces will rise. The disappearance of IS as a territorial threat will likely increase divisions among Middle Eastern states.

scholarly journals The Impact of Political, Legal and Economic Institutions on Family Takaful/ Life Insurance Consumption in OIC Countries

2019 ◽  
Vol 6 (3) ◽  
pp. 97-114
Author(s):  
Mohammad Ghaith Mahaini ◽  
Kamaruzaman Noordin ◽  
Mohammad Taqiuddin Mohamad
Keyword(s):  
Life Insurance ◽  
Political Institutions ◽  
Fixed Effects ◽  
Negative Impact ◽  
Positive Impact ◽  
Economic Institutions ◽  
Random Effects Models ◽  
Government Effectiveness ◽  
Insurance Consumption ◽  
The Impact

This study aims at testing the impact of political, legal and economic institutions on life insurance/ family takaful consumption in OIC countries. Using a panel data covering 33 OIC countries for the years from 1990 till 2016, fixed effects and random effects models have been utilised. The empirical results suggest that for political institutions, more government effectiveness promotes consumption of life insurance in OIC countries. Additionally, the more unstable the country is, the more life insurance/family takaful is purchased perhaps as an attempt of individuals to mitigate the increased level of risks. Similarly, economic institutions, measured by both investment freedom and financial freedom, have a positive impact on life insurance consumption in OIC countries. However, results show that trade freedom index has a negative impact. Further, legal institutions do not seem to have any significant impact on life insurance consumption in OIC countries.

Weak economic institutions in Africa: a destiny or design?

2019 ◽  
Vol 46 (7) ◽  
pp. 904-919
Author(s):  
Abdulkareem Alhassan ◽  
Abdulhakeem Abdullahi Kilishi
Keyword(s):  
Political Institutions ◽  
Deep Understanding ◽  
Economic Institutions ◽  
Economic Policies ◽  
African Countries ◽  
Policy Makers ◽  
Research Attention ◽  
Content Type ◽  
Economic Progress ◽  
Policies And Programs

Purpose The primacy of institutions for economic progress has been established in the literature. Yet, less research attention is paid to the existence and persistence of weak economic institutions in Africa. Thus, the purpose of this paper is to empirically explore the determinants of the quality of economic institutions in Africa. Design/methodology/approach Hausman–Taylor instrumental variable estimator of panel regression was employed for a sample of 43 Sub-Sahara African countries over the period 1995–2017. Findings The study finds that the existence and persistence of weak economic institutions in Africa is more of design than destiny. That is, weak economic institutions are created and sustained more by bad political institutions rather than cultural diversity and geographical factors. Therefore, strong political institutions need to be entrenched to reverse the equilibrium of weak economic institutions and dismal economic performance in the continent. Practical implications The study provides deep understanding of the determinants of economic institutions. This is imperative for policy makers, development agencies and stakeholders in designing viable economic policies and programs for the continent. Originality/value The novelty of the study is rooted in the examination of the factors responsible for the development and persistence of weak economic institutions in Africa. The idea is original because previous studies focus on political institutions and neglected economic institutions.

Controlling the boundaries: how to minimize the negative impact of working outside regular hours

2016 ◽  
Vol 24 (6) ◽  
pp. 15-17
Author(s):  
Graham Cole
Keyword(s):  
Design Methodology ◽  
New Technologies ◽  
Negative Impact ◽  
Working Hours ◽  
Business Climate ◽  
Content Type ◽  
Technological Advances ◽  
The Face ◽  
Pertinent Information ◽  
Practical Implications

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings Heightened competition has become the norm for most organizations operating in the current business climate. Globalization is often cited as a key reason for this. The seemingly incessant emergence of new technologies is another. In the face of such developments, markets evolve accordingly. With firms facing increasingly tougher challenges, the spotlight on employees has intensified. The extent of technological advances means that work is no longer wholly defined by conventional boundaries of space and time. For many people, normal working hours have become something of an anachronism. The advent of the smartphone is especially significant in this respect. An increasing number of employees are now using these and other similar devices to routinely perform workplace duties in their own time. Practical implications The paper provides strategic insights and practical thinking that have influenced some of the world's leading organizations. Originality/value The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Stakes are huge for France's gamble in Lebanon

2020 ◽  
Keyword(s):  
Foreign Policy ◽  
Middle East ◽  
International Cooperation ◽  
Political Elite ◽  
The Political ◽  
Security Cooperation ◽  
Content Type ◽  
Domestic Support

Significance He travelled to Beirut the day after the devastating port explosion on August 6, calling on the political elite to implement far-reaching reforms while directly promising the Lebanese people on the streets that he would not abandon them. In addition to deep historic and cultural ties, Macron's gamble is underpinned by various French strategic interests. Impacts France's acceptance of Hezbollah will undermine its efforts to gain international cooperation on its policy towards Lebanon. Macron's foreign policy assertiveness in Lebanon, and other regions such as the Sahel, is unlikely to strengthen his domestic support. French-UK security cooperation will remain strong in the Middle East after Brexit.

Water conservation technology to become export market

2015 ◽  
Keyword(s):  
Developing Countries ◽  
Middle East ◽  
Foreign Aid ◽  
Water Scarcity ◽  
Water Conservation ◽  
Economic Resources ◽  
Export Market ◽  
Content Type ◽  
The World ◽  
Conservation Technology

Significance California is in the middle of a historic drought, although it is only one of many areas around the world with water scarcity. However, unlike many water-threatened areas in the Middle East and Central Asia, California has the economic resources to sustain capital- and technology-intensive water conservation techniques, which could then be exported elsewhere. Impacts Communications infrastructure will be necessary for many developing countries to monitor drought levels. This will offer an additional impetus for foreign aid to these regions. It will also encourage states that share water basins to establish regional multilateral organisations.

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