Institutions, human capital and entrepreneurial orientation: implications for growth policy

2018 ◽  
Vol 7 (2) ◽  
pp. 135-160 ◽  
Author(s):  
Thanti Mthanti ◽  
Kalu Ojah
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Low Income ◽  
Entrepreneurial Orientation ◽  
Research Policy ◽  
Empirical Support ◽  
Low Income Countries ◽  
Content Type ◽  
Growth Policy ◽  
Development Levels

Purpose The purpose of this paper is to establish a more robust empirical support for the long established postulation by Adam Smith and Joseph Schumpeter that human capital and institutions enable Schumpeterian entrepreneurship, which, in turn, facilitates economic growth. Design/methodology/approach Adopting entrepreneurial orientation (EO) (i.e. innovativeness, proactiveness and risk taking; Mthanti and Ojah, 2017, Research Policy, 46:4, pp. 724-739) as the measure of Schumpeterian entrepreneurship at the macro-level, and using a sample of 93 countries, over 1980-2008, the authors employ system Generalised Method of Moments to investigate institutions and human capital as possible determinants of Schumpeterian entrepreneurship (EO). Findings The authors find that the human capital-EO nexus is robust across economic development levels. However, there is a cross-country variation in the institutions-EO nexus. In line with theoretical predictions, institutions indeed drive EO in middle-to-high-income countries. However, in low-income countries, building institutions in order to foster EO yields perverse outcomes, which, for us and especially based on deeper analysis, suggest that improving the quality of institutions may not be a necessary precondition for EO/growth policy in low-income countries. Furthermore, the authors find that EO is a highly persistent series, with self-reinforcing network effects, i.e. lofty EO behaviour encourages more lofty EO behaviour. Research limitations/implications Drivers of macro EO are erroneously taken as of growth. This empirical analysis corrects the sequencing. Practical implications Policy practice must acknowledge macro-EO importantly has both direct and indirect growth effects. Originality/value This study is the first to empirically test the theoretical sequence between drivers of growth/EO and economic growth.

How financial development and economic growth influence human capital in low-income countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Ali ◽  
Syed Ali Ali Raza ◽  
Chin-Hong Puah ◽  
Shamim Samdani
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Financial Development ◽  
Low Income ◽  
Random Effect ◽  
Random Effect Model ◽  
Unit Root Test ◽  
Low Income Countries ◽  
Analysis Tool ◽  
Content Type

PurposeThis research aims to explain the effect of financial indicators and economic growth on human capital in low-income countries.Design/methodology/approachWe gathered balanced panel data from 1980 to 2016 over a sample of 12 low-income countries categorized by World Development Indicators. The data stationary properties were analyzed by unit root test while the existence of a long-run relationship among the variables was confirmed by cointegration test. We performed Hausman test to differentiate between the fixed effect and random effect model. The sensitivity analysis confirmed the robustness of the results.FindingsOur findings indicated that broad money supply and private sector credit has a positive and significant impact on human capital. Interestingly, bank credit showed a negative and significant effect on human capital. We also found a significant positive relationship between human capital and economic growth in the study sample.Originality/valueThis is a preliminary study using financial development and human capital in low-income countries with panel econometric techniques as an analysis tool. Overall, we suggest a policy to focus on the financial sector development and economic growth to produce sustainable human capital.

Does foreign direct investment cause economic growth? A dynamic panel data analysis for SADC countries

2016 ◽  
Vol 11 (3) ◽  
pp. 316-332 ◽  
Author(s):  
Edmore E Mahembe ◽  
Nicholas M Odhiambo
Keyword(s):  
Economic Growth ◽  
Data Analysis ◽  
Causal Relationship ◽  
Low Income ◽  
Panel Data Analysis ◽  
Low Income Countries ◽  
Middle Income ◽  
Fdi Inflows ◽  
Content Type ◽  
Middle Income Countries

Purpose – The purpose of this paper is to examine the causal relationship between inward foreign direct investment (FDI) and economic growth in Southern African Development Community (SADC) countries over the period 1980-2012. It also investigates whether the causal relationship between FDI inflows and economic growth is dependent on the level of income. Design/methodology/approach – In order to assess whether the causal relationship between FDI inflows and economic growth is dependent on the level of income, the study divided the SADC countries into two groups, namely, the middle-income countries and the low-income countries. The study used the recent panel-data analysis methods to examine this linkage. The Granger causality test for the middle-income countries was conducted within a vector-error correction mechanism framework; while that of the low-income countries was conducted within a vector autoregressions framework. Findings – The results for the middle-income countries’ panel show that there is a uni-directional causal flow from GDP to FDI, and not vice versa. However, for the low-income countries’ panel, there was no evidence of causality in either direction. The study concludes that the FDI-led growth hypothesis does not apply to SADC countries. Research limitations/implications – Methodology applied in this study is a bivariate framework which is likely to suffer from the omission of variable bias (Odhiambo, 2008, 2011). Second, the Granger causality analysis employed in this only investigates the direction of causality and whether each variable can be used to explain another, but does not directly test for the mechanisms through which FDI leads to economic growth and economic growth leads to FDI. Practical implications – Future studies may include a third variable such as domestic savings, exports, or financial development in a trivariate or multivariate panel causality model. A more complete analysis which seeks to explain the channels through which FDI impacts growth is suggested for future studies. Lastly, sector level analysis will help policy makers draft effective industrial policies, which can guide allocation of incentives. Social implications – The results of this study support the Growth-led FDI hypothesis, but not the FDI-led growth hypothesis. In other words, it is economic growth that drives FDI inflows into the SADC region and into Southern Africa, and not vice versa. This implies that the recent high economic growth rates that have been recorded in some of the SADC countries, especially the middle-income countries, have led to a massive inflow of FDI into this region. Originality/value – At the regional level, SADC as a regional bloc has been actively pursuing policies and strategies aimed at attracting FDI into the region. Despite the important role of FDI in economic development, and the increase in FDI inflows into SADC countries in particular, there is a significant dearth of literature on the causal relationship between FDI and economic growth. The study used the recent panel-data analysis methods to examine the causal relationship between FDI and economic growth in SADC countries.

scholarly journals The laffer curve and the debt-growth link in low-income Sub-Saharan African economies

2015 ◽  
Vol 42 (5) ◽  
pp. 878-892 ◽  
Author(s):  
Kelbesa Abdisa Megersa
Keyword(s):  
Economic Growth ◽  
Low Income ◽  
Public Debt ◽  
Sub Saharan Africa ◽  
Low Income Countries ◽  
Positive Contribution ◽  
Content Type ◽  
Laffer Curve ◽  
Negative Effect ◽  
Sub Saharan

Purpose – The study of the link between debt and growth has been full of debates, both in theory and empirics. However, there is a growing consensus that the relationship is sensitive to the level of debt. The purpose of this paper is to address the question of non-linearity in the long-term relationship between public debt and economic growth. Specifically, the author set out to test if there exists an established “laffer curve” type relationship, where debt contributes to economic growth up to a certain point (maximal threshold) and then starts to have a negative effect on growth afterwards. Design/methodology/approach – To carry out the tests, the author has used a methodology that delivers a superior test of inverse U-shapes (Lind and Mehlum, 2010), in addition to the traditional test based on a regression with a quadratic specification. Findings – The results in the paper present evidence of a bell-shaped relationship between economic growth and total public debt in a panel of low-income Sub-Saharan African economies. This supports the hypothesis that debt has some positive contribution to economic growth in low-income countries, albeit up to a point. Practical implications – The overall result supports the claim that public debt may start to be a drag on economic growth if it goes on increasing beyond the level where it would be sustainable. Originality/value – This paper leads the way by implementing a robust test of non-linearity (“inverse-U” test) to the analyses the debt-growth nexus and the laffer curve in Sub-Saharan Africa.

Foreign capital inflows and economic growth: the experience of low-income countries in Sub Saharan Africa

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Atif Awad
Keyword(s):  
Low Income ◽  
Foreign Capital ◽  
Ordinary Least Squares ◽  
Capital Inflows ◽  
Sub Saharan Africa ◽  
Low Income Countries ◽  
Content Type ◽  
Long Run ◽  
Foreign Capital Inflows ◽  
The Impact

Purpose This paper aims to investigate the long-run impact of selected foreign capital inflows, including aid, remittances, foreign direct investment (FDI), trade and debt, on the economic growth of 21 low-income countries in the Sub Saharan Africa (SSA) region, during the period 1990–2018. Design/methodology/approach To obtain this objective and for robust analysis, a parametric approach, which was dynamic ordinary least squares, and a non-parametric technique, which was fully modified ordinary least squares, were used. Findings The results of both models confirmed that, in the long run, trade and aid affected the growth rate of the per capita income in these countries in a positive way. However, external debt seemed to have an adverse influence on such growth. Originality/value First, this is the initial study that has addressed this matter across a homogenous group of countries in the SSA region. Second, while most of the previous studies regarding capital inflows into the SSA region have focused on the impact of only one or two aspects of such foreign capital inflows on growth, the present study, instead, examined the impact of five types of foreign capital inflows (aid, remittances, FDI, trade and debt).

Is the Ukrainian economy’s absorptive capacity appropriate to attract foreign direct investment and facilitate economic growth?

2018 ◽  
Vol 13 (6) ◽  
pp. 1928-1947
Author(s):  
Svitlana Shevelova ◽  
Svitlana Plaskon
Keyword(s):  
Higher Education ◽  
Economic Growth ◽  
Human Capital ◽  
Foreign Direct Investment ◽  
Production Function ◽  
Transition Economies ◽  
Absorptive Capacity ◽  
Direct Investment ◽  
Content Type ◽  
Douglas Production Function

Purpose Despite an increasing volume of literature focussed on foreign direct investment (FDI) in transition economies, there has been little research into FDI in Ukraine. The relationship between the inflows of FDI (IFDI) and absorptive capacity (AC) has been under-researched in the peripheral transition countries like Ukraine. The purpose of this paper is to analyse the appropriateness of the Ukrainian economy’s AC to attract IFDI and facilitate economic growth with a particular focus on AC factors, such as the potential of human resources to absorb innovation and benefit from research and development (R&D) expenditure. Design/methodology/approach This study presents a thoughtful research design: there is an analysis of the AC framework for justification and selection factors that allows a measurement of the potential of Ukraine’s AC to attract and exploit IFDI. The study uses data from 25 regions in Ukraine for the 1996–2015 period. To estimate the effects of IFDI on Ukrainian economic growth, a Cobb–Douglas production function is used. As an appropriate instrumentation technique for dynamic panel data, the Generalised Method of Moments is used to provide unbiased and efficient estimates of the results. The application of the interactive term in this study allows the authors to indicate the existence of complementarities between IFDI and human capital, in particular with higher education, that afford opportunity to absorb new technologies and benefit from IFDI. Findings The resulting model indicates that R&D expenditure benefited very significantly in evolving country’s innovation system due to economic growth. Physical and human capital has not been used effectively in Ukraine to facilitate economic growth and attract IFDI. The number of patents is not significant in all of the regression models. Moreover, IFDI in Ukraine for the 1996–2015 period did not significantly impact on economic growth. However, the AC of human capital, in particular those with a higher education, is relatively relevant to benefit from IFDI. Practical implications The findings have important implications for governmental policy, which should be based on improving the business climate, a strategy for digital development, innovation, migration, institutional and regional policies aimed at the achievement of country’s sustainable economic growth. The government should increase R&D expenditure as an important factor of gross domestic product growth and introduce grants, loans and other financial supports for encouraging students to continue university education. Originality/value The originality and value of this paper is empirical and methodological. The empirical results of this study enable a conclusion about the appropriate level of the country’s absorptive capability required to benefit from IFDI. The paper also contributes to the existing academic debate and proves that despite the well-established theoretical framework for the IFDI–AC economic impact context, a new theorisation is needed to explore the full complexity of the country’s explicit relationship between AC and IFDI. Future research should be focussed on examining not only groups of countries but also distinctly the country’s explicit relationship between AC and IFDI with the particular attention for the under-researched countries: the peripheral transition economies to discover new research niches for theory building. This study presents an original methodological approach with a careful justification of the theoretical framework for hypothesis development, an appropriate sample and an original application of seminal research methods based on the Cobb–Douglas production function. This study proves that the interactive term, which allows indication of the existence of complementarities between IFDI and other variables, is appropriate for measuring AC in countries with smaller amounts of IFDI.

Private school vouchers for expanding secondary school access? The case of Tanzania

2018 ◽  
Vol 32 (7) ◽  
pp. 1307-1318
Author(s):  
Donald R. Baum ◽  
Jacobus Cilliers
Keyword(s):  
Secondary Education ◽  
Secondary School ◽  
Low Income ◽  
Private School ◽  
Systems Approach ◽  
Financial Burden ◽  
Low Income Countries ◽  
Urban District ◽  
Content Type ◽  
School Voucher

Purpose The purpose of this paper is to provide insight into the current contributions of private schools to education provision in Tanzania, and to consider the feasibility of a school voucher program to contribute to the expansion of the secondary school system, compared to the alternative expansion of public secondary education. Design/methodology/approach The study offers an analysis of current educational circumstances and educational goals in Tanzania, and projects differential costs and outcomes associated with various options for expanding secondary education. Data come from two sources: a census of the private schooling market in the Morogoro Urban district, conducted as part of the World Bank’s Systems Approach for Better Education Results initiative; and Tanzania’s National Panel Survey 2010–2011. Findings For those students unable to cover the full cost of secondary education, findings suggest that a targeted private school voucher would be an efficient and equitable policy mechanism for secondary school expansion. Such an approach would ease the financial burden on government for constructing all new schools, yet assure access for the most vulnerable. Originality/value The implementation of school voucher programs is increasing in low-income countries. It is important for policy makers to carefully consider the appropriateness of this type of policy intervention for their particular educational contexts. This paper models an approach by which researchers and policymakers can assess the educational circumstances of a particular location, and determine the potential effectiveness of a private school voucher policy.

Cross-cultural metacognition as a prior for humanitarian knowledge: when cultures collide in global health emergencies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tachia Chin ◽  
Jianwei Meng ◽  
Shouyang Wang ◽  
Yi Shi ◽  
Jianxin Zhang
Keyword(s):  
Low Income ◽  
A Priori ◽  
Normative Theory ◽  
Cross Cultural ◽  
Warning Signs ◽  
Low Income Countries ◽  
Global Public Health ◽  
Business World ◽  
Content Type ◽  
Cultural Conflicts

Purpose A serious global public health emergency (GPHE) like the COVID-19 aggravates the inequilibrium of medical care and other critical resources between wealthy and poor nations, which, coupled with the collision of cultures, indicates the vital need for developing humanitarian knowledge transcending cultures. Given the scarcity of literature addressing such unprecedent issues, this paper thus proposes new, unconventional viewpoints and future themes at the intersection of knowledge management (KM) and humanitarian inquiry. Design/methodology/approach This paper is conceptual in nature. The data of the World Bank and the Office for the Coordination of Humanitarian Affairs are analysed to introduce some emerging real impact topics regarding cross-cultural conflicts and humanitarian knowledge in the post-COVID business world. The theoretical foundation was built upon a critical literature review. Findings This paper synthesizes the perspectives of culture, KM and the humanistic philosophy to distil the core component of cultural intelligence and comparatively and thereby illuminating why cross-cultural metacognition acts as a priori for achieving cosmopolitan humanitarian knowledge. Research limitations/implications This paper provides profound implications to academics by highlighting the importance to formulating new, inter-disciplinary themes or unorthodox, phenomenon-driven assumptions beyond the traditional KM domain. This paper also offers practitioners and policymakers valuable insights into coping with the growing disparity between high- and low-income countries by showing warning signs of a looming humanitarian crisis associated with a GPHE context. Originality/value This paper does not aim to claim the birth of a new domain but call for more research on developing a normative theory of humanitarian knowledge as transcendence of cultures. It implies uncharted territories of great interest and potential for the real impact KM community.

scholarly journals Global e-government development: besides the relative wealth of countries, do policies matter?

2020 ◽  
Vol 14 (3) ◽  
pp. 381-400 ◽  
Author(s):  
Gonçalo Paiva Dias
Keyword(s):  
Low Income ◽  
Public Policies ◽  
Low Income Countries ◽  
Political Commitment ◽  
Content Type ◽  
Secondary Sources ◽  
Relative Wealth ◽  
Innovative Thinking ◽  
High Level ◽  
Government Development

Purpose This study aims to investigate whether, discounting the effect of the relative wealth of countries, it is possible to observe the relevance of policies for e-government development. Design/methodology/approach The deviations of countries' results from what could be expected, considering their relative wealth is calculated by using the residuals of a linear regression using the Gross Domestic Product per capita as the independent variable and the UN E-Government Development Index as the dependent variable. The countries that achieve better and worse results than expected are then identified and their cases are analyzed by resorting to secondary sources, namely, published research referring to their cases. Those research documents were identified by successively searching the Scopus database, the Google Scholar database and the Web of Science. Findings The existence of formal e-government strategies and plans and the capacity to implement them can make a difference, allowing countries to achieve better results than expected or, in their absence, to perform worse than expected. Research limitations/implications The proposed methodology can be useful to e-government researchers, particularly as a basis for deeper and more detailed studies. Practical implications Countries should invest in well-developed and focused strategies and continuity of public policies and their capacity to deliver results. For that purpose, political commitment and high-level coordination are key factors. For low-income countries, long-lasting cooperation with external experienced partners is crucial. For high-income countries, innovative thinking is a key enabler. Originality/value This study uses an innovative method to look beyond the effect of the relative wealth of countries and investigate the relevance of public policies for e-government development.

Time lag analysis of FDI spillover effect

2019 ◽  
Vol 15 (4) ◽  
pp. 629-650 ◽  
Author(s):  
Yilin Zhang ◽  
Zhenyu Cheng ◽  
Qingsong He
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Human Capital ◽  
Technical Efficiency ◽  
Time Lag ◽  
Spillover Effect ◽  
Content Type ◽  
Fdi Spillovers ◽  
Belt And Road ◽  
The Belt And Road

Purpose For the developing countries involving in the Belt and Road Initiative (BRI) with China as the main source of foreign development investment (FDI) and development as the top priority, it appears to attract more and more attention on how to make the best use of China’s outward foreign development investment. However, the contradictory evidence in the previous studies of FDI spillover effect and the remarkable time-lag feature of spillovers motivate us to analyze the mechanism of FDI spillover effect. The paper aims to discuss this issue. Design/methodology/approach The mechanism of FDI spillovers and the unavoidable lag effect in this process are empirically analyzed. Based on the panel data from the Belt and Road developing countries (BRDCs) and China’s direct investments (CDIs) from 2003 to 2017, the authors establish a panel vector autoregressive model, employing impulse response function and variance decomposition analysis, together with Granger causality test. Findings Results suggest a dynamic interactive causality mechanism. First, CDI promotes the economic growth of BRDCs through technical efficiency, human capital and institutional transition with combined lags of five, nine and eight years. Second, improvements in the technical efficiency and institutional quality promote economic growth by facilitating the human capital with integrated delays of six and eight years. Third, China’s investment directly affects the economic growth of BRDCs, with a time lag of six years. The average time lag is about eight years. Originality/value Based on the analysis on the mechanism and time lag of FDI spillovers, the authors have shown that many previous articles using one-year lagged FDI to examine the spillover effect have systematic biases, which contributes to the research on the FDI spillover mechanism. It provides new views for host countries on how to make more effective use of FDI, especially for BRDCs using CDIs.

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