Commodity price fluctuations and development: perspective from emerging economies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rexford Abaidoo ◽  
Elvis Agyapong Agyapong
Keyword(s):  
Crude Oil ◽  
Emerging Economies ◽  
Political Stability ◽  
International Market ◽  
Commodity Price ◽  
Institutional Variables ◽  
Content Type ◽  
Government Effectiveness ◽  
Price Fluctuations ◽  
Empirical Estimates

Purpose This paper aims to examine the impact of commodity price changes (crude oil, cocoa, coffee, cotton and gold) on the international market on development (development proxied by the human development index) (HDI) among emerging economies in Sub-Saharan Africa (SSA). Design/methodology/approach Empirical estimates verifying theorized relationships in question were performed using the two-step system generalized method of moments framework. Findings Results from the empirical estimates suggest that a percentage increase in the prices of crude oil, cocoa and gold in the world market have a significant positive influence on development among economies in the sub-region all things being equal; however, similar price changes in cotton and coffee showed a negative effect on development. Further empirical estimates suggest that the extent to which prices of key commodities such as crude oil, influence development in the sub-region benefit less from institutional variables such as government effectiveness, corruption control and political stability. The same institutional variables, however, were found to augment how changes in cocoa prices influence development among economies in the sub-region. Originality/value This study specifically examines the extent to which commodity price fluctuations impact a holistic measure of development, (HDI which inherently captures economic growth) among emerging economies such as those in the SSA region, and how such relationship may be moderated by conditions such as corruption control and government effectiveness. The review suggests that such a study is rare, did not find any specific empirical inquiry focusing on what this study is designed to accomplish. A major gap or deficit identified among most reviewed studies is the failure to verify how the surmised relationship between movements in prices of commodities traded on the international market and development is moderated by institutional factors such as corruption control, government effectiveness and political stability. This study specifically examines such interaction effects in its empirical analysis.

Can energy commodities affect energy blockchain-based cryptos?

2019 ◽  
Vol 36 (4) ◽  
pp. 682-699 ◽  
Author(s):  
Ikhlaas Gurrib
Keyword(s):  
Natural Gas ◽  
Crude Oil ◽  
Autoregressive Model ◽  
Structural Breaks ◽  
Price Index ◽  
Principal Component ◽  
Commodity Price ◽  
Var Model ◽  
Content Type ◽  
Heating Oil

Purpose The purpose of this paper is to shed fresh light into whether an energy commodity price index (ENFX) and energy blockchain-based crypto price index (ENCX) can be used to predict movements in the energy commodity and energy crypto market. Design/methodology/approach Using principal component analysis over daily data of crude oil, heating oil, natural gas and energy based cryptos, the ENFX and ENCX indices are constructed, where ENFX (ENCX) represents 94% (88%) of variability in energy commodity (energy crypto) prices. Findings Natural gas price movements were better explained by ENCX, and shared positive (negative) correlations with cryptos (crude oil and heating oil). Using a vector autoregressive model (VAR), while the 1-day lagged ENCX (ENFX) was significant in estimating current ENCX (ENFX) values, only lagged ENCX was significant in estimating current ENFX. Granger causality tests confirmed the two markets do not granger cause each other. One standard deviation shock in ENFX had a negative effect on ENCX. Weak forecasting results of the VAR model, support the two markets are not robust forecasters of each other. Robustness wise, the VAR model ranked lower than an autoregressive model, but higher than a random walk model. Research limitations/implications Significant structural breaks at distinct dates in the two markets reinforce that the two markets do not help to predict each other. The findings are limited by the existence of bubbles (December 2017-January 2018) which were witnessed in energy blockchain-based crypto markets and natural gas, but not in crude oil and heating oil. Originality/value As per the authors’ knowledge, this is the first paper to analyze the relationship between leading energy commodities and energy blockchain-based crypto markets.

scholarly journals Globalisation and governance in Africa: a critical contribution to the empirics

2018 ◽  
Vol 17 (1) ◽  
pp. 2-27 ◽  
Author(s):  
Simplice A. Asongu ◽  
Uchenna Efobi ◽  
Vanessa S. Tchamyou
Keyword(s):  
Political Stability ◽  
Policy Implications ◽  
Economic Governance ◽  
African Countries ◽  
Institutional Governance ◽  
Content Type ◽  
Government Effectiveness ◽  
Generalised Method Of Moments ◽  
Political Governance ◽  
Economic Globalisation

Purpose This study aims to assess the effect of globalisation on governance in 51 African countries for the period 1996-2011. Design/methodology/approach Ten bundled and unbundled governance indicators and four globalisation variables are used. The empirical evidence is based on Generalised Method of Moments. Findings Firstly, on political governance, while only social globalisation improves political stability, only economic globalisation does not increase voice and accountability and political governance. Secondly, with regard to economic governance: only economic globalisation significantly promotes regulation quality; social globalisation and general globalisation significantly advance government effectiveness; and economic globalisation and general globalisation significantly promote economic governance. Thirdly, with respect to institutional governance, while only social globalisation improves corruption-control, the effects of globalisation dynamics on the rule of law and institutional governance are not significant. Fourthly, the impacts of social globalisation and general globalisation are positive on general governance. Practical implications It follows that political governance is driven by voice and accountability compared to political stability; economic governance is promoted by both regulation quality and government effectiveness from specific globalisation angles; and globalisation does not improve institutional governance for the most part. Originality/value Governance variables are bundled and unbundled to reflect evolving conceptions and definitions of governance. Theoretical contributions and policy implications are discussed.

Latin American firms may struggle globally

2016 ◽  
Keyword(s):  
Emerging Markets ◽  
Latin American ◽  
Business Groups ◽  
Commodity Price ◽  
Institutional Characteristics ◽  
Content Type ◽  
Price Fluctuations ◽  
Technology Firms ◽  
The Past ◽  
Success Stories

Subject The expansion of multilatinas. Significance Latin American multinationals (known as 'multilatinas') have gained increasing attention over the past decade, with a number of notable success stories. Nonetheless, many such firms have struggled to internationalise beyond the region, while state-owned multinationals are vulnerable to commodity price fluctuations and political instability. Impacts Family-controlled business groups will prefer to operate in markets with similar institutional characteristics to their home countries. State-controlled firms will retain their international presence, but their fortunes will depend on conditions in their home countries. Technology firms will often internationalise relatively quickly, but generally to other emerging markets.

scholarly journals Information technology, governance and insurance in Sub-Saharan Africa

2019 ◽  
Vol 16 (8) ◽  
pp. 1253-1273 ◽  
Author(s):  
Simplice Asongu ◽  
Joseph Nnanna ◽  
Paul Acha-Anyi
Keyword(s):  
Rule Of Law ◽  
Life Insurance ◽  
Political Stability ◽  
Sub Saharan Africa ◽  
Content Type ◽  
Government Effectiveness ◽  
The Rule Of Law ◽  
Internet Penetration ◽  
Insurance Penetration ◽  
Sub Saharan

Purpose This study aims to investigate the role of information and communication technology (ICT) in modulating the effect of governance on insurance penetration in 42 Sub-Saharan African countries using data for the period 2004-2014. Design/methodology/approach Two insurance indicators are used in the analysis, namely, life insurance and non-life insurance. The three ICT modulating dynamics used include mobile phone penetration, internet penetration and fixed broadband subscriptions. Six governance channels are also considered, namely, political stability, “voice & accountability”, regulation quality, government effectiveness, the rule of law and corruption-control. The empirical evidence is based on generalized method of moments. Findings The following main findings are established. First, mobile phone penetration does not significantly modulate governance channels to positively affect life insurance while it effectively complements “voice & accountability” to induce a positive net effect on non-life insurance. Second, internet penetration complements governance dynamics of political stability, government effectiveness and rule of law to induce positive net effects on life insurance and corruption-control for an overall positive effect on non-life insurance. Third, the relevance of fixed broadband subscriptions in promoting life insurance is apparent via governance channels of regulation quality, government effectiveness and the rule of law while fixed broadband subscriptions do not induce significant overall net effects on non-life insurance though the conditional effects are overwhelmingly significant. Originality/value To the best of the authors’ knowledge, studies on the relevance of ICT in promoting insurance consumption through governance channels are sparse, especially for a region such as Sub-Saharan Africa where insurance penetration is low compared to other regions of the world.

scholarly journals Political connections and earnings quality

2016 ◽  
Vol 24 (4) ◽  
pp. 339-356 ◽  
Author(s):  
Iman Harymawan ◽  
John Nowland
Keyword(s):  
Design Methodology ◽  
Stock Exchange ◽  
Earnings Quality ◽  
Political Stability ◽  
Political Connections ◽  
Content Type ◽  
Government Effectiveness ◽  
Different Dimensions ◽  
Market Pressures

Purpose The purpose of this study is to investigate how the earnings quality of politically connected firms is affected by changes in political stability and government effectiveness in a developing country. Design/methodology/approach This study uses a sample of 2,073 firm-year observations from 349 firms listed on the Indonesian Stock Exchange from 2003 to 2012 to examine how political stability and government effectiveness affect the earnings quality of politically connected firms, relative to non-politically connected firms. A two-stage model is used to address self-selection issues in the choice of firms to establish political connections. Findings This study finds that increased government effectiveness reduces the benefits of political connections, requiring politically connected firms to be more responsive to market pressures and resulting in higher earnings quality. However, increased political stability enhances the certainty of benefits from political connections, reducing the need for politically connected firms to respond to market pressures and resulting in lower earnings quality. Research limitations/implications For policymakers, these results indicate that different dimensions of political and economic development can affect the incentives of firms with political connections in different ways. Originality/value This study finds that the earnings quality of politically connected firms increases as government effectiveness improves, but it decreases as the political environment becomes more stable.

scholarly journals Financial access, governance and insurance sector development in sub-Saharan Africa

2020 ◽  
Vol 47 (4) ◽  
pp. 849-875 ◽  
Author(s):  
Simplice Asongu ◽  
Nicholas M. Odhiambo
Keyword(s):  
Rule Of Law ◽  
Life Insurance ◽  
Political Stability ◽  
Sub Saharan Africa ◽  
Financial Access ◽  
Content Type ◽  
Government Effectiveness ◽  
The Rule Of Law ◽  
Sub Saharan

PurposeThis study investigates the role of financial access in moderating the effect of governance on insurance consumption in 42 sub-Saharan African countries using data for the period 2004–2014.Design/methodology/approachTwo life insurance indicators are used, notably: life insurance and non-life insurance. Six governance measurements are also used, namely: political stability, ‘voice and accountability’, government effectiveness, regulation quality, corruption-control and the rule of law. The empirical evidence is based on the Generalised Method of Moments (GMM) and Least Squares Dummy Variable Corrected (LSDVC) estimators.FindingsEstimations from the LSDVC are not significant while the following main findings are established from the GMM. First, financial access promotes life insurance through channels of political stability, ‘voice and accountability’, government effectiveness, the rule of law and corruption-control. Second, financial access also stimulates non-life insurance via governance mechanisms of political stability, ‘voice and accountability’, government effectiveness, regulation quality, the rule of law and corruption-control.Originality/valueThis research complements the sparse literature on insurance promotion in Africa by engaging the hitherto unexplored role of financial access through governance channels.

What determines bank interest rate spread? Evidence from Sub-Saharan Africa

2018 ◽  
Vol 9 (3) ◽  
pp. 335-348 ◽  
Author(s):  
Daniel Kipkirong Tarus ◽  
Philip Otieno Manyala
Keyword(s):  
Interest Rate ◽  
Political Stability ◽  
Sub Saharan Africa ◽  
African Countries ◽  
Middle Income ◽  
Institutional Variables ◽  
Content Type ◽  
Interest Rate Spread ◽  
Sub Saharan ◽  
The Interest Rate

Purpose The purpose of this paper is to examine the determinants of bank interest rate spread in Sub-Saharan African countries, which were categorized into macro-specific, bank-specific and institutional variables. Design/methodology/approach The authors used fixed effects estimations to analyze the data. The data were drawn from a pool of 20 Sub-Saharan African countries for a period of ten years spanning 2003–2012. The countries were categorized into low-income, lower middle-income and upper middle-income countries based on World Bank income classifications. Findings The results show that inflation has a negative and significant effect on interest rate spread, while operating costs and bank concentration have a positive and significant effect on interest rate spread. Similarly, government effectiveness, rule of law and political stability are negatively related to the interest rate spread. Practical implications The paper provides evidence that interest rate spread is determined by both bank-specific, macro-economic and institutional variables. The paper also indicates that the income status of a country is important in explaining the variations in the interest rate spread across the region. Therefore, the policy makers should design policies that take into account the variables in order to help in planning by all economic agents, including banks. Originality/value The paper uses data from Sub-Saharan Africa and introduces institutional variables in the model, which have been found to be critical in the context.

Does E-government reduce corruption? Evidence from a heterogeneous panel data model

2018 ◽  
Vol 12 (2) ◽  
pp. 134-154 ◽  
Author(s):  
Devid Kumar Basyal ◽  
Niraj Poudyal ◽  
Jin-Wan Seo
Keyword(s):  
Panel Data ◽  
Good Governance ◽  
Positive Impact ◽  
Civil Liberties ◽  
Political Stability ◽  
Empirical Modeling ◽  
Political Rights ◽  
Content Type ◽  
Government Effectiveness ◽  
The Relationship

Purpose The purpose of this paper is to revisit the relationship between E-government and corruption using global panel data from 176 countries covering the period from 2003 to 2014, considering other potential determinants, such as economic prosperity (gross domestic product per capita [GDPPC]), price stability (inflation), good governance (political stability and government effectiveness) and press freedom (civil liberties and political rights) indicators. Hence, the main rationale of this study is to reexamine the conventional wisdom as to the relationship between E-government and corruption using panel data independent of any preexisting notions. Design/methodology/approach The probability reduction approach of empirical modeling proposed by Spanos (2009) is used to test the relationship. Secondary data were collected from the United Nations, the World Bank, Transparency International and Freedom House. Findings No statistical evidence was found for the idea that E-government has a positive impact on corruption reduction following a rigorous test of the proposition. However, strong evidence was found for the positive impact of a country’s government effectiveness, political stability and economic status. There also appears to be some evidence for the effect of GDPPC and civil liberties. There is no evidence to prove that inflation and political rights have any corruption reducing the effect. Research limitations/implications Case studies suggest that E-government is helpful for curbing corruption. This study includes and examines some of the potential and important variables associated with corruption. Further research is encouraged and it should include more variables, such as national culture, poverty, religion and geography. Regarding methodology, a more parsimonious model must be sought to take into account adequately the entire probabilistic structure of the data. Practical implications The findings of the study demonstrate that E-government is less significant for reducing corruption compared to other factors. Hence, policymakers should further focus on other potential areas such as socio-economic factors, good governance, culture and transparency to combat corruption in addition to improving digital government. Originality/value This research applies a new methodological approach to the study of the relationship between E-government and corruption.

Iran could disrupt Strait of Hormuz navigation

2018 ◽  
Keyword(s):  
Crude Oil ◽  
Oil Production ◽  
International Market ◽  
Islamic Revolution ◽  
Content Type ◽  
Oil Market ◽  
Oil Exports ◽  
Strait Of Hormuz ◽  
Supreme Leader ◽  
Military Preparedness

Significance This followed several days of wargames in the area by the Islamic Revolution Guard Corps (IRGC). US plans to reinstate sanctions on Iran -- the first tranche came into effect today -- and to restrict vital oil exports from November have triggered an exchange of threats and counter-threats between Tehran and Washington. Iranian officials warn that they may prevent other exporters from using the narrow strait, transited by about 20 million barrels a day of crude oil for the international market. Impacts Tensions in the Gulf will result in sharp price hikes in an already-strained oil market. In case of escalation, Iran might consider surgical targeting of Saudi and other enemy oil production and export chokepoints. IRGC efforts to display determination and military preparedness could cause tensions with the more cautious Rouhani government. If Supreme Leader Ali Khamenei were incapacitated, IRGC policy could become less constrained and predictable.

Industrial structure binds Belarus to Russia

2019 ◽  
Keyword(s):  
Foreign Policy ◽  
Risk Aversion ◽  
Crude Oil ◽  
Industrial Structure ◽  
Political Stability ◽  
Industrial Sector ◽  
Refining Industry ◽  
Content Type ◽  
Industrial Plants ◽  
Multiple Factors

Subject The industrial sector in Belarus. Significance Belarusian officials including President Alexander Lukashenka were in Moscow last month to renegotiate trade and energy arrangements, and gave little impression that they came away with a satisfactory deal. Russia is a key market for manufactures and foodstuffs, and is the main supplier of crude oil that feeds Belarus's refining industry. Industrial plants in Belarus are generally unreformed and at least partly state-owned, and are sustained for reasons of social and political stability. Impacts Multiple factors including Lukashenka's risk aversion will conspire against reforms that could make industry internationally competitive. Economic dependence on Russia makes Minsk less likely to pursue an independent or pro-Western foreign policy. Maintaining large state-controlled industrial plants is essential to Lukashenka's electoral base

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