Institutional Quality and Income Inequality in Developing Countries: A Dynamic Panel Threshold Analysis

2021 ◽  
pp. 146499342110167
Author(s):  
Lawrence Adu Asamoah
Keyword(s):  
Developing Countries ◽  
Income Inequality ◽  
Developing Economies ◽  
Threshold Model ◽  
Institutional Quality ◽  
Threshold Value ◽  
Threshold Effect ◽  
Policy Implications ◽  
Dynamic Panel ◽  
Negative Effect

This study investigates whether there is an institutional quality threshold effect on income distribution. We employ the dynamic panel threshold model developed by Kremer et al. (2013: Empirical Economics 44(2): 861–878) and a panel of both developing and advanced countries from 1995 to 2017. Our findings suggest the inequality-reducing effect of institutional quality is disproportionate. More specifically, we find two-pronged results: (i) when institutional quality is measured by World Governance Indicators, we find quadratic effect for advanced countries, but a monotonic negative effect for developing countries; (ii) when the International Country Risk Guide-based measure of institutional quality is used as the threshold variable, we find a Kuznets inverted U-shaped relationship between institutions and income inequality for both advanced and developing countries. The results also show a higher threshold value for developing countries compared to advanced economies. These results are robust to both measurement and endogeneity issues. The results have interesting policy implications for income inequality in developing economies.

scholarly journals The Impact of Financial Development on Innovation Activities in Emerging and Developing Countries

2019 ◽  
Vol 10 (1) ◽  
pp. 112 ◽  
Author(s):  
KamiliaKamilia LoukilLoukil
Keyword(s):  
Developing Countries ◽  
Financial Development ◽  
Financial Services ◽  
Positive Impact ◽  
Threshold Model ◽  
Threshold Value ◽  
Innovation Activities ◽  
Linear Effects ◽  
Emerging And Developing Countries ◽  
The Impact

We investigate in this paper the effect of financial development on innovation in emerging and developing countries. The estimation of panel threshold model for a sample 54 countries during the period 1980-2009 shows the presence of non linear effects in the relationship between financial development and innovation. We find a threshold value of economic development below which the financial development level has no significant impact on innovation and above which financial development has a significant positive impact on innovation. In sum, our findings suggest that the presence of a healthy economic environment is crucial for financial institutions to offer high-quality financial services, promoting more innovation.

scholarly journals Effect of Institutional Quality and Wealth from Oil Revenue on Economic Growth in Oil-Exporting Developing Countries

2019 ◽  
Vol 11 (13) ◽  
pp. 3635 ◽  
Author(s):  
Adewale Samuel Hassan ◽  
Daniel Francois Meyer ◽  
Sebastian Kot
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Institutional Quality ◽  
Linear Interaction ◽  
Distributed Lag ◽  
Oil Revenue ◽  
Long Run ◽  
Negative Effect ◽  
Short Run ◽  
Oil Wealth

This article investigates the role of institutional quality in the oil wealth–economic growth nexus for 35 oil-exporting developing countries between 1984 and 2016. To achieve this objective, an empirical model was employed with linear interaction between oil wealth and institutional quality, and estimated by means of panel autoregressive distributed lag (ARDL) with a dynamic fixed effect estimator. From the results, a contingent effect of oil wealth on economic growth, both in the long run and in the short run, was established. Specifically, institutional quality was found to mitigate the negative effect of oil wealth on economic growth in the long run, while in the short run, institutional quality was found to enhance the positive effect of oil wealth on economic growth. Furthermore, the results provide the threshold levels of institutional quality, beyond which oil wealth enhances economic growth, both in the long run and in the short run, for the sampled countries. These results suggest that in order for oil-exporting developing countries to benefit from an increase in oil wealth, they must adopt appropriate policy measures to improve their levels of institutional quality and embed their entire oil wealth-generating mechanism in a sound institutional framework. Also of importance is that governments must ensure sustainable development through the benefits of wealth from oil.

Impediments affecting the curbing of illicit financial flows of organised crime in developing economies

2019 ◽  
Vol 26 (1) ◽  
pp. 5-21 ◽  
Author(s):  
Emmanuel Sotande
Keyword(s):  
Developing Countries ◽  
Developing Economies ◽  
Task Force ◽  
Organised Crime ◽  
Policy Implications ◽  
Periodic Review ◽  
Financial Flows ◽  
Content Type ◽  
Serious Crime ◽  
Illicit Financial Flows

Purpose The purpose of this paper is to examine the treats hindering war against illicit financial flows of organised crime in developing economies and Nigeria in particular. The examination shows that the impediments facing the fight against money laundering and organised crime financial flows vary from one country to another. It may be lesser in developed economies where most instruments, treaties and best practice recommendations to curb serious crime originated from. However, the impediments against the proceeds of organised crime in developing economies are overwhelming. Design/methodology/approach The research methodology adopted was qualitative analysis. This was applied through the use and analysis of documents and expert interviews. Findings The impediments jeopardising the success against organised crime and other related serious crime financial flows in developing economies are devastating. Consequently, the study offered some policy implications to help mitigate these impediments in developing countries. The dynamics and the phenomena of organised crime business model are operated with ingenious strategies within the global states. Therefore, staying in control of the menace and the threats originated from the organised criminal activities would require periodic review of the global initiatives, standards and strategies deployed by the standard setters to combat organised crime and its financial flows in developing and evolving economies. Additionally, the implementing countries should be carried along and allow to make inputs when such initiatives and standards are being developed. Social implications In Nigeria, there is a clear evidence of “collateral damage” in terms of social justice as result of financial exclusion of many bankable adults of the country that do not possess unique identities for account opening documentation and customer due diligence of the Financial Action Task Force recommendation 10. Originality/value There have been quite a number of studies on organised crime and still fewer have recognised the need to explore the success or failure of combating the proceeds of crime in developing economies. This study provides answer to these gaps by screening associated risks of fighting the proceeds of organised crime in developing countries and Nigeria in particular.

The Empirical Determinants of Corruption in Developing Countries

2017 ◽  
Vol 16 (4) ◽  
pp. 392-409 ◽  
Author(s):  
Azmat Gani
Keyword(s):  
Developing Countries ◽  
Direct Investment ◽  
Fixed Effects ◽  
Developing Economies ◽  
Policy Implications ◽  
Country Size ◽  
Colonial Legacy ◽  
Level Of Economic Development ◽  
Main Factors ◽  
Determinants Of Corruption

This paper investigates the main factors determining corruption in developing countries. It employs the fixed-effects estimation technique to data for several developing countries, pooled for the period 2004 to 2010. The empirical results revealed that the level of economic development, country size, natural resource exports, foreign direct investment, absence of democracy, and colonial legacy as the main correlates of corruption in the developing economies. Some policy implications are drawn.

scholarly journals Education and Economic Growth in Developing Countries: Empirical Evidence from GMM Estimators for Dynamic Panel Data

2021 ◽  
Vol 34 (1) ◽  
pp. 14-29
Author(s):  
Wafa Sebki
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Panel Data ◽  
Tertiary Education ◽  
Dynamic Panel Data ◽  
Dynamic Panel ◽  
Negative Effect ◽  
The Difference ◽  
Difference Gmm ◽  
Positive Effect

Abstract The paper aims at studying the effect of education measured by enrolment ratios in secondary and higher education on economic growth measured by the rate of GDP growth in a sample of 40 developing countries during the period from 2002 to 2016 using the dynamic panel data estimators. The results of estimating the model of this study using the difference GMM estimator or what is known as the Arellano and Bond estimator showed that the proportions of those enrolled in tertiary education had a significant positive effect on economic growth, while the proportions of those enrolled in secondary education had a significant negative effect.

scholarly journals EXTERNAL DEBT, INSTITUTIONAL QUALITY AND ECONOMIC GROWTH

2020 ◽  
Vol 23 (2) ◽  
pp. 221-238
Author(s):  
Siti Nurazira Mohd Daud
Keyword(s):  
Economic Growth ◽  
Panel Data Analysis ◽  
External Debt ◽  
Institutional Quality ◽  
Dynamic Panel Data ◽  
Dynamic Panel ◽  
Debt Overhang ◽  
Negative Effect ◽  
Dynamic Panel Data Analysis

This paper addresses the gap in the literature by investigating the role of the institutional quality in the nexus of external debt and economic growth. By employing a dynamic panel data analysis, we found that the institutional quality plays some role in complementing the effect of external debt on a country’s economic growth. We also found that the negative effect of external debt and a country’s economic growth monotonically increases with the level of institutional indicator, which implies the possibility of debt overhang may still happen in economies endowed with good institutions, but for higher values of debt.

scholarly journals How Does Institutional Quality Moderate the Influence of Financial Development on Environmental Pollution? Evidence From G20 Countries

2021 ◽  
Author(s):  
Toyo Amegnonna Marcel Dossou ◽  
Emmanuelle Kambaye Ndomandji
Keyword(s):  
Environmental Pollution ◽  
Co2 Emissions ◽  
Financial Development ◽  
Institutional Quality ◽  
Moderating Effect ◽  
Policy Implications ◽  
Standard Errors ◽  
Negative Effect ◽  
The Relationship ◽  
Econometric Technique

Abstract Unlike previous studies that focused mainly on the relationship between financial development and CO2 emissions, the current study examined the moderating effect of institutional quality on the influence of financial development on environmental pollution in G20 countries over the period 2003-2015. The panel corrected standard errors (PCSE) is employed as an econometric technique. The findings are established as follows: First, the findings show that institutional quality appears to have a mixed (positive and negative) effect on environmental pollution. Second, the findings show that financial development has mixed (positive and negative) effect on environmental pollution. Third, the findings also show that the interaction between institutional quality and financial development has a negative and statistically significant on environmental pollution, meaning that institutional quality complements financial sector to reduce environmental pollution. Policy implications are discussed.

Do government expenditure reduce income inequality: evidence from developing and developed countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Noor Zahirah Mohd Sidek
Keyword(s):  
Developing Countries ◽  
Income Inequality ◽  
Driving Forces ◽  
Government Expenditure ◽  
Developed Countries ◽  
Policy Implications ◽  
Content Type ◽  
Positive Effects ◽  
The Impact ◽  
Developing And Developed Countries

Purpose This paper aims to re-examine the impact of government expenditure on income inequality. Existing studies provide mixed results on whether government expenditure reduces or increases income inequality. In this paper, government expenditure is viewed as a tool for redistribution, hence, its impact on inequality is examined. Design/methodology/approach A sample of 122 countries with 91 and 31 countries categorized as developing and developed countries is used. The dynamic panel threshold regression is used to examine the impact of government expenditure on income inequality and to estimate the turning point of the negative or positive effects. Findings The major findings suggest that, in general, government expenditure does reduce income inequality. Results from developed countries support the inversed U-shaped Kuznet curve where higher government expenditure initially led to more inequality but would eventually bring about a positive effect after a certain threshold level. For developing countries, education and development expenditure were the driving forces towards lower income inequality. Practical implications Several policy implications can be derived from this paper. First, government expenditure is a useful tool to alleviate the problem of income inequality. More integration with the global economy via trading activities is also an important channel to help reduce income inequality. Finally, better institutional quality provides an effective ecosystem in promoting better redistribution of income via government expenditure. Originality/value This paper presents a maiden attempt to estimate a threshold value or when government expenditure starts to reduce or increase income inequality. The sample is segregated into developed and developing countries to further control the effect of government size and the level of development of a country.

B2B E-Commerce Infrastructure Success Factors for Small Companies in Developing Economies

2004 ◽  
pp. 185-205 ◽  
Author(s):  
Murray E. Jennex ◽  
Don Amoroso ◽  
Olayele Adelakun
Keyword(s):  
Developing Countries ◽  
Literature Review ◽  
Critical Success Factors ◽  
Success Factors ◽  
Developing Economies ◽  
Policy Implications ◽  
Small Companies ◽  
Factors Affecting ◽  
Critical Success ◽  
Key Policy

This chapter looks into the key infrastructure factors affecting the success of small companies in developing economies that are establishing B2B e-commerce ventures by aggregating critical success factors from general e-commerce studies and studies from e-commerce in developing countries. The factors were identified through a literature review and case studies of two organizations. The results of the pilot study and literature review reveal five groups of success factors that contribute to the success of B2B e-commerce. These factors were later assessed for importance using a survey. The outcome of our analysis reveals a reduced list of key critical success factors that SMEs should emphasize as well as a couple of key policy implications for governments in developing countries.

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