Globalization and Africa: Implications for Human Development

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in February 2012Abstract Purpose -The purpose of this paper is to assess the effects of trade and financial globalization on human development in 52 African countries using updated data (1996-2010) and a new indicator of human development (adjusted for inequality).Design/methodology/approach -The estimation technique used is a Two-Stage-Least Squares Instrumental Variable methodology. Instruments include: income-levels, legal-origins and religious-dominations. The first-step consists of justifying the choice of the estimation technique with a Hausman-test for endogeneity. In the second-step, we verify that the instrumental variables are exogenous to the endogenous components of explaining variables (globalization dynamic channels) conditional on other covariates (control variables). In the third-step, the strength and validity of the instruments are assessed with the Cragg-Donald and Sargan overidentifying restrictions tests respectively. Robustness checks are ensured by: (1) use of alternative globalization indicators; (2) endogeneity based estimation; (3) adoption of two interchangeable sets of instruments; (4) estimation with a technique that controls for timeinvariant unobservable shocks that affect openness and human development simultaneously.Findings -Findings broadly indicate that while trade globalization improves human development (consistent with the neoliberal theory), financial globalization has the opposite effect (in line with the hegemony thesis). The 'life expectancy' component of the HDI weighs most in the positive impact of trade globalization on human emancipation.Practical implications -Capital accounts should be opened in tandem with financial and institutional development. The investment atmosphere needs improvement to curtail capital flight (about 39%). Other policy implications include: adoption of openness options in a selective and gradual manner, development of some industrial backbone for an importsubstitution or export-led industry, emphasis on regional trade and building capacity, development of the agricultural sector with continuous government assistance, building of rural infrastructure, increasing adult literacy rate and developing human resources, fighting corruption and mitigating wastages in government expenditure.1 Simplice A. Asongu is Lead economist in the Research Department of the AGDI (asongus@afridev.org). 3Originality/value -These findings are based on very recent data. Usage of the in...

Foreign Aid and Governance in Africa

“…They are also consistent with recent African human development (Asongu, 2013b(Asongu, , 2014a, finance (Asongu, 2012c) and institutions (Asongu, 2012a) literature. In essence, the following intuitions motivate the choice of the instrumental variables.…”

“…Indicators ( These instruments have been substantially documented in the economic development literature (La Porta et al, 1997;Beck et al, 2003;Asongu, 2011Asongu, , 2012bAsongu, , 2013b. They are also consistent with recent African human development (Asongu, 2013b(Asongu, , 2014a, finance (Asongu, 2012c) and institutions (Asongu, 2012a) literature.…”

Globalization, (Fighting) Corruption and Development: How are These Phenomena Linearly and Nonlinearly Related in Wealth Effects?

“…This phenomenon has also been alleged to disfigure human development in the manner it is evolving as it seeks a victory of market over government and self-interest over altruism (Asongu, 2012a). The public support for globalization has waned and prompted universal demands to recapture some of its attractive glow and lofty ambitions, so that the phenomenon be given a human face.…”

“…In fact the phenomenon is the dominant force in the economic universe as it upholds economic prosperity in its lusty, ineluctable and historical process whose march can be stopped only by endangering the prosperity of peoples and nations. Globalization also threatens to disfigure human development in the manner it is evolving as it seeks a victory of market over government and self-interest over altruism (Asongu, 2012a). Therefore not surprisingly, the public support for globalization has waned in both developed and developing countries with a frantic search for a third-way out of the morally enervating regime of unvarnished capitalism.…”

“…As we have observed from findings in Table 1, trade liberalization is the component of globalization that improves human development. This positive outcome could emanate from cheap imports in basic human needs flooding African markets from China and beyond (Asongu, 2012a). It follows that cheap imports increase consumer purchasing power, thus decreasing incentives to subsistence-oriented corruption.…”