Trade liberalization policies and foreign direct investment inflows in Africa: Evidence from new measures of trade liberalization

Gatsi, John Gartchie; Appiah, Michael Owusu; Kawor, Seyram; Amoah, Emmanuel Kwakye; Abeka, Mac Junior

doi:10.1080/09638199.2021.1983009

Cited by 12 publications

(6 citation statements)

References 41 publications

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“…8 Trade facilitation's usefulness for developing countries has been questioned with mixed findings (Siddiqui, 2015). On the one hand, Obuobi et al (2022) found that trade facilitation increased FDI flows to African countries; on the other hand, Yameogo and Omojolaibi (2021) noted that trade facilitation in sub-Saharan Africa was detrimental to economic growth in the short term, even though it reduced poverty in the long term. Even so, the literature has not fully explored trade facilitation's impact on particularly African SMEs' performance.…”

Section: Discussionmentioning

confidence: 99%

“…Complementarily, studies in the African context, though not focused on SMEs, present mixed findings. For instance, Obuobi et al (2022) argued that trade facilitation policies improved FDI inflows to African countries. Yameogo and Omojolaibi (2021) also argued that trade facilitation and institutional quality reduced poverty in sub-Saharan African countries in the long run, but noted that trade openness is detrimental to economic growth in the short term.…”

Section: Development Of Hypothesesmentioning

confidence: 99%

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The impact of trade facilitation on African SMEs’ performance

2023

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Whilst contemporary literature indicates that the business environment (BE) impacts almost all entrepreneurial activities, there are indications that the unique business and institutional setting in Africa (with its challenges and opportunities) and the nature of SMEs (their strengths and weaknesses), among other factors, lead to the context-specific impact of regulations on the performance of African SMEs. Using regressions and propensity score matching methods on a panel of 39,461 firm observations (27 African countries) from the World Bank Enterprise Surveys, we unearthed evidence to suggest that whilst enabling tax administration and business licensing regulations improve SMEs’ performance, trade facilitation impedes African SMEs’ performance. Furthermore, the institutional context of competition (from foreign firms) worsens trade facilitation’s negative impact on African SMEs’ performance. These findings suggest a fine-tuning of BE regulations in African countries. Trade facilitation, for example, must be carefully thought through and implemented in a way to benefit SMEs.

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Section: Discussionmentioning

confidence: 99%

Section: Development Of Hypothesesmentioning

confidence: 99%

The impact of trade facilitation on African SMEs’ performance

2023

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“…The purpose of this test is to check whether the differentiated error term is second‐order serially correlated. Thus, the Arellano and Bond serial correlation Test (AR2) was employed to test for autocorrelation in the second order (see Abeka et al, 2022; Abeka, Amoah, et al, 2021; Abeka, Andoh, et al, 2021; Obuobi et al, 2022). If the null hypotheses of both tests are not rejected, then the model is consistent.…”

Section: Methodsmentioning

confidence: 99%

Financial inclusion, economic freedom and financial stability in sub‐Saharan Africa

Frimpong

Yusuf

Boateng

et al. 2023

Thunderbird Intl Bus Rev

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Executive Summary The study examines the role of economic freedom in the relationship between financial inclusion and stability in sub‐Saharan African economies. By employing the System General Method of Moment and data from 39 sub‐Saharan African countries between 2004 and 2017, the study examines whether economic freedom (i.e., financial and business freedom) conditions the effect of financial inclusion on stability. Results from the study show evidence of a positive impact of financial inclusion on financial stability in sub‐Saharan African economies. Again, the results depict that financial inclusion could better enhance financial stability in economies with a high level of economic freedom (i.e., financial and business freedom). The results suggest that policymakers should allow financial institutions to operate with the level of freedom required to provide services at the lowest possible price. Further, it is recommended that policymakers should ensure that administrative requirements are minimal, bureaucracy costs are lesser, and licensing regulations for startups and expansion of existing firms are friendly. With this, associated increases in business and financial freedom would have promising implications for the relationship between financial inclusion and stability. Managerial Implications of the Study This research is very vital for firms in both the financial and nonfinancial. Specifically, managers of firms in the financial sector can embrace the level of financial freedom that would be allowed by the government, to come up with new and inclusive financial products, while putting in measures not to endanger the stability of the financial sector. Managers in the business sector could also take advantage of the business freedom that would be allowed by the government to diversify business operations, increase profitability and avoid causing nonperforming loan problems to banks. Originality/Value The study provides the first insight into how economic institutions condition the effect of financial inclusion on financial stability, which has not been previously studied.

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“…In line with existing literature on institutional structures and economic development, the study employs the dynamic panel GMM estimator (see Agyemang et al, 2018; Agyemang et al, 2019; Abeka et al, 2022a; Abeka et al, 2022b; Obuobi et al, 2021) developed by Holtz‐Eakin and Rosen (1990) and Arellano and Bond (1991) and augmented by Arellano and Bover (1995) and Blundell and Bond (1998) to estimate the models specified. The need to address country‐specific effects and simultaneity bias partly led to the adoption of the GMM.…”

Section: Methodsmentioning

confidence: 99%

Institutions and venture capital market development in sub‐Saharan Africa

Boateng,

Owusu Junior,

Gatsi

et al. 2023

J of Intl Development

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We investigate the critical interplay between economic institutions and political institutions and assess their influence on venture capital market development in sub‐Saharan Africa (SSA). To address endogeneity concern in our model specification, the two‐step system generalised method of moments was employed on a sample of 34 SSA countries from 2007 to 2018. The findings reveal that strengthening disaggregated measures of economic institutions, comprising legal system and property rights, size of government, sound money, regulations, and freedom to trade internationally spur venture capital market development in SSA. Finally, the evidence indicates that political institutions condition the influence of economic institutions on venture capital market development. The implications for policy are further discussed.

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Trade liberalization policies and foreign direct investment inflows in Africa: Evidence from new measures of trade liberalization

Cited by 12 publications

References 41 publications

The impact of trade facilitation on African SMEs’ performance

The impact of trade facilitation on African SMEs’ performance

Financial inclusion, economic freedom and financial stability in sub‐Saharan Africa

Institutions and venture capital market development in sub‐Saharan Africa

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