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Why some nations are wealthier than others are one of the most contentious and enigmatic questions in international development economics. This has necessitated plausible explanations for the reasons behind Africa's poor development record over the past 50 years. Among other factors, fragility arising from different conflicts in African countries has been ranked as a key factor that undermines the development of the continent. Nigeria found itself in this set due to growing conflicts in different parts of the country. Consequently, fragility worsened the country's development due to the huge associated economic and social costs. More so, conflict-affected countries are characterized by the worst socio-economic outcomes. Hence, existing studies have been preoccupied with the understanding of the relationship between fragility and economic growth as well as fragility and poverty. To provide evidence in the context of Nigeria, this paper, therefore, empirically investigated the fragility-growth nexus, as well as the fragility-poverty nexus, in a sample of 36 states and the Federal Capital Territory (FCT) in Nigeria. We further considered the macroeconomic and socio-political relationships in fragile and non-fragile states of Nigeria. Using data covering the period between 2011 and 2015, both the static approach (Ordinary Least Squares, Fixed Effect, and Random Effect) and the dynamic approach (Difference and System Generalized Method of Moments) were explored to provide answers to some key questions in the study. The results showed that the neoclassical and socio-political approaches complement each other. Specifically, fragility significantly weakened economic growth and further worsened poverty levels among the states. This suggests that conflict-related fragility creates an unstable environment that discourages economic activities and aggravates hunger among the population. More so, the results indicated that only debt enhances economic growth while income reduces poverty in both fragile and non-fragile states. Hence, conflict resolution is crucial to addressing conflicts in different parts of the country. Also, the country needs to explore various strategies (security infrastructure, and human capital) to overcome fragility, enhance economic growth, and combat poverty. [ABSTRACT FROM AUTHOR]

Zimbabwe financial sector went through different phases of transformation during the past four decades (RBZ, 2014). This paper analysed the historical developments and structure of the Zimbabwe's banking sector. Challenges encountered by Zimbabwe banks and the determinants of Zimbabwe banking sector success were also assessed from an empirical literature and case study based approaches. This paper deviates from previous studies on banking sector development in Zimbabwe in that (1) it focuses on developments, critical success factors, challenges and determinants of Zimbabwe banking sector all in one study, (2) It uses both case study and empirical study approaches in one paper and (3) there is no study on Zimbabwe the author is aware of which investigated the determinants of Zimbabwe banking sector development using macroeconomic variables. The case study approach found out that poor savings culture, high lending rates, systemic risk and absence of lender of last resort were the major challenges faced by Zimbabwe's banking sector. Moreover, an empirical literature review prognosis showed that inflation, reserve ratio requirement, lending and deposit rates, output and economic growth played an influential role in determining Zimbabwe's banking sector profitability. Unlike previous studies which focused on banking sector profitability, the current study explored the macroeconomic determinants of Zimbabwe's banking sector development using the ordinary least squares (OLS) multiple regression model with data ranging from 1984 to 2014. Economic growth, deposit interest rates, savings and foreign direct investment (FDI) were found to have had a positive and significant impact on banking sector development of Zimbabwe in line with theory and empirical literature. The study therefore urges the Zimbabwean authorities to design and implement policies that grows the economy, ensure that depositors receive better interest rates, increase savings mobilization and FDI inflow attraction efforts in order to promote banking sector development. Inflation and trade openness had a negative but non-significant impact on Zimbabwe's banking sector development. The Zimbabwean authorities should therefore keep both inflation and trade openness at lower levels in order to deepen the banking sector. [ABSTRACT FROM AUTHOR]

Although the relationship between colonial education and economic growth are topics of growing interest, few studies have examined the influence colonial education on economic growth in South Africa. This paper uses archival data (derived from Bluebooks, De Zwart 2011, Statistical yearbook of the colony of Natal and Malherbe (1925)) from colonial South Africa over the 1859-1910 period to study the extent to which economic growth is influenced by education. The analysis applies fixed effect to account for unobserved colony-level heterogeneity and minimise the omitted variable bias. It also employs certain methods (such as Fixed effects two-stage least squares (FE-2SLS) procedure)) that account for a possible endogeneity bias caused by reverse causation between the dependent variable (growth) and our variable of interest (education). Our analysis yields two important results. First, the results suggest that levels of education (proxied by spending on education) have a robust positive impact on economic growth. The results are robust to addressing the potential reverse causality between education and economic growth and using alternative measures of education (proxied by enrolment rate). Secondly, the impact of education on economic growth appear to vary from one population group to another. Specifically, the effect of education on economic growth is found to be significantly higher for Europeans compared to natives groups, adding a more nuanced understanding of the relationship between education and growth in the South African context. The estimated coefficients of control variables such as natural resources present positive and significant estimates on economic growth, in line with many studies in developing countries which have found that discovery of natural resources favourably affects the rate of economic growth. Thus our results suggest that there is a need to think about how available resources could be used more efficiently to guarantee quality education for all and proposes that policy interventions in the historically disadvantaged schools and universities might have important implications to stimulate economic growth. This does not mean that historically advantaged schools must be ignored as biased educational policy that is not inclusive to all would lead to large educational gaps that can be persistent and destructive to the development of a country. [ABSTRACT FROM AUTHOR]

This paper empirically examines the relationship between services trade liberalization and economic growth. Services trade currently comprises approximately 20 percent of total world trade, with more than half of the world's labor force employed in service sectors. The possibility that reducing barriers can enhance global production is increasingly receiving attention. The impact of liberalization on growth is empirically assessed by including services trade restrictiveness as the key variable of interest in cross-sectional estimations of a global production function. Income dummies were interacted with levels of services trade restrictiveness to discern variations of influence across countries at different income levels. Services trade restrictiveness is captured using a World Bank index for a pooled cross-section of countries. Robustness of results are evaluated using a similar services trade restrictiveness index recently constructed by the OECD for member countries. The results suggest that services trade liberalization has a positive impact on a country's per capita GDP. This benefit of service liberalization is larger in countries with greater services export values. In addition, service liberalization in low income countries has a greater impact on per capita income levels than does service liberalization in high income countries. While positive and statistically significant, the scale of the effect appears small. The robustness of the results were tested using an alternate measure of services trade restrictiveness for OECD countries. These robustness results validated the benchmark results and also suggested, for high income countries, the liberalization of services trade may have a non-linear influence on per capita income growth. These findings underscore the importance of including service trade liberalization as a part of trade policy discussions and development agendas, as liberalization of services restrictions may stimulate growth in per capita income and highlights that removing the barriers to services trade can positively impact income levels, especially in low-income countries. Currently, policies surrounding services trade liberalization largely occur at the bilateral agreement level. However, as knowledge grows about the possible benefits of services trade liberalization, movement towards multilateral recommendations may be optimal. [ABSTRACT FROM AUTHOR]

African economies count among the fastest-growing economies in the world. In particular, West African economies have grown by an average of 5.7% in 2013 and 6% in 2014, despite the battle with the Ebola virus. Ghana has been at the forefront of this growth with an average economic growth of 8% in the period 2001-2014 (AfDB 2015). The challenge faced by African countries, such as Ghana, is to maintain this high economic growth rate in order to finance a number of developmental projects and curb the rampant poverty prevalent in a number of African countries. The sustainability of Ghana's growth path and the economic policy that ensued necessitates a sound knowledge of the drivers and determinants of its economic growth. This paper contribute to the literature on economic growth in Ghana, as a case study of a fast-growing economy in Africa, by applying the BMA analysis in determining the drivers of the country's economic growth. To the best of our knowledge, there is no study that identifies the drivers of economic growth in Ghana by using the BMA approach. The BMA technique provides the advantage over single-model techniques by combining and averaging different existing models and theories to determine the driver of economic growth. Yearly data ranging from 1970 to 2012 was collected from the World Bank Development Indicators (WDI 2012) and International Monetary Fund (IMF) statistics. There are 22 variables used in the model estimation, including the GDP per capita as the dependent variable. Explanatory variables are selected by taking into account their likelihood of determining economic growth in Ghana. Moreover, these variables are selected by accounting for the particularities of the Ghanaian economies, such as the existence of the dual economy and its reliance on natural resources for export revenues. Using the 50% threshold, as suggested by Raftery (1995), for the selection of relevant variables that drive economic growth in Ghana, the empirical results show that variables such as population density, crop production, inflation rate, labor force, current account balance and population growth are the important drivers of economic growth in Ghana. The paper suggests the following recommendation in the light of these results. Firstly, inflation targeting should remain the anchor of monetary policy in Ghana. Secondly, this paper recommends that the government of Ghana develops policies and strategies that enable the crowding-in of the private sector. Finally, this paper recommends that the government of Ghana promotes crop production in both commercial and subsistence sectors. [ABSTRACT FROM AUTHOR]

In developing economies like India, 'informal' sector occupies a large portion of GDP and employment. In the wake of slowdown in investments across countries and ensuing fall in the GDP growth rates, the question that arises is the following. If an economy suffers from growth slowdown, and since investment is often believed to be a driver of growth, should more investments go to the formal sector or to the informal sector? In what ways outcomes are different in terms of composition of output, employment, and wages? The issue may be a particular interest to India where slowdown in investments is believed to be the primary reason behind the recent sluggish growth of the economy. This paper theoretically evaluates the effects of investments on sectoral wage rates, output and employment composition, and growth in a developing economy consisting of a vast informal sector in a general equilibrium framework with endogenous demand and sector specific capital. The model traces, beginning with capital market disequilibrium and labour market distortion, whether investments into the sectors lead to equilibrium in capital and labour markets over time. This approach is distinctly different from the existing literature that is primarily engaged with finding out comparative statics results of a change in policy variables such as tariff rate and subsidy/tax. This paper also brings in endogenous demand that is mostly missing thus far. The model highlights the following results. Investments in the formal sector increase the size of the sector and cause the informal sector to shrink. The labour market distortion goes away as wages are eventually equalized across the sectors, after which the capital market equilibrium is achieved. Equalisation of wages is similar to the 'turning point' of the Lewis model of development. On the other hand, investments in the informal sector increase its own size but do not alter the size of the formal sector. Much contrary to the previous case, capital market equilibrium is achieved first, so the labour market distortion stays, leading to the existence of a persistent wage gap in the long run. One way of avoiding the possibility of the informal sector becoming large in size would be to subsidize the short-run capital return in the formal sector. This of course is a 'second-best' policy to counteracting the distortion in the labour market. [ABSTRACT FROM AUTHOR]

In the late 1990s, the World Bank and the International Monetary Fund (IMF) initiated a series of debt relief programs for highly indebted poor countries (HIPCs) based on the idea that high levels of indebtedness impede growth by discouraging domestic and foreign investment. This paper examines the relationship between external debt and growth with a focus on the effects of multilateral debt relief. In particular, we use a sample of 33 least developed countries (LDCs) over the period 1970- 2010 to explore the impact of indebtedness on growth before and after participating in the debt relief initiatives. In contrast to previous studies, we employ a combination of parametric and nonparametric methods to investigate the linear and nonlinear aspects of the debt-growth relationship. In the non-parametric analysis, we model growth as a discreet-time Markov process and estimate the transition probabilities for HIPCs. The results show that lower debt levels stimulate economic growth. The average impact of debt on growth in HIPCs becomes negative at about 64 -78% of GDP depending on the initial growth conditions. In the period after joining the debt relief initiatives, HIPCs generally exhibited a higher chance of moving towards or persisting in the positive range of growth. However, this process was related to lower debt levels mostly in countries that had initially exhibited moderate to rapid growth, while debt relief seems to have been less relevant for future growth in countries that started off in a state of moderate economic decline. Furthermore, the results of the regression analysis show that the marginal effect of public and publicly guaranteed (PPG) debt on growth is negative and significant. Debt relief programs were found to mitigate the negative impact of debt, both after their initiation in 1996 and after the HIPCs reached their decision point. Generally, the overarching policy that can be drawn from this paper is that LDCs, and HIPCs in particular, should strive to reduce their PPG debt levels to at least below 64%-78% of GDP in order to experience and maintain positive growth rates, ceteris paribus. Notwithstanding, our findings also suggest that if HIPCs, and LDCs in general, want to reduce or maintain their debt to sustainable levels, they should adopt some of the conditions imposed by the international financial institutions on HIPCs as part of their macroeconomic policy framework, such as developing and implementing a poverty reduction strategy through a broad based participatory process. [ABSTRACT FROM AUTHOR]

This paper estimates the dampening effect of rising inequality on growth effects on poverty rates using the U.S. county level data. According to the "growth elasticity" argument, rising inequality weakens the magnitudes of the growth effects on poverty reduction. The dampening effect is defined as the negative effect of rising inequality on the growth elasticity of poverty and is decomposed into the direct and the indirect dampening effects. Where the direct dampening effect is equal to the estimate of inequality elasticity of poverty. The indirect dampening effect is calculated as the difference between the estimate of a benchmark growth elasticity of poverty and the estimate of growth elasticity of poverty while allowing inequality to change. The benchmark growth elasticity of poverty is estimated from a model which assumes inequality as constant. This study analyzes data on poverty rates, real median household income and inequality from 731 counties of the United States. Data are compiled from two programs of the U.S. Census Bureau and converted into annualized percent changes. Unlike previous studies analyzing survey data from developing countries, U.S. county data are comparable across counties and more reliable. The dampening effects are estimated using the ordinary least square technique applied to five models of poverty. The study finds that income growth does alleviate poverty, but growing inequality directly and indirectly dampens the growth effects on poverty rates. Estimate of the total dampening effect of inequality indicates that the rising inequality is likely to lift 129,405 fewer people out of poverty annually. The growth effect on poverty rates is estimated to be weaker in counties with growing inequality than that in counties with declining and unchanged inequality, confirming the dampening effect of rising inequality. Estimates of the regional effects captured by regional dummy variables suggest that regional specific factors do also dampen growth effect on poverty rates. One reason for such dampening is likely to be tightened-budgetary conditions emanating from cuts in social safety net programs across the United States during 2006-10. Overall, the results from this study indicate that merely pro-growth policies are unlikely to ensure faster poverty reduction in the United States. The policy intervention must also focus on pro-poor growth strategies targeting the incomes of the lower quintiles. [ABSTRACT FROM AUTHOR]

The main objective of this paper is to estimate the contributions of Foreign Direct Investment (FDI) to the aggregate growth and whether FDI have had an impact on total factor productivity (TFP) of Turkey for the period 1960-2005 using aggregate production function. This paper argues that the two main channels through which FDI can affect host country economic growth are technology spillovers and physical capital accumulation. Further, it intends to identify the casual linkage among FDI, TFP and economic growth and then evaluates various channels through which FDI is linked to TFP using some recent econometric techniques. The empirical results indicate that FDI contributes positively to TFP and growth via capital accumulation and technological spillovers. [ABSTRACT FROM AUTHOR]

This paper presents empirical evidence on how telecommunications infrastructure is related to economic growth in a panel dataset covering 44 African countries for the period from 1990 to 2010. A dynamic panel data approach model is employed, which suggests that telecommunications contribute in a major way to the economic development of the continent, after controlling for a number of other factors. Furthermore, the findings also show that investment in telecommunications is subject to increasing returns, demonstrating that an increase in telecommunications investment produces further growth. Therefore, telecommunications investment and services should be encouraged in the region. [ABSTRACT FROM AUTHOR]

In this paper, we examine the aid-growth-poverty relation by using quantile regression, which enables us to estimate the impact of growth and growth enhancing policies at different quantiles in the conditional distribution of poverty. The coefficient estimates in a quantile regression capture the marginal impact of a change in the explanatory variable observed at the τth quantile of the dependent variable. We find that growth in average income and other growth enhancing policies have heterogeneous impact on poverty, specifically that the marginal effect of growth and growth enhancing policies decreases at higher levels of poverty. These results are robust to the consideration of endogeneity of aid and use of alternative measures of poverty--poverty gap and squared poverty gap. [ABSTRACT FROM AUTHOR]

Recent literature has debated possible adverse impacts of aid volatility on a country's economic performance. Our paper adds to this literature in three ways: First it tests the validity of the aid volatility and growth relationship from various aspects: across time horizons, by sources of aid, and by aid volatility interactions with country characteristics. Second, it investigates the relationship by the level of aid absorption and spending. Third, when examining the relationship between IDA aid volatility and growth, it isolates IDA aid volatility due to the recipient country's performance from that due to other sources. Our findings suggest that, in the long run, on average, aid volatility is negatively correlated with real economic growth. But the relationship is not even. It is stronger for sub-Saharan African countries than for other regions and it is not present in middle income countries or countries with strong institutions. [ABSTRACT FROM AUTHOR]

"Growth is good for the poor" is a ubiquitous statement and one generally backed by theory, research and history. In the long-run, growth reduces poverty. Yet, growth in output - per se - is neither a necessary nor a sufficient condition for poverty reduction in the short-term. The paper uses a number of parametric and non-parametric methodologies to assess the relation between growth and poverty in Kazakhstan, a country that experienced rapid growth and poverty reduction in the short-term. Combining macro and micro regional data, we find a very small trickle down effect of output growth on household incomes and no evidence that output growth is correlated with poverty reduction. We find instead that pro-poor growth in household income explains well poverty reduction. [ABSTRACT FROM AUTHOR]

Using cointegration and error correction mechanism, this paper investigates the effectiveness of aid in Nepal during the period 1983-2002. Specifically, it examines the long-run relationship between aid and per capita real GDP. To address the current debate on whether aid works only in a good policy environment, we have included policy variables for macroeconomic stability, financial sector development and openness in an extended model. The results show that foreign aid has a positive and statistically significant effect on per capita real GDP in the long-run. More importantly, aid effectiveness improves in the presence of good policy environment. [ABSTRACT FROM AUTHOR]

Savings and growth are often strongly correlated. Thus, it is important to study the determinants of savings and the direction of causality between savings and growth as these have important implications for development policy. Yet, careful empirical studies on savings behavior are missing for Bangladesh. Thus, in this paper, we estimate the long-run total and private savings functions for Bangladesh using recent time series techniques. We find that the total savings rate is mainly determined by the GDP growth rate, dependency ratio, interest rates and bank density. The private savings rate is also affected by the public savings rate. Further, using the Granger Causality tests, we find that in Bangladesh, there is a bi-directional causality between savings and growth. We also carry out the Forecast Error Variance Decomposition (FEVD) analysis using the VAR framework. The FEVD results confirm the causality results obtained using the Granger causality tests as well as the estimated savings functions. [ABSTRACT FROM AUTHOR]