Search

Abstract: This paper studies the role played by the quality of property rights in the linkages of international capital flows into sub‐Saharan African (SSA) economies. Using panel data of 36 SSA countries over the period 1996–2015 and the ARDL procedure with the Pooled Mean Group regression method appropriate for non‐stationary panel data estimation, we account for the joint effects of property rights quality and openness to foreign capital flows on economic growth. We uncover the existence of a property rights quality threshold beyond which property rights either amplifies the spillovers effects or attenuates the negative effect of capital flows on economic growth. For instance, it takes a level of property rights of at least 60 to have a positive long‐term impact of capital flows on economic growth in natural resource‐poor African countries. The quality of property rights matters more to obtain spillover effects of capital flows on growth in natural resource‐poor countries than in their peer natural resource‐rich countries. Finally, with regard to the countries' income levels, capital flows have significant long‐term spillovers effects on economic growth in advanced African economies than in their low‐income peers. [ABSTRACT FROM AUTHOR]

Investment is a crucial factor determining economic performance at the firm as well as the country level. In this paper I identify the determinants of the decision to invest in new plant and equipment as well as the determinants of the level of such investment for a sample of firms in 19 sub-Saharan African countries. In particular, I concentrate on the role of property rights, external finance, trade status and firm ownership on investment. Results indicate that internationally trading firms, foreign owned firms and firms with better access to sources of external finance tend to be more likely to invest and to invest more, with little role for indicators of property rights in influencing investment decisions found. [ABSTRACT FROM AUTHOR]

Global value chains (GVC) have propelled substantial expansion in international trade across the globe over the last two decades. Yet, the institution–GVC nexus in Africa suffers complete neglect in literature. Therefore, we evaluate the impact of different components of political and economic institutions on backward (BWDGVC), forward (FWDGVC), total GVC participation, and GVC position (upstreamness) in Africa. Using system‐GMM with United Nations Conference on Trade and Development GVC database (UNCTAD‐Eora MRIO) for 47 African countries over the period 2000–2018, the key findings show that the effects of the political and economic institutions on GVC participation are diverse. Specifically, property rights, government spending, monetary freedom, and tax burden negatively affect BWDGVC participation while government integrity, investment freedom, and financial freedom stimulate the BWDGVC. Also, all the components of institutional quality that propel BWDGVC, hinder FWDGVC participation and upstreamness, except investment freedom which promotes both BWDGVC and FWDGVC. Nonetheless, property rights, government integrity, monetary freedom, financial freedom, and tax burden engender total GVC participation, whereas government effectiveness, and investment freedom hinder the total GVC participation. Furthermore, good political institutions promote BWGVC and total GVC but reduce upstreamness. Thus, institutions are fundamental drivers of GVC participation in Africa. [ABSTRACT FROM AUTHOR]