PUBLICATIONS
The AGDI has published substantially in fulfillment of its mission statement of contributing to knowledge towards African development:
IDEAS
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ECONSTOR
https://www.econstor.eu/dspace/escollectionhome/10419/123513
Publication List
2015 |
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611. | Asongu, Antonio Andrés Simplice R A 2015. Abstract | Links | BibTeX | Tags: Instrumental variables, Software piracy; Human development; Intellectual property rights; Panel data @workingpaper{Asongu_599, author = {Antonio Andrés R Simplice A. Asongu}, url = {http://www.afridev.org/RePEc/agd/agd-wpaper/Piracy-and-inclusive-human-development.pdf}, year = {2015}, date = {2015-12-02}, abstract = {The study examines the effect of software piracy on inclusive human development in 11 African countries for which software piracy data is available for the period 2000-2010. The empirical evidence is based on instrumental variable panel Fixed Effects (FE) and Tobit models in order to control for the unobserved heterogeneity and limited range in the dependent variable. The modeling exercise is based on the inequality adjusted human development (IHDI) and its constituents. The following main findings are established. First, from the FE regressions, software piracy consistently improves the IHDI and its constituents. Within this framework, the positive relationship between inclusive human development and software piracy is driven by all its constituents. Second, for Tobit regressions, the positive relationship between software piracy and inclusive human development is confirmed exclusively in the IHDI and literacy specifications. Within the latter framework, the positive relationship between software piracy and inclusive human is driven fundamentally by the literacy rate. Policy implications are discussed.}, keywords = {Instrumental variables, Software piracy; Human development; Intellectual property rights; Panel data}, pubstate = {published}, tppubtype = {workingpaper} } The study examines the effect of software piracy on inclusive human development in 11 African countries for which software piracy data is available for the period 2000-2010. The empirical evidence is based on instrumental variable panel Fixed Effects (FE) and Tobit models in order to control for the unobserved heterogeneity and limited range in the dependent variable. The modeling exercise is based on the inequality adjusted human development (IHDI) and its constituents. The following main findings are established. First, from the FE regressions, software piracy consistently improves the IHDI and its constituents. Within this framework, the positive relationship between inclusive human development and software piracy is driven by all its constituents. Second, for Tobit regressions, the positive relationship between software piracy and inclusive human development is confirmed exclusively in the IHDI and literacy specifications. Within the latter framework, the positive relationship between software piracy and inclusive human is driven fundamentally by the literacy rate. Policy implications are discussed. |
612. | Asongu, Simplice A Journal of the Knowledge Economy, 6 (4), pp. 717-748, 2015. Abstract | Links | BibTeX | Tags: Financial Development, Financial sector competition, Knowledge economy @article{Asongu_600, author = {Simplice A Asongu}, url = {http://link.springer.com/article/10.1007/s13132-012-0141-4}, doi = {10.1007/s13132-012-0141-4}, year = {2015}, date = {2015-12-01}, journal = {Journal of the Knowledge Economy}, volume = {6}, number = {4}, pages = {717-748}, abstract = {The goal of this paper is to assess how financial sector competition plays out in the development of knowledge economy (KE). It contributes at the same time to the macroeconomic literature on measuring financial development and response to the growing field of KE by means of informal sector promotion, microfinance, and mobile banking. It suggests a practicable way to disentangle the effects of various financial sectors on different components of KE. The variables identified under the World Bank’s four knowledge economy index (KEI) are employed. Three hypotheses based on seven propositions are tested. Results show: (a) the informal financial sector, a previously missing component in the definition of the financial system by the IMF significantly affects KE dimensions; (b) disentangling different components of the existing measurement of the financial system improves dynamics in the KE–finance nexus, and (c) introduction of measures of sector importance provides relevant new insights into how financial sector competition affects KE.}, keywords = {Financial Development, Financial sector competition, Knowledge economy}, pubstate = {published}, tppubtype = {article} } The goal of this paper is to assess how financial sector competition plays out in the development of knowledge economy (KE). It contributes at the same time to the macroeconomic literature on measuring financial development and response to the growing field of KE by means of informal sector promotion, microfinance, and mobile banking. It suggests a practicable way to disentangle the effects of various financial sectors on different components of KE. The variables identified under the World Bank’s four knowledge economy index (KEI) are employed. Three hypotheses based on seven propositions are tested. Results show: (a) the informal financial sector, a previously missing component in the definition of the financial system by the IMF significantly affects KE dimensions; (b) disentangling different components of the existing measurement of the financial system improves dynamics in the KE–finance nexus, and (c) introduction of measures of sector importance provides relevant new insights into how financial sector competition affects KE. |
613. | Asongu, Simplice A Journal of the Knowledge Economy, 6 (4), pp. 682-703, 2015. Abstract | Links | BibTeX | Tags: Africa, Intellectual property rights, Panel data, Software piracy @article{Asongu_601, author = {Simplice A Asongu}, url = {http://link.springer.com/article/10.1007%2Fs13132-012-0137-0}, doi = {10.1007%2Fs13132-012-0137-0}, year = {2015}, date = {2015-12-01}, journal = {Journal of the Knowledge Economy}, volume = {6}, number = {4}, pages = {682-703}, abstract = {In the current efforts toward harmonizing intellectual property rights (IPRs) regimes in the African continent, this paper provides answers to four key questions relevant in the policy decision-making processes. After empirically examining the questions, the following findings are established. (1) In comparison to common law countries, civil law countries inherently have a significant autonomous rate of software piracy; consistent with the “law and property rights” theory. (2) But for IPRs laws, the other intellectual property (IP) protection channels (World Intellectual Property Organization treaties, main IP law, and multilateral treaties) reduce the incidence of software piracy. (3) In both short-run and long-term, IPRs protection channels in civil law countries appear to mitigate software piracy more than in common law countries. (4) Formal institutions are instrumental in the fight against software piracy through IPRs protection channels.}, keywords = {Africa, Intellectual property rights, Panel data, Software piracy}, pubstate = {published}, tppubtype = {article} } In the current efforts toward harmonizing intellectual property rights (IPRs) regimes in the African continent, this paper provides answers to four key questions relevant in the policy decision-making processes. After empirically examining the questions, the following findings are established. (1) In comparison to common law countries, civil law countries inherently have a significant autonomous rate of software piracy; consistent with the “law and property rights” theory. (2) But for IPRs laws, the other intellectual property (IP) protection channels (World Intellectual Property Organization treaties, main IP law, and multilateral treaties) reduce the incidence of software piracy. (3) In both short-run and long-term, IPRs protection channels in civil law countries appear to mitigate software piracy more than in common law countries. (4) Formal institutions are instrumental in the fight against software piracy through IPRs protection channels. |
614. | Asongu, Enowbi Batuo & Vanessa Tchamyou Simplice M S A Bundling Governance: Finance versus Institutions in Private Investment Promotion 2015. Abstract | Links | BibTeX | Tags: Finance; Institutions; Investment: Property Rights; Africa @workingpaper{Asongu2015b, title = {Bundling Governance: Finance versus Institutions in Private Investment Promotion}, author = {Enowbi Batuo & Vanessa Tchamyou M S Simplice A. Asongu}, editor = {African 2015 Governance and Development Institute WP/15/051}, url = {http://www.afridev.org/RePEc/agd/agd-wpaper/Bundling-governance.-Finance-Institutions-and-Investment.pdf}, year = {2015}, date = {2015-12-01}, abstract = {Purpose – The study extends the debate on finance versus institutions in the promotion of investment documented by Acemoglu and Johnson (2005), Ali (2013) and Asongu (2014). We assess the effects of various components of governance on private investment, notably: political, economic and institutional governances. Financial indicators of depth, allocation efficiency, activity and size are used. Design/methodology/approach – An endogeneity robust dynamic system GMM estimation technique is employed. Principal component analysis is also employed to reduce the dimensions of governance variables. The empirical evidence is based on 53 African countries for the period 1996-2010. Findings – The findings provide support for the quality of governance as a better determinant of private investment than financial intermediary development. Moreover, the evidence of finance and governance as substitutes in their impact on investment implies that good governance fuels private investment and this positive impact is stronger in nations with less developed financial systems. This finding is consistent with Ali (2013) and contrary to the results of Asongu (2014c). Practical implication – Policy measures for fighting involuntary and voluntary surplus liquidities are discussed. The paper provides additional support for the need of strengthening governance institutions to promote investment on the one hand and fighting financial allocation inefficiency by mitigating surplus liquidity issues on the other hand. Originality/value – The paper extends the debate on the substitution of finance and institutions in the promotion of private investment.}, keywords = {Finance; Institutions; Investment: Property Rights; Africa}, pubstate = {published}, tppubtype = {workingpaper} } Purpose – The study extends the debate on finance versus institutions in the promotion of investment documented by Acemoglu and Johnson (2005), Ali (2013) and Asongu (2014). We assess the effects of various components of governance on private investment, notably: political, economic and institutional governances. Financial indicators of depth, allocation efficiency, activity and size are used. Design/methodology/approach – An endogeneity robust dynamic system GMM estimation technique is employed. Principal component analysis is also employed to reduce the dimensions of governance variables. The empirical evidence is based on 53 African countries for the period 1996-2010. Findings – The findings provide support for the quality of governance as a better determinant of private investment than financial intermediary development. Moreover, the evidence of finance and governance as substitutes in their impact on investment implies that good governance fuels private investment and this positive impact is stronger in nations with less developed financial systems. This finding is consistent with Ali (2013) and contrary to the results of Asongu (2014c). Practical implication – Policy measures for fighting involuntary and voluntary surplus liquidities are discussed. The paper provides additional support for the need of strengthening governance institutions to promote investment on the one hand and fighting financial allocation inefficiency by mitigating surplus liquidity issues on the other hand. Originality/value – The paper extends the debate on the substitution of finance and institutions in the promotion of private investment. |
615. | Asongu, Vanessa Tchamyou Simplice S A Inequality, Finance and Pro-Poor Investment in Africa 2015. Abstract | Links | BibTeX | Tags: Finance; Investment; Poverty; Inequality; Africa @workingpaper{Asongu2015bb, title = {Inequality, Finance and Pro-Poor Investment in Africa}, author = {Vanessa Tchamyou S Simplice A. Asongu}, editor = {African 2015 Governance and Development Institute WP/15/052}, url = {http://www.afridev.org/RePEc/agd/agd-wpaper/Inequality-finance-and-pro-poor-investment-in-Africa.pdf}, year = {2015}, date = {2015-12-01}, abstract = {This study complements existing literature by investigating how investment-driven finance affects inequality in Africa. The empirical evidence is based on restricted and unrestricted TwoStage Least Squares and a pre-crisis periodicity (1980-2002). Inequality is measured with estimated household income inequality whereas financial development is proxied with financial depth (money supply and liquid liabilities), financial efficiency (at banking and financial system levels), financial activity (from banking and financial system perspectives) and financial size. The findings show that with the exception of foreign investment, financial dynamics of depth, efficiency, activity and size enhance equalizing income-distribution through domestic, private and public investment channels. Policy implications are discussed with particular emphasis on improving inclusive development for the post-2015 sustainable development agenda. Notably, in the current transition from Millennium Development Goals (MDGs) to Sustainable Development Goals (SDGs), mobilizing domestic resources for investment purposes may have greater inclusive benefits than overly reliance on foreign sources of capital.}, keywords = {Finance; Investment; Poverty; Inequality; Africa}, pubstate = {published}, tppubtype = {workingpaper} } This study complements existing literature by investigating how investment-driven finance affects inequality in Africa. The empirical evidence is based on restricted and unrestricted TwoStage Least Squares and a pre-crisis periodicity (1980-2002). Inequality is measured with estimated household income inequality whereas financial development is proxied with financial depth (money supply and liquid liabilities), financial efficiency (at banking and financial system levels), financial activity (from banking and financial system perspectives) and financial size. The findings show that with the exception of foreign investment, financial dynamics of depth, efficiency, activity and size enhance equalizing income-distribution through domestic, private and public investment channels. Policy implications are discussed with particular emphasis on improving inclusive development for the post-2015 sustainable development agenda. Notably, in the current transition from Millennium Development Goals (MDGs) to Sustainable Development Goals (SDGs), mobilizing domestic resources for investment purposes may have greater inclusive benefits than overly reliance on foreign sources of capital. |
616. | Asongu, Vanessa Tchamyou Simplice S A The Comparative African Regional Economics of Globalization in Financial Allocation Efficiency 2015. Abstract | Links | BibTeX | Tags: Globalization; Financial Development; Regional Integration; Panel; Africa @workingpaper{Asongu2015bc, title = {The Comparative African Regional Economics of Globalization in Financial Allocation Efficiency}, author = {Vanessa Tchamyou S Simplice A. Asongu}, editor = {African 2015 Governance and Development Institute WP/15/053}, url = {http://www.afridev.org/RePEc/agd/agd-wpaper/Comparative-African-Regional-Economics.pdf}, year = {2015}, date = {2015-12-01}, abstract = {The study assesses the role of globalization-fuelled regionalization policies on financial allocation efficiency in four economic and monetary regions in Africa for the period 1980 to 2008. Banking system and financial system efficiencies are used as dependent variables whereas seven bundled and unbundled globalization variables are employed as independent indicators. The bundling exercise is achieved by means of principal component analysis while the empirical evidence is based on interactive Fixed Effects regressions. The following findings are established. First, financial allocation efficiency is more sensitive to financial openness compared to trade openness and most sensitive to globalization. The relationship between allocation efficiency and globalization-fuelled regionalization policies is: (i) Kuznets or inverted U-shape in the UEMOA and CEMAC zones (evidence of decreasing returns to allocation efficiency from globalization-fuelled regionalization) and (ii) U-shape overwhelmingly in the COMESA and scantily in the EAC (increasing returns to allocation efficiency from globalization-fuelled regionalization). Established shapes are relevant to specific globalization dynamics within regions. ‘Economic and monetary’ regions are more prone to surplus liquidity than purely economic regions. Policy implications and measures of fighting surplus liquidity are discussed.}, keywords = {Globalization; Financial Development; Regional Integration; Panel; Africa}, pubstate = {published}, tppubtype = {workingpaper} } The study assesses the role of globalization-fuelled regionalization policies on financial allocation efficiency in four economic and monetary regions in Africa for the period 1980 to 2008. Banking system and financial system efficiencies are used as dependent variables whereas seven bundled and unbundled globalization variables are employed as independent indicators. The bundling exercise is achieved by means of principal component analysis while the empirical evidence is based on interactive Fixed Effects regressions. The following findings are established. First, financial allocation efficiency is more sensitive to financial openness compared to trade openness and most sensitive to globalization. The relationship between allocation efficiency and globalization-fuelled regionalization policies is: (i) Kuznets or inverted U-shape in the UEMOA and CEMAC zones (evidence of decreasing returns to allocation efficiency from globalization-fuelled regionalization) and (ii) U-shape overwhelmingly in the COMESA and scantily in the EAC (increasing returns to allocation efficiency from globalization-fuelled regionalization). Established shapes are relevant to specific globalization dynamics within regions. ‘Economic and monetary’ regions are more prone to surplus liquidity than purely economic regions. Policy implications and measures of fighting surplus liquidity are discussed. |
617. | Kodila-Tedika, Julius Agbor Oasis A Does Trust Matter for Entrepreneurship: Evidence from A Cross-Section of Countries 2015. Abstract | Links | BibTeX | Tags: Entrepreneurship, institution, trust @workingpaper{Kodila-Tedika2015b, title = {Does Trust Matter for Entrepreneurship: Evidence from A Cross-Section of Countries}, author = {Julius Agbor A Oasis Kodila-Tedika}, editor = {African 2015 Governance and Development Institute WP/15/057}, url = {http://www.afridev.org/RePEc/agd/agd-wpaper/Does-Trust-Matter-for-Entrepreneurship.pdf}, year = {2015}, date = {2015-12-01}, abstract = {Differences in trust levels between countries explain the observed discrepancies in entrepreneurial spirit amongst them. We test this hypothesis with a cross-section of 60 countries in 2010. Our findings suggest that about half of the variation in entrepreneurial spirit across countries in the world is driven by trust considerations. This result is robust to regional clustering, to outliers and to alternative conditioning variables. The findings of the study suggest that while formal incentives to nurture entrepreneurship must be maintained, policymakers should also seek to pay attention to the role of trust cultivated through informal networks.}, keywords = {Entrepreneurship, institution, trust}, pubstate = {published}, tppubtype = {workingpaper} } Differences in trust levels between countries explain the observed discrepancies in entrepreneurial spirit amongst them. We test this hypothesis with a cross-section of 60 countries in 2010. Our findings suggest that about half of the variation in entrepreneurial spirit across countries in the world is driven by trust considerations. This result is robust to regional clustering, to outliers and to alternative conditioning variables. The findings of the study suggest that while formal incentives to nurture entrepreneurship must be maintained, policymakers should also seek to pay attention to the role of trust cultivated through informal networks. |
618. | Asongu, Simplice A 2015. Abstract | Links | BibTeX | Tags: Asymmetric development; Extreme poverty: SSA, Transfer pricing @workingpaper{Asongu2015bd, title = {Rational Asymmetric Development: Transfer Mispricing and Sub-Saharan Africa’s Extreme Poverty Tragedy}, author = {Simplice A Asongu}, editor = {African 2015 Governance and Development Institute WP/15/054}, url = {http://www.afridev.org/RePEc/agd/agd-wpaper/Rational-Asymmetric-Development-and-Transfer-Mispricing-and-Poverty-Tragedy-of-Africa.pdf}, year = {2015}, date = {2015-12-01}, abstract = {A recent publication by the World Bank on Millennium Development Goals (MDGs) has established that extreme poverty has been decreasing in all regions of the world with the exception of sub-Saharan Africa (SSA), in spite of over two decades of growth resurgence. This chapter explores the role of transfer mispricing in SSA’s extreme poverty tragedy. The analytical structure entails: (i) emphasis of rational asymmetric development as the dark side of transfer pricing; (ii) linkages between financial reporting, international financial reporting standards (IFRS), transfer pricing and poverty; (iii) evidence that the recent growth resurgence in African countries has been driven substantially by resource-rich countries which are experiencing high levels of exclusive growth and extreme poverty; (iv) the practice of transfer mispricing by multinationals operating in resource-rich countries of SSA and (v) a Zambian case study of extreme poverty and transfer mispricing schemes by Glencore in the copper industry. While transfer mispricing is contributing to diminishing African growth, available evidence shows that the component of growth that is not captured by transfer mispricing does not trickle down to the poor because the African elite is also animated by practices of rational asymmetric development. Policy implications for the fight against extreme poverty are discussed.}, keywords = {Asymmetric development; Extreme poverty: SSA, Transfer pricing}, pubstate = {published}, tppubtype = {workingpaper} } A recent publication by the World Bank on Millennium Development Goals (MDGs) has established that extreme poverty has been decreasing in all regions of the world with the exception of sub-Saharan Africa (SSA), in spite of over two decades of growth resurgence. This chapter explores the role of transfer mispricing in SSA’s extreme poverty tragedy. The analytical structure entails: (i) emphasis of rational asymmetric development as the dark side of transfer pricing; (ii) linkages between financial reporting, international financial reporting standards (IFRS), transfer pricing and poverty; (iii) evidence that the recent growth resurgence in African countries has been driven substantially by resource-rich countries which are experiencing high levels of exclusive growth and extreme poverty; (iv) the practice of transfer mispricing by multinationals operating in resource-rich countries of SSA and (v) a Zambian case study of extreme poverty and transfer mispricing schemes by Glencore in the copper industry. While transfer mispricing is contributing to diminishing African growth, available evidence shows that the component of growth that is not captured by transfer mispricing does not trickle down to the poor because the African elite is also animated by practices of rational asymmetric development. Policy implications for the fight against extreme poverty are discussed. |
619. | NWAKA, Stephen ONIFADE Ikechukwu T D Government Size, Openness and Income Risk Nexus: New Evidence from Some African Countries 2015. Abstract | Links | BibTeX | Tags: ARDL-bounds testing, FM-OLS; trade openness; income risk; government size; Africa. @workingpaper{NWAKA2015, title = {Government Size, Openness and Income Risk Nexus: New Evidence from Some African Countries}, author = {Stephen ONIFADE T Ikechukwu D. NWAKA}, editor = {African 2015 Governance and Development Institute WP/15/056}, url = {http://www.afridev.org/RePEc/agd/agd-wpaper/Government-Size-Openness-and-Income-Risk-Nexus.pdf}, year = {2015}, date = {2015-12-01}, abstract = {Empirical evidence for the compensation hypothesis holds that trade openness independent of income risk has no significant effects on government size. Hence, using time series data for the period 1965-2013 from Egypt, Ghana, Kenya, Nigeria and South Africa and applying the bounds test method of cointegration, this paper investigates the nature of the relationship between openness, income risk, terms of trade volatility and income per capita on government size in each of the 5 African countries. Our empirical findings show a long-run relationship particularly in Egypt and Ghana and a limited evidence for other countries. Similarly, after applying both the Autoregressive Distributed Lags (ARDL) and Fully Modified OLS (FM-OLS) on original data and Moving Average (MV) converted data, our findings vary across the countries due to country-specific factors. Hence, the evidence we find does not support the compensation hypothesis. However, we observe significant positive effects of income per capita on government size for each country and some evidence of the mitigating and cushioning effects of governments when exposed to income risks and volatility due to trade openness. We therefore suggest some appropriate policy recommendations for the selected countries.}, keywords = {ARDL-bounds testing, FM-OLS; trade openness; income risk; government size; Africa.}, pubstate = {published}, tppubtype = {workingpaper} } Empirical evidence for the compensation hypothesis holds that trade openness independent of income risk has no significant effects on government size. Hence, using time series data for the period 1965-2013 from Egypt, Ghana, Kenya, Nigeria and South Africa and applying the bounds test method of cointegration, this paper investigates the nature of the relationship between openness, income risk, terms of trade volatility and income per capita on government size in each of the 5 African countries. Our empirical findings show a long-run relationship particularly in Egypt and Ghana and a limited evidence for other countries. Similarly, after applying both the Autoregressive Distributed Lags (ARDL) and Fully Modified OLS (FM-OLS) on original data and Moving Average (MV) converted data, our findings vary across the countries due to country-specific factors. Hence, the evidence we find does not support the compensation hypothesis. However, we observe significant positive effects of income per capita on government size for each country and some evidence of the mitigating and cushioning effects of governments when exposed to income risks and volatility due to trade openness. We therefore suggest some appropriate policy recommendations for the selected countries. |
620. | Asongu, Jacinta Nwachukwu Simplice C A Foreign aid instability and bundled governance dynamics in Africa 2015. Abstract | Links | BibTeX | Tags: Instability; Foreign aid; Governance; Development; Africa @workingpaper{Asongu2015be, title = {Foreign aid instability and bundled governance dynamics in Africa}, author = {Jacinta Nwachukwu C Simplice A. Asongu}, editor = {African 2015 Governance and Development Institute WP/15/058}, url = {http://www.afridev.org/RePEc/agd/agd-wpaper/Foreign-aid-instability-and-bundled-governance-dynamics.pdf}, year = {2015}, date = {2015-12-01}, abstract = {Purpose- With the recent financial crisis and reduction of foreign aid by donor countries, the aidinstitutions debate is shifting to how aid instability affects governance in developing countries. We engage the policy debate by assessing the role of foreign aid instability on governance dynamics in fifty three African countries for the period 1996-2010. Design/methodology/approach- An autoregressive endogeneity-robust Generalized Methods of Moments is employed. Instabilities are measured in terms of standard errors and standard deviations. Three main aid indicators are used, namely: total aid, aid from multilateral donors and bilateral aid. Principal Component Analysis is used to bundle governance indicators, namely: political governance (voice & accountability and political stability/non violence), economic governance (regulation quality and government effectiveness), institutional governance (rule of law and corruption-control) and general governance (political, economic and institutional governance). Findings- Our findings show that foreign aid instability increases governance standards, especially political and general governance. Practical implications- In the presence of foreign aid instability, governments could be constrained to improve governance standards in exchange for, or anticipation of greater dependence on local tax revenues. Moreover, bundling governance indicators improves insights into how macroeconomic variables affect governance. This is essentially because, while aid instability improves general governance, for the most part it is not consistently for economic and institutional governance. Originality/value- The paper has contributed to the aid-institutions’ literature by examining how aid instabilities affect an aggregate index of governance dynamics in Africa.}, keywords = {Instability; Foreign aid; Governance; Development; Africa}, pubstate = {published}, tppubtype = {workingpaper} } Purpose- With the recent financial crisis and reduction of foreign aid by donor countries, the aidinstitutions debate is shifting to how aid instability affects governance in developing countries. We engage the policy debate by assessing the role of foreign aid instability on governance dynamics in fifty three African countries for the period 1996-2010. Design/methodology/approach- An autoregressive endogeneity-robust Generalized Methods of Moments is employed. Instabilities are measured in terms of standard errors and standard deviations. Three main aid indicators are used, namely: total aid, aid from multilateral donors and bilateral aid. Principal Component Analysis is used to bundle governance indicators, namely: political governance (voice & accountability and political stability/non violence), economic governance (regulation quality and government effectiveness), institutional governance (rule of law and corruption-control) and general governance (political, economic and institutional governance). Findings- Our findings show that foreign aid instability increases governance standards, especially political and general governance. Practical implications- In the presence of foreign aid instability, governments could be constrained to improve governance standards in exchange for, or anticipation of greater dependence on local tax revenues. Moreover, bundling governance indicators improves insights into how macroeconomic variables affect governance. This is essentially because, while aid instability improves general governance, for the most part it is not consistently for economic and institutional governance. Originality/value- The paper has contributed to the aid-institutions’ literature by examining how aid instabilities affect an aggregate index of governance dynamics in Africa. |