Advertisement

Group Formation and Growth Enhancing Variables: Evidence from Selected WAMZ Countries

Part of the Advances in African Economic, Social and Political Development book series (AAESPD)

Abstract

This paper sets out to empirically examine two issues. First, whether countries which belong in the same geographical area are apparently homogeneous and be pooled together in studying their growth drivers. Second and arising from the first, if homogeneity does not hold, what other growth enhancing variables drive the growth process for the group of selected WAMZ countries. The cross-sectional dependence result suggests dissimilarity among the countries and as such, the selected WAMZ countries should be studied independently. Foreign Direct Investment and democratic variables are prominent in the growth process of the WAMZ. However, Official Development Assistance (ODA) negatively impacted on economic growth of the economies studied, thus suggesting that it is highly fungible. To maximize the returns of government spending on growth and avoid the fungibility of foreign aid, fiscal discipline and consolidation are required for the apparent growth of the WAMZ economies.

Keywords

Growth Cross-section dependence Pesaran’s CD test WAMZ Dynamic ordinary least squares Economic integration 

JEL Classification

C210 C220 O2 O4 F130 F150 

Notes

Acknowledgment

I wish to express my appreciation to WAIFEM and CREPOL for the funding provided to read this paper at the ACRIA5.

References

  1. Acemoglu D, Johnson S, Robinson JA (2001) The colonial origins of comparative development: an empirical investigation. Am Econ Rev 91(5):1369–1401CrossRefGoogle Scholar
  2. Bailey N, Kapetanios G, Hashem Pesaran M (2012) Exponent of cross-sectional dependence: estimation and inference. In: CWPE 1206Google Scholar
  3. Barro RJ (1989) A cross-country study of growth, saving and government. National Bureau of Economic Research Working Paper No. 2855, February 1989Google Scholar
  4. Barro RJ (1990) Government spending in a simple model of endogenous growth. J Polit Econ 98(5:2):S103–S126CrossRefGoogle Scholar
  5. Barro R, Lee J-W (2013) A new data set of educational attainment in the world, 1950–2010. J Dev Econ 104:184–198CrossRefGoogle Scholar
  6. Breusch T, Pagan A (1980) The Lagrange multiplier test and its application to model specification in econometrics. Rev Econ Stud 47:239–253CrossRefGoogle Scholar
  7. Camacho-Gutierrez P (2010) Dynamic OLS estimation of the U.S. import demand for Mexican crude oil. MPRA Paper No. 30608, Posted 6 May 2011Google Scholar
  8. Cerrato M (2001) The cross sectional dependence puzzle. http://repec.org/res2002/Cerrato.pdf. Accessed 04 June 2014
  9. Chenery H, Robinson S, Syrquin M (1986) Industrialization and growth: a comparative study. Oxford University Press, New YorkGoogle Scholar
  10. Cooray A, Paradiso A, Truglia FG (2013) Do countries belonging to the same region suggest the same growth enhancing variables? Evidence from selected South Asian countries. Econ Model 33:772–779CrossRefGoogle Scholar
  11. de Hoyos RE, Sarafidis V (2006) Testing for cross-sectional dependence in panel data models. Stata J 6(4):482–496Google Scholar
  12. Dinopoulos E, Thompson P (1999) Reassessing the empirical validity of the human capital augmented neoclassical growth model. J Evol Econ 9:135–154CrossRefGoogle Scholar
  13. Dowrick S (1995) The determinants of long-run growth. In: Andersen P, Dwyer J, Gruen D (eds) Productivity and growth: RBA annual conference volume. Reserve Bank of Australia, SydneyGoogle Scholar
  14. Durlauf SN, Quah DT (1999) The new empirics of economic growth. In: Taylor JB, Woodford M (eds) Handbook of macroeconomics. Elsevier Science, Amsterdam, pp 235–308CrossRefGoogle Scholar
  15. Durlauf S, Kourtellos A, Minkin A (2001) The local Solow growth model. Eur Econ Rev 45:928–940CrossRefGoogle Scholar
  16. Ekpo HA (2014) Governance, growth and development in selected West African countries: a reconsideration of the evidence. Paper presented at the American Economic Association and African Finance Economic Association conference, Philadelphia, 3–6 Jan 2014Google Scholar
  17. Frees EW (1995) Assessing cross-sectional correlation in panel data. J Econ 69:393–414CrossRefGoogle Scholar
  18. Frees EW (2004) Longitudinal and panel data: analysis and applications in the social sciences. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  19. Friedman M (1937) The use of ranks to avoid the assumption of normality implicit in the analysis of variance. J Am Stat Assoc 32:675–701CrossRefGoogle Scholar
  20. Jalles JT (2012) Openness, regional trade agreements and growth: evidence from Asia. Asian Econ J 26:63–85CrossRefGoogle Scholar
  21. Jongwanich J, Kohpaiboon A (2013) Capital flows and real exchange rates in emerging Asian countries. J Asian Econ 24:138–146CrossRefGoogle Scholar
  22. Kibritcioglu A, Dibooglu S (2001) Long-run economic growth: an interdisciplinary approach. http://www.business.uiuc.edu/Working_Papers/papers/01−0121.pdf. Accessed 10 May 2014
  23. Kuznets S (1955) Economic growth and income inequality. Am Econ Rev 65:1–29Google Scholar
  24. Kuznets S (1966) Modern economic growth. Yale University Press, New HavenGoogle Scholar
  25. Kuznets S (1971) Economic growth of nations: total output and production structure. Harvard University Press, Cambridge, MACrossRefGoogle Scholar
  26. Levene H (1960) Robust testes for equality of variances. In: Olkin I (ed) Contributions to probability and statistics. Stanford University Press, Palo Alto, CA, pp 278–292Google Scholar
  27. Luintel K, Khan M, Arestis P, Theodoridis K (2008) Financial structure and economic growth. J Dev Econ 86:181–200CrossRefGoogle Scholar
  28. Mankiw NG, Romer D, Weil DN (1992) A contribution to the empirics of economic growth. Q J Econ 107(2):407–437CrossRefGoogle Scholar
  29. Narayan S, Narayan PN, Mishra S (2010) Investigating the relationship between health and economic growth: empirical evidence from a panel of 5 Asian countries. J Asian Econ 21(4):404–411CrossRefGoogle Scholar
  30. North DC (1990) Institutions, institutional change and economic performance. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  31. North DC (1994) Institutions and productivity in history. http://econwpa.wustl.edu:8089/eps/eh/papers/9411/9411003.pdf. Washington University, St. Louis, MO, mimeo
  32. North DC, Thomas RP (1973) The rise of the western world. A new economic history. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  33. Omotor DG (2010) Foreign aid and public expenditure: the case of Nigeria. Niger J Exch Secur 15(1):69–97Google Scholar
  34. Osei R, Morrissey O, Lloyd T (2005) The Fiscal effects of foreign aid in Ghana. UNU-WIDER, Research Paper No. 2005/661Google Scholar
  35. Pesaran MH (2004) General diagnostic tests for cross section dependence in panels. Cambridge Working Papers in Economics No. 0435, University of Cambridge, Faculty of EconomicsGoogle Scholar
  36. Rao B, Cooray A (2012) How useful is growth literature for policies in the developing countries? Appl Econ 44(6):671–681CrossRefGoogle Scholar
  37. Rao BB (2010) Estimates of the steady state growth rates for selected Asian countries with an extended Solow model. Econ Model 27:46–53CrossRefGoogle Scholar
  38. Rao BB, Hassan GE (2012) An analysis of the determinants of the long run growth rate of Bangladesh. Appl Econ 44:565–580CrossRefGoogle Scholar
  39. Sarafidis V, Wansbeek T (2010) Cross-sectional Dependence in panel data analysis. http://mpra.ub.uni-muenchen.de/20815/MPRA. Paper No. 20815, posted 21 Feb 2010, 18:26 UTC
  40. Solow RM (1956) A contribution to the theory of economic growth. Q J Econ 70(1):65–94CrossRefGoogle Scholar
  41. Stern N (1991) The determinants of growth. Econ J 101(404):122–133CrossRefGoogle Scholar
  42. Stock JH, Watson MW (1993) A simple estimator of cointegrating vectors in higher order integrated systems. Econometrica 61(1):120–128Google Scholar
  43. Transparency International (2013) Corruption perception index. http://www.transparency.org/cpi2014
  44. World Bank (2012) World development report 2013: Jobs. World Bank, Washington, DC. doi: 10.1596/978-0-8213-9575-2. License: Creative Commons Attribution CC BY 3.0

Copyright information

© Springer International Publishing Switzerland 2016

Authors and Affiliations

  1. 1.Business Development UnitWest African Institute for Financial and Economic Management (WAIFEM)LagosNigeria

Personalised recommendations