Doing Business and Inclusive Human Development in Sub-Saharan Africa

Asongu, Simplice and Odhiambo, Nicholas (2018): Doing Business and Inclusive Human Development in Sub-Saharan Africa. Forthcoming in: African Journal of Economic and Management Studies

Abstract

Purpose- This study examines how doing business affects inclusive human development in 48 sub-Saharan Africa for the period 2000-2012.

Design/methodology/approach- The measurement of inclusive human development encompasses both absolute pro-poor and relative pro-poor concepts of inclusive development. Three doing business variables are used, namely: the number of start-up procedures required to register a business; time required to start a business; and time to prepare and pay taxes. The empirical evidence is based on Fixed Effects and Generalised Method of Moments regressions.

Findings- The findings show that increasing constraints to the doing of business have a negative effect on inclusive human development.

Originality/value- The study is timely and very relevant to the post-2015 Sustainable Development agenda for two fundamental reasons: (i) Exclusive development is a critical policy syndrome in Africa because about 50% of countries in the continent did not attain the MDG extreme poverty target despite enjoying more than two decades of growth resurgence. (ii) Growth in Africa is primarily driven by large extractive industries and with the population of the continent expected to double in about 30 years, scholarship on entrepreneurship for inclusive development is very welcome. This is essentially because studies have shown that the increase in unemployment (resulting from the underlying demographic change) would be accommodated by the private sector, not the public sector.

• Item Type: MPRA Paper
• Language: English
• Keywords: Doing Business; Inclusive Development; Entrepreneurship; Africa
• Subjects: I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I30 - General; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M2 - Business Economics > M20 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O30 - General; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa

References

Afutu-Kotey, R. L., Gough, K. W., &Owusu, G., (2017). “Young Entrepreneurs in the Mobile Telephony Sector in Ghana: From Necessities to Aspirations”. Journal of African Business, 18(4), pp. 476-491.

Anand, R., Mishra, S., &Peiris, S. J., (2013).“Inclusive Growth: Measurement and Determinants”, IMF Working Paper 13/135, Washington.

Anyanwu, J. C., (2014). “Determining the correlates of poverty for inclusive growth in Africa”, European Economics Letters, 3(1), pp. 12-17.

Anyanwu, J. C., (2013). “The correlates of poverty in Nigeria and policy implications”, African Journal of Economic and Sustainable Development, 2(1), pp. 23-52.

Arellano, M., & Bond, S., (1991), “Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations” The Review of Economic Studies, 58(2), pp. 277-297.

Arellano, M., &Bover, O., (1995), “Another look at the instrumental variable estimation of errorcomponents models”, Journal of Econometrics, 68(1), pp. 29-52.

Asongu, S. A., (2013). “How Would Population Growth Affect Investment in the Future? Asymmetric Panel Causality Evidence for Africa”, African Development Review, 25, (1), pp. 14-29.

Asongu, S. A., (2014). “The Questionable Economics of Development Assistance in Africa: Hot-Fresh Evidence, 1996–2010”, The Review of Black Political Economy, 41(4), pp. 455-480.

Asongu, S. A., (2015). “The impact of mobile phone penetration on African inequality”, International Journal of Social Economics, 42(8), pp.706 – 716.

Asongu, S. A., Biekpe, N., &Tchamyou, V. S., (2019). “Remittances, ICT and Doing Business in Sub-Saharan Africa”, Journal of Economic Studies, 46(1): Forthcoming.

Asongu, S. A., & De Moor, L., (2017). “Financial globalisation dynamic thresholds for financial development: evidence from Africa”, The European Journal of Development Research, 29(1), pp 192–212.

Asongu, S. A., Efobi, U., &Beecroft, I., (2015). “Inclusive Human Development in Pre-Crisis Times of Globalisation-Driven Debts”, African Development Review, 27(4), pp. 428-442.

Asongu, S. A., & le Roux, S., (2017). “Enhancing ICT for Inclusive Human Development in Sub-Saharan Africa”, Technological Forecasting and Social Change, 118(May), pp.44-54.

Asongu, S. A., &Nwachukwu, J. C., (2016a). “The Role of Governance in Mobile Phones for Inclusive Human Development in Sub-Saharan Africa”, Technovation, 55-56(September–October), pp. 1-13.

Asongu, S.A, &Nwachukwu, J. C., (2016b). “The Mobile Phone in the Diffusion of Knowledge for Institutional Quality in Sub Saharan Africa”, World Development, 86(October), pp.133-147.

Asongu, S. A., &Nwachukwu, J. C., (2017a).“The Comparative Inclusive Human Development of Globalisation in Africa”, Social Indicators Research,134( 3), pp 1027–1050.

Asongu, S. A., &Nwachukwu, J.C. (2017b). “Foreign Aid and Inclusive Development: Updated Evidence from Africa, 2005–2012”, Social Science Quarterly, 98(1), pp.282–298.

Asongu, S. A., Nwachukwu, J.C., &Orim, S-M., I., (2018).“Mobile phones, institutional quality and entrepreneurship in Sub-Saharan Africa”, Technological Forecasting and Social Change, 131(June), pp. 183-203.

Azzimonti, M., De Francisco, E., Quadrini, V., (2014). “Financial Globalisation, Inequality and the Rising Public Debt”, American Economic Review, 104(8), pp. 2267-2302.

Baliamoune-Lutz, M., (2007). “Globalisation and Gender Inequality: Is Africa Different?”,Journal of African Economies, 16(2), pp. 301-348.

Baliamoune-Lutz, M., & McGillivray, M., (2009). “Does Gender Inequality Reduce Growth in Sub-Saharan Africa and Arab Countries?”,African Development Review, 21(2), pp. 224-242.

Baltagi, B. H., (2008). “Forecasting with panel data”, Journal of Forecasting, 27(2), pp. 153-173.

Bardy, R., Drew, S., &Kennedy, T. F., (2012). “Foreign Investment and Ethics: How to Contribute to SocialResponsibility by Doing Business in Less-Developed Countries”, Journal of Business Ethics, 106(3), pp. 267-282.

Beck, T., Demirgüç-Kunt, A., & Levine, R.(2003). “Law and finance: why does legal origin matter?”,Journal of Comparative Economics, 31(4), pp. 653-675.

Bicaba, Z., Brixiova, Z., &Ncube, M., (2017). “Can Extreme Poverty in Sub-Saharan Africa be Eliminated by 2030?,” Journal of African Development, 19(2), pp. 93-110.

Blundell, R., & Bond, S., (1998). “Initial conditions and moment restrictions in dynamic panel data models” Journal of Econometrics, 87(1), pp. 115-143.

Boadi, I., Dana, L. P., Merten, G., & Mensah, L., (2017). “SMEs’ Financing and Banks’ Profitability: A “Good Date” for Banks in Ghana?," Journal of African Business, 18(2), pp. 257-277.

Bond, S., Hoeffler, A., &Tample, J. (2001) “GMM Estimation of Empirical Growth Models”, University of Oxford.

Dewan, S., &Ramaprasad, J., (2014). “Social media, traditional media and music sales”, MIS Quarterly, 38(1), pp. 101-128.

Dollar, D., &Kraay, A., (2003), “Institutions, Trade, and Growth,” Journal of Monetary Economics, 50(1), pp. 133-162.

Domeher, D., Musah, G., & Hassan, N., (2017). “Inter-sectoral Differences in the SME Financing Gap: Evidence from Selected Sectors in Ghana,” Journal of African Business, 18(2), pp. 194-220.

Efobi, U. R., Tanankem, B. V. &Asongu, S. A., (2016).“Technological Advancement and the Evolving Gender Identities: A Focus on the Level of Female Economic Participation in Sub-Saharan Africa”, African Governance and Development Institute Working Paper No. 16/045, Yaoundé.

Eifert, B., Gelb, A., &Ramachandran, V., (2008). “The Cost of Doing Business in Africa: Evidence from Enterprise Survey Data”, World Development, 36(9), pp. 1531-1546.

Elu J., &Loubert, L., (2013). “Earnings Inequality and the Intersectionality of Gender and Ethnicity In SubSaharan Africa: The Case of Tanzanian Manufacturing”, American Economic Review, Papers and Proceedings 04/2013, 103(103), pp. 289-292.

Fielden, S. L., &Dawe, A., (2004). “Entrepreneurship and social inclusion”, Women in Management Review, 19(3), pp.139-142.

Fosu, A. K., (2015). “Growth, Inequality and Poverty in Sub-Saharan Africa: Recent Progress in a Global Context”, Oxford Development Studies, 43(1), pp. 44-59.

Gerba, D. T. (2012).“Impact of entrepreneurship education on entrepreneurial intentions of business and engineering students in Ethiopia”, African Journal of Economic and Management Studies, 3(2), pp. 258-277.

Hall, J., Matos, S., Sheehan, L., & Silvestre, B., (2012). “Entrepreneurship and Innovation at the Base of the Pyramid: A Recipe for Inclusive Growth or Social Exclusion?”,Journal of Management Studies, 49(4), pp. 785-812.

Hussain, M. D., Bhuiyan, A. B., &Bakar, R., (2014). “Entrepreneurship Development and Poverty Alleviation: an Empirical Review”, Journal of Asian Scientific Research, 4(10), pp. 558-573.

Khavul, S., Bruton, J. D., & Wood, E., (2009). “Informal Family Business in Africa”, Entrepreneurship: Theory & Practice, 33(6), pp. 1219-1238.

Klasen, S., (2005).“Economic Growth and Poverty Reduction: Measurements and Policies”, Paris, Working paper No. 246, OECD Development Center, Paris.

Kuada, J., (2015). “Entrepreneurship in Africa – a classificatory framework and a research agenda”, African Journal of Economic and Management Studies, 6(2) pp. 148-163.

Kuada, J. (2014). “Cross- border interfirm knowledge generation and enterprise development in Africa”, in Nwankwo, S. and Ibeh, K. (Eds), The Routledge Companion to Business in Africa, Routledge, London and New York, pp. 352-370.

Kuada, J., (2009). “Gender, social networks, and entrepreneurship in Ghana”, Journal of African Business, 10 (1), pp. 85-103.

Lopez, H., &Serven, L. (2004), “The Mechanics of Growth-Poverty-Inequality Relationship”, mimeo.

Love, I., &Zicchino, L., (2006).“Financial Development and Dynamic Investment Behaviour: Evidence from Panel VAR” .The Quarterly Review of Economics and Finance, 46(2), pp. 190-210.

Mensah, S. N., & Benedict, E., (2010). “Entrepreneurship training and poverty alleviation: Empowering the poor in the Eastern Free State of South Africa”, African Journal of Economic and Management Studies, 1(2), pp. 138-163.

Mishra, S., Gable, S. L., &Anand, R., (2011), “Service Export Sophsitication and Economic Growth,” World Bank Policy Working Paper No. 5606, Washington.

Mlachila, M., Tapsoba, R., & Tapsoba, S. J. A., (2017). “A Quality of Growth Index for Developing Countries: A Proposal”, Social Indicators Research, 134(2), pp 675–710.

Nanziri, E. L., (2016). “Financial Inclusion and Welfare in South Africa: Is there a Gender Gap?,” Journal of African Development, 18(2), pp. 109-134.

Obeng-Odoom, F. (2013). “Africa’s Failed Economic Development Trajectory: A Critique”, African Review of Economics and Finance, 4(2), pp. 151-175.

Obeng-Odoom, F. (2015). “Africa: On the Rise, but to Where?”,Forum for Social Economics, 44(3), pp. 234-250.

Oseifuah, E. K., (2010). “Financial literacy and youth entrepreurship in South Africa”, African Journal of Economic and Management Studies, 1(2), pp. 164-182.

Paul, B., Bhorat, H., & Cheadle, H., (2010). “The cost of “doing business and labour regulation: The case of South Africa”, International Labour Review, 149(1), pp. 73-91.

Ravallion, M., & Chen, S., (2003), “Measuring Pro-Poor Growth,” Economics Letters, 78(1), pp. 93-99.

Roodman, D., (2009a). “A Note on the Theme of Too Many Instruments”, Oxford Bulletin of Economics and Statistics, 71(1), pp. 135-158.

Roodman, D., (2009b). “How to do xtabond2: An introduction to difference and system GMM in Stata”, Stata Journal, 9(1), pp. 86-136.

Seneviratne, D., & Sun, Y., (2013), “Infrastructure and Income Distribution in ASEAN-5: What are the Links?” IMF Working Paper No. 13/41, Washington.

Singh, S., Simpson, R., Mordi, C., &Okafor, C., (2011). “Motivation to become an entrepreneur : a study of Nigerian women’s decisions”, African Journal of Economic and Management Studies, 2(2), pp. 202-219.

Ssozi, J., &Asongu, S., (2016). “The Effects of Remittances on Output per Worker in Sub-Saharan Africa: A Production Function Approach”, South African Journal of Economics, 84(3), pp. 400–421.

Taplin, R., &Snyman, M., (2004).“Doing business in South Africa’s new mining environment: A legal perspective”, CIM Bulletin, 97(1078), pp. 91-98.

Tapsoba, S. J-A., (2010). “Trade Intensity and Business Cycle Synchronicity in Africa”, African Development Review, 22(1), pp. 149-172.

Tchamyou, V. S., (2017). “The role of knowledge economy in African business”, Journal of the Knowledge Economy, 8(4), pp 1189–1228.

Tchamyou, V. S.,(2018a). “Education, Lifelong learning, Inequality and Financial access: Evidence from African countries”.Contemporary Social Science. DOI:10.1080/21582041.2018.1433314.

Tchamyou, V. S., (2018b).“The Role of Information Sharing in Modulating the Effect of Financial Access on Inequality”.Journal of African Business: Forthcoming.

Tchamyou, S. V., &Asongu, S. A., (2017).“Information Sharing and Financial Sector Development in Africa”, Journal of African Business, 18(1), pp. 24-49.

Thorbecke, E., (2013). “The Interrelationship Linking Growth, Inequality and Poverty in Sub-Saharan Africa”, Journal of African Economies, 33, Suppl_1, pp. 15-48.

World Bank (2015). “World Development Indicators”, World Bank Publicationshttp://www.gopa.de/fr/news/world-bank-release-world-development-indicators-2015 (Accessed: 25/04/2015).