Appendix 1: Definitions of Variables
Variables Signs Definitions of variables (Measurement) Sources Political Stability PolSta
“Political stability/no violence (estimate): measured as the perceptions of the likelihood that the government will be destabilized or overthrown by unconstitutional and violent means, including domestic violence and terrorism”
World Bank (WGI)
Voice &
Accountability
V&A “Voice and accountability (estimate): measures the extent to which a country’s citizens are able to participate in selecting their government and to enjoy freedom of expression, freedom of association and a free media”.
World Bank (WGI)
Political Governance
Polgov First Principal Component of Political Stability and Voice &
Accountability. The process by which those in authority are selected and replaced.
PCA
Government Gov. E
“Government effectiveness (estimate): measures the quality
of public services, the quality and degree of independence World Bank (WGI)
21 Effectiveness from political pressures of the civil service, the quality of
policy formulation and implementation, and the credibility of governments’ commitments to such policies”.
Regulation Quality
RQ “Regulation quality (estimate): measured as the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector
development”.
World Bank (WGI)
Economic Governance
Ecogov “First Principal Component of Government Effectiveness and Regulation Quality. The capacity of government to formulate
& implement policies, and to deliver services”.
PCA
Rule of Law RL
“Rule of law (estimate): captures perceptions of the extent to which agents have confidence in and abide by the rules of society and in particular the quality of contract enforcement, property rights, the police, the courts, as well as the likelihood of crime and violence”.
World Bank (WGI)
Corruption-Control
CC
“Control of corruption (estimate): captures perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as
‘capture’ of the state by elites and private interests”.
World Bank (WGI)
Institutional Governance
Instgov First Principal Component of Rule of Law and Corruption-Control. The respect for citizens and the state of institutions that govern the interactions among them
PCA
General Governance
G.gov First Principal Component of Political, Economic and Institutional Governances
PCA
Political Globalisation
Polglob “This captures the extent of political globalisation in terms of number of foreign embassies in a country, membership in internatonal orgnisations, participation in UN security”.
Dreher et al. (2010)
Economic Globalisation
Ecoglob “Overall economic globalisation (considers both the flow and the restrictions in a given country to derive this). The higher, the better social globalisation”.
Dreher et al. (2010)
Social Globalisation
Socglob “Overall scores for the countries extent of social
globalisation. The higher the better socially globalised the country”.
Dreher et al. (2010)
Globalisation Glob This is an overall index that contains economic globalisation, social globalisation and political globalisation
Dreher et al. (2010)
Education Educ Secondary School Enrolment (% of Gross) World Bank (WDI) Mobile phones Mobile Mobile phone subscriptions (per 100 people) World Bank (WDI) GDP growth GDPg Gross Domestic Product (GDP) growth (annual %) World Bank (WDI) Population
growth
Popg Population growth rate (annual %) World Bank (WDI)
Foreign aid Aid Total Development Assistance (% of GDP) World Bank (WDI) Public Investment Pub. Ivt. Gross Public Investment (% of Grosss) World Bank (WDI)
Inflation Inflation Annual Consumer Price Inflation World Bank (WDI)
WDI: World Bank Development Indicators. WGI: World Governance Indicators. PCA: Principal Component Analysis.
22 Appendix 2: Summary statistics (1996-2011)
Mean SD Minimum Maximum Observations
Political Stability -0.572 0.954 -3.304 1.189 612
Voice & Accountability -0.709 0.730 -2.178 1.009 612
Political Governance 0.000 1.273 -3.323 2.790 612
Government Effectiveness -0.731 0.639 -2.454 0.876 662
Regulation Quality -0.708 0.654 -2.663 0.846 612
Economic Governance -0.0009 1.048 -2.252 2.458 611
Rule of Law -0.708 0.683 1.048 -2.525 612
Control of Corruption -0.600 0.601 -2.061 1.255 611
Institutional Governance -0.002 1.368 -3.584 3.596 611
General Governance -0.004 1.985 -5.535 4.819 611
Political Globalisation 58.142 18.323 19.958 94.164 816
Economic Globalisation 44.625 13.095 12.301 84.949 688
Social Globalisation 28.519 11.247 5.773 65.033 816
Globalisation 41.376 10.133 17.514 68.523 816
Education(SSE) 40.941 26.892 4.022 123.893 491
Mobile phone penetration 19.829 29.390 0.000 171.515 811
GDP growth 4.863 7.297 -32.832 106.279 792
Population growth 2.317 1.007 -1.081 9.770 816
Foreign aid 10.212 12.245 -0.251 147.054 791
Public Investment 7.491 4.692 0.000 43.011 713
Inflation 54.723 925.774 -9.797 24411.03 717
S.D: Standard Deviation.
23 Appendix 3: Correlation matrix for GMM (uniform sample size : 329)
Political Governance Economic Governance Institutional Governance Globalisation Control Variables
PS VA Polgov GE RQ Ecogov CC RL Instgov G.gov Polglob Ecoglob Socglob Glob SSE Mobile GDPg Popg Aid Pub.Ivt. Inflation
1.000 0.690 0.911 0.678 0.712 0.460 0.736 0.792 0.785 0.865 -0.129 0.363 0.561 0.393 0.402 0.245 -0.078 -0.342 -0.143 0.136 -0.189 PS 1.000 0.921 0.690 0.735 0.425 0.697 0.762 0.752 0.857 0.015 0.373 0.477 0.430 0.411 0.206 -0.060 -0.211 -0.078 0.141 -0.100 VA
1.000 0.740 0.787 0.482 0.774 0.843 0.833 0.936 -0.046 0.381 0.555 0.442 0.431 0.246 -0.073 -0.291 -0.108 0.147 -0.154 Polgov 1.000 0.876 0.647 0.865 0.887 0.905 0.889 0.132 0.422 0.720 0.631 0.661 0.368 -0.038 -0.475 -0.295 0.054 -0.127 GE
1.000 0.736 0.814 0.858 0.862 0.912 0.138 0.428 0.727 0.640 0.605 0.387 -0.091 -0.386 -0.342 -0.380 -0.220 RQ 1.000 0.552 0.611 0.597 0.635 0.199 0.304 0.591 0.541 0.407 0.307 -0.084 -0.325 -0.262 -0.274 -0.222 Ecogov
1.000 0.877 0.971 0.917 -0.080 0.411 0.679 0.499 0.596 0.311 -0.096 -0.513 -0.213 0.217 -0.147 CC
1.000 0.965 0.953 0.045 0.409 0.741 0.590 0.625 0.354 -0.058 -0.471 -0.250 0.123 -0.170 RL
1.000 0.964 -0.020 0.419 0.728 0.557 0.629 0.341 -0.077 -0506 -0.240 0.125 -0.163 Instgov
1.000 0.005 0.431 0.705 0.565 0.581 0.333 -0.083 -0.427 -0.219 0.098 -0.184 G.gov
1.000 -0.117 0.099 0.486 0.192 0.245 -0.014 0.057 -0.232 -0.108 -0.099 Polglob
1.000 0.525 0.715 0.585 0.509 0.048 -0.476 -0.419 0.012 0.198 Ecoglob
1.000 0.802 0.792 0.551 -0.168 -0.734 -0.512 -0.141 -0.156 Socglob 1.000 0.780 0.652 -0.062 -0.570 -0.580 -0.115 -0.021 Glob
1.000 0.602 -0.120 -0.693 -0.580 -0.046 -0.092 SSE 1.000 -0.090 -0.421 -0.348 -0.020 -0.083 Mobile
1.000 0.195 0.073 0.216 0.023 GDPg
1.000 0.476 0.063 0.079 Popg
1.000 0.288 0.099 Aid
1.000 0.018 Pub. Ivt.
1.000 Inflation PS: Political Stability/Non violence. VA: Voice & Accountability. Polgov: Political Governance. GE: Government Effectiveness. RQ: Regulation Quality. Ecogov: Economic Governance. CC: Corruption-Control. RL:
Rule of Law. Instgov: Institutional Governance. G.Gov: General Governance. Polgov: Political Globalisation. Ecoglob: Economic Globalisation. Socglob: Social Globalisation. Glob: Globalisation. SSE: Secondary School Enrolment. Mobile: Mobile Phone Penetration. GDPg: Gross Domestic Product growth. Popg: Population growth. Aid: Foreign aid. Pub. Ivt: Public Investment.
24 Appendix 4: Persistence of the dependent variables
Political Governance Economic Governance Institutional Governance
PS VA Polgov GE RQ Ecogov CC RL Instgov G.gov
PS(-1) 0.961
VA(-1) 0.981
Polgov(-1) 0.978
GE(-1) 0.980
RQ(-1) 0.978
Ecogov(-1) 0.990
CC(-1) 0.967
RL(-1) 0.981
Instgov(-1) 0.981
G.gov(-1) 0.988
PS: Political Stability/Non violence. PS(-1): Lagged value of Political Stability/Non Violence. VA: Voice & Accountability. Polgov:
Political Governance. GE: Government Effectiveness. RQ: Regulation Quality. Ecogov: Economic Governance. CC: Corruption-Control.
RL: Rule of Law. Instgov: Institutional Governance. G.Gov: General Governance.
References
Ades, A., & Di Tella, R., (1999), “Rents, competition and corruption”, American Economic Review, 89(4), pp. 982-993.
Anyanwu, J., & Erhijakpor, A., (2014). “Does Oil Wealth Affect Democracy in Africa?”African Development Review, 26(1), pp. 15-37.
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 error components models”, Journal of Econometrics, 68(1), pp. 29-52.
Asongu, S. A., & Kodila-Tedika, O., (2015). “Is Poverty in the African DNA (Gene)?”, African Governance and Development Institute Working Paper No. 15/011, Yaoundé.
Asongu, S. A., (2014). “Globalisation (fighting) corruption and development. How are these phenomena linearly and non-linearly related in wealth effects?”, Journal of Economic Studies, 41(3), pp. 346-369.
Asongu, S. A., (2016a). “Determinants of Growth in Fast Developing Countries: Evidence from Bundling and Unbundling Institutions”, Politics & Policy, 44(1), pp. 97-134.
Asongus. S. A., (2016b). “Sino-African relations: a review and reconciliation of dominant schools of thought”, Politics & Policy, 44(2), pp. 351-383.
25 Asongu, S. A., & De Moor, L., (2016). “Financial globalisation dynamic thresholds for financial development: evidence from Africa”, The European Journal of Development Research. DOI: 10.1057/ejdr.2016.10.
Asongu, S. A., & Nwachukwu, J., (2016a). “Revolution empirics: predicting the Arab Spring” Empirical Economics: http://link.springer.com/article/10.1007/s00181-015-1013-0 Asongu, S. A, & Nwachukwu, J. C., (2016b). “Foreign aid and governance in Africa”, International Review of Applied Economics, 30(1), pp. 69-88.
Asongu, S. A. & Ssozi, J., (2016). “Sino-African Relations: Some Solutions and Strategies to the Policy Syndromes”, Journal of African Business, 17(1), pp. 33-51.
Ba, J., & Ng S (2006). “Confidence intervals for diffusion index forecasts and inference for factor-augmented regression”, Econometrica, 74(4), pp. 1133-1150.
Bai, J., (2003). “Inferential theory for factor models of large dimensions”. Econometrica, 71 (1),pp.135-173.
Bai, J., (2009). “Panel data models with interactive fixed effects”. Econometrica, 77(4), pp.
1229-1279.
Baltagi, B. H., (2008). “Forecasting with panel data”, Journal of Forecasting, 27(2), pp. 153-173.
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.
Bhagwati, J. (1982), “Directly unproductive, profit-seeking (DUP) activities”, Journal of Political Economy, 90(5), pp. 988-1002.
Bhagwati, J. & Srinivasan, T. N. (1980), “Revenue seeking: a generalisation of the theory of tariffs”, Journal of Political Economy, 80(1), pp. 1069-1087.
Bonaglia, F., Braga de Macedo, J. & Bussolo, M. (2001), “How globalization improves governance”, Working Paper, No. 181, OECD, Paris.
Blundell, R., & Bond, S., (1998). “Initial conditions and moment restrictions in dynamic panel data models” Journal of Econometrics, 87(1), pp. 115-143.
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.
Dreher, A., Gaston, N., Martens, P., & Van Boxem, L., (2010). “Measuring Globalization – Opening the Black Box. A Critical Analysis of Globalization Indices”, Journal of Globalization Studies, 1(1), pp. 166-185.
26 Efobi, U., (2015). “Politicians’ Attributes and Institutional Quality in Africa: A Focus on Corruption”, Journal of Economic Issues, 49(3), pp. 787-813.
Fonchingong, C., (2014). “Firming Up Institutional Policy for Deprived Elderly in Cameroon”, Politics & Policy, 42(6), pp. 948-980.
Fosu, A., (2013a), “Growth of African Economies: Productivity, Policy Syndromes and the Importance of Institutions” Journal of African Economies, 22(4), pp. 523-551.
Fosu, A., (2013b). “Growth of African Economies: Productivity, Policy Syndromes and the Importance of Institutions” Journal of African Economies 22(4), pp. 523-551.
Fosu, A. K., (2015a). “Growth, Inequality and Poverty in Sub-Saharan Africa: Recent Progress in a Global Context”, Oxford Development Studies, 43(1), pp. 44-59.
Fosu, A., (2015b). Growth and Institutions in African Development, First edited by Augustin K. Fosu, , Routledge Studies in Development Economics: New York
Fosu, A., (2015c). Growth and institutions in African Development, in Growth and
Institutions in African Development, First edited by Augustin K. Fosu, 2015, Chapter 1, pp.
1-17, Routledge Studies in Development Economics: New York.
Gatti, R. (1999), “Corruption and trade tariffs, or a case for uniform tariffs”, Working Paper.
No. 2216, World Bank Policy Research, Washington, DC.
Goredema, C, (2009). “Recovery of proceeds of crime: observations on practical challenges in Sub-Saharan Africa.” In Basel Institute on Governance, Tracing Stolen Assets: A
Practitioner’s Handbook. Available at: http://www.
baselgovernance.org/fileadmin/docs/publications/books/asset-tracing_web-version.pdf (06-26-14)
Greenaway-McGrevy, R., Han, C., & Sul, D., (2012). “Asymptotic distribution of factor aug- mented estimators for panel regression”. Journal of Econometrics, 169 (1), pp. 48-53.
Jolliffe, I. T. (2002) Principal Component Analysis (2nd Ed.) New York: Springer.
Kaiser, H. F. (1974) “An index of factorial simplicity” Psychometrika, 39(1), pp. 31-36.
Kangoye, T., (2013). “Does Aid Unpredictability Weaken Governance? Evidence From Developing Countries”, The Developing Economies, 51(2), pp. 121-144.
Kaufmann, D., Kraay, A., & Mastruzzi, M., (2007a). “Growth and Governance: A Reply”, Journal of Politics, 69(2), pp. 555-562.
Kaufmann, D., Kraay, A., & Mastruzzi, M., (2007b). “Growth and Governance: A Rejoinder”, Journal of Politics, 69(2), pp. 570-572.
27 Kaufmann, D., Kraay, A & Mastruzzi, M., (2010). “The worldwide governance indicators:
Methodology and analytical Issues”. World Bank Policy Research Working Paper No 5430, Washington.
Kurtz, M., & Schrank, A., (2007a). “Growth and Governance: Models, Measures, and Mechanisms”, Journal of Politics, 69(2), pp. 538-554.
Kurtz, M., & Schrank, A., (2007b). “Growth and Governance: A Defense”, Journal of Politics, 69(2), pp. 563-569.
Klitgaard, R. (1988), Controlling Corruption, University of California Press, Berkeley, CA and London.
Krueger, A. (1974), “The political economy of the rent seeking society”, American Economic Review, 64(3), pp. 291-303.
Lalountas, D.A., Manolas, G.A., & Vavouras, I. S., (2011), “ Corruption, globalization and development: How are these three phenomena related?”, Journal of Policy Modeling, 33(4), pp. 636-648.
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.
McKenzie C, R., & McAleer M (1997). “On efficient estimation and correct inference in models with generated regressors: A general approach.” Japanese Economic Review, 48(4), pp. 368-389.
McMillan, M,S., (2013). “The Changing Structure of Africa’s Economies.” Background Paper for African Economic Outlook 2013. African Development Bank, OECD Development Center, and United Nations Development Program. Revised version available at:
http://legacy.wlu.ca/documents/57803/McMillian_ChangingAfrica_140317.pdf Okada, K., & Samreth, S.,(2012), “The effect of foreign aid on corruption: A quantile regression approach”, Economic Letters, 11(2), pp. 240-243.
Oxley L, & McAleer, M., (1993). “Econometric issues in macroeconomic models with generated regressors.” Journal of Economic Surveys, 7(1), pp. 1-40.
Pagan, A., (1984). “Econometric issues in the analysis of regressions with generated regressors” International Economic Review, 25(1), pp. 221-247.
Pesaran, M. H., (2006). “Estimation and inference in large heterogeneous panels with a mul- tifactor error structure”. Econometrica 74 (4), pp. 967-1012.
Rhodes, R. A. W., (1996). “The New Governance: Governing without Government”, Political Studies, 44(4), pp. 652-667.
28 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.
Stock, J. H. & M. W. Watson (2002). “Forecasting using principal components from a large number of predictors”. Journal of the American Statistical Association, 97 (460), pp.1167-1179.
Tchamyou, V. S., (2015). “The role of knowledge economy in African business”, African Governance and Development Institute Working Paper No. 14/049, Yaoundé.
Treisman, D. (2000), “The causes of corruption: a cross-national study”, Journal of Public Economics, 76(3), pp. 399-457.
Wei, S.J. (2000), “Natural openness and good governance”, Working Paper, No. 7765, NBER, Cambridge, MA.
Westerlund, J., & Urbain, J-P., (2013a). “On the estimation and inference in factor-augmented panel regressions with correlated loadings”, Economic Letters, 119(3), pp. 247-250.
Westerlund, J., & Urbain, J-P., (2013b). “On the implementation and use of factor-augmented regressions in panel data”, Journal of Asian Economics, 28(October), pp. 3-11.
Westerlund, J., & Urbain, J-P., (2012). “Cross-sectional averages versus principal components”, Maastricht University, RM/11/053, Maastricht.
World Bank (2015). “World Development Indicators”, World Bank Publications http://www.gopa.de/fr/news/world-bank-release-world-development-indicators-2015
(Accessed: 25/04/2015).