Economic Growth or Good Governance: What is More
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Transcript Economic Growth or Good Governance: What is More
Economic Growth or Good
Governance: What is More
Important to Reduce Poverty and
Insecurity in Sub-Saharan Africa?
AMM QUAMRUZZAMAN, MCGILL UNIVERSITY
P R E S E N TAT I O N P R E PA R E D F O R T H E C S A C O N G R E S S 2 0 1 5 , OT TAWA
JUNE 5, 2015
Background
The first of the eight MDGs – halve the proportion of
people living below the income of less than $1 a day by
2015.
47% of the people in SSA live below $1.25 a day and more
than two thirds live on less than $2 a day.
Measured in terms of income alone, SSA is the only region
where poverty has increased since 1990.
SSA is also one of the most vulnerable regions in the world
in terms of citizen insecurity measured using homicide rate.
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Background
Poverty and insecurity are arguably the two most pressing
development challenges facing sub-Saharan Africa.
Policy response 1: national policies, supported by western
donors, with a focus on promoting good governance.
Policy response 2: economic policies with a primary focus
on promoting sustainable economic growth.
This paper evaluates the relative importance of good
governance and economic growth in reducing poverty and
insecurity in SSA.
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Data and Methods
Drawbacks of income-based poverty measures and
homicide rate-based insecurity measures.
Afrobarometer Lived Poverty Index and Insecurity Index.
Afrobarometer governance indicators, WGI and WDI.
Cross-sectional data – 30 countries, longitudinal data – 16
countries over the period 2002-2013.
Individual-level and country-level hierarchical data
structure: mixed method (xtmixed command of Stata 13).
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Variables and Measurement
LPI: How frequently people ‘involuntarily’ go without basic
necessities such as enough food, clean water, medicine or
medical treatment, cooking fuel, and a cash income.
0 = never, 1 = just once or twice, 2 = several times, 3 = many
times, and 4= always during the course of a year.
Combined these responses using exploratory factor analysis
(EFA) and using the principal factor to obtain the LPI scores,
with higher scores corresponding to greater extent of lived
poverty.
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Variables and Measurement…
LII: Following the same EFA method, combined the
responses to how frequently people feared crime in the
neighborhood, were physically attacked by someone, and
something was stolen from their house during a year.
Economic growth: Annual percentage growth rate of GDP
per capita in constant 2005 US dollars.
Also 4 dummies for income levels based on GDP per capita,
PPP adjusted, in 2011 int’l dollars: < $4000, $4001 - $8000,
$8001 - $12000, and > $12000, with < $4000 as ref.
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Variables and Measurement…
Good governance: Bribe, government performance, lack of
rule of law, satisfaction with democracy, service provisioning
WGIs – rule of law, control of corruption, government
effectiveness (-2.5 to 2.5); FH – extent of democracy (0-10).
Control variables: education, employment status, area of
residence, if left party in power, log of refugee population
by country of asylum, and ethnolinguistic fractionalization.
Regions (Western and Eastern Africa, with Southern Africa
as the reference category) and survey years (for panel data).
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Results (using Afrobarometer indicators)
Cross-sectional analysis
Variable
Longitudinal analysis
Poverty
Insecurity
Poverty
Insecurity
-0.045***
0.006
-0.027***
-0.008
Level of income: $4001-8000
-0.334**
0.110
-0.021
-0.083*
Level of income: $8001-12000
-0.591**
-0.493**
0.277**
-0.303***
Level of income: $12000 up
-0.616***
0.015
0.550***
-0.137
Bribe/corruption
0.081***
0.141***
0.083***
0.159***
Lack of rule of law
0.060***
0.047***
0.052***
0.046***
Government performance
-0.081***
-0.071***
-0.083***
-0.052***
Satisfaction with democracy
-0.125***
-0.061**
-0.108***
-0.025
Service provisioning
-0.144***
-0.015
-0.144***
0.007
Economic growth
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Results (using WGIs)
Cross-sectional analysis
Longitudinal analysis
Variable
Poverty
Insecurity
Poverty
Insecurity
Extent of democracy
-0.075**
-0.041**
-0.148*
0.036
Control of corruption
-0.424***
-0.058
-0.258
-0.029
Rule of law
-0.350***
-0.066
-0.326
-0.182
Government effectiveness
-0.444***
-0.127*
-0.350*
-0.282
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Conclusion
Economic growth has significant effects on poverty reduction but
not on insecurity reduction.
Good governance has more potential to reduce both poverty and
insecurity in SSA.
Economic growth needs to sustain to have a significant effect on
poverty reduction.
Strong institutions are a prerequisite for a sustainable economic
growth, to raise the capacity of the poor, and to ensure security.
Economic growth needs to be transformative and redistributive (to
create more jobs and income equality, for effective service delivery).
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