Download 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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