The Effects Of Fragility On Macroeconomics Variables In West Africa
Keywords:
Keywords: Fragility, Macroeconomic outcomes, Panel VAR.Abstract
Studies have shown that African economies have not been performing well compared to other parts of the world in recent times as the region constitutes about the first half of all the indicators of fragility from different perspectives. This research is an empirical investigation of the interactions between selected macroeconomic outcomes and fragility in West African countries. A panel data of 24 years from 1995-2018 for the 17 West African nations were used. The study used Panel Vector Autoregressive (PVAR) estimation techniques. The study found that fragility has a very high impact on macroeconomic variables which in turn have implications on West African economies. The study also found that fragility is self-reinforcing. The study, therefore, recommends that the government of west African countries should revisit their trade liberalization policy by specifying policy on the content of trade and putting adequate measure for enforcement. Also, education should not be limited to classrooms alone rather vocational training should be part of the national curriculum.
References
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Auty, R. M. (2001). Reforming Resource-Abundant Transition Economies: Kazakstan and Uzbekistan. Resource abundance and economic development, 260-276.
Azariadis, C., & Drazen, A. (1990). Threshold externalities in economic development. The Quarterly Journal of Economics, 105(2), 501-526.
Badeeb, R., Lean, H., & Clark, J. (2017). The evolution of the natural resource curse thesis: A critical literature survey. Resources Policy, 51, 123-134. doi: 10.1016/j.resourpol.2016.10.015
Barro, R. J. (1991). Economic growth in a cross section of countries. The quarterly journal of economics, 106(2), 407-443.
Barro, R. J., & Lee, J. W. (1993). Losers and winners in economic growth. The World Bank Economic Review, 7(suppl_1), 267-298.
Barro, R., & Wolf, H. (1989). Data appendix for economic growth in a cross section of countries. unpublished, November.
Barro, R. J. (1991). Economic growth in a cross section of countries. The quarterly journal of economics, 106(2), 407-443.
Barro, R. J., & Martin, S. I. X.(2004). Economic growth. Journal of Macroeconomics, 18, 552.
Bertocchi, G., & Canova, F. (2002). Did colonization matter for growth?: An empirical exploration into the historical causes of Africa's underdevelopment. European economic review, 46(10), 1851-1871.
Bertocchi, G., & Guerzoni, A. (2011). The Fragile Definition of State Fragility. Rivista italiana degli economisti, 16(2), 339-356.
Brinkerhoff, D. W. (2005). Organisational legitimacy, capacity and capacity development. European Centre for Development Policy Management, Maastricht.
Brinkerhoff, D. W. (2005). Rebuilding governance in failed states and post‐conflict societies: core concepts and cross‐cutting themes. Public Administration and Development: The International Journal of Management Research and Practice, 25(1), 3-14.
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Campos, J. E., Lien, D., & Pradhan, S. (1999). The impact of corruption on investment: Predictability matters. World development, 27(6), 1059-1067.
Carment, D., Prest, S., & Samy, Y. (2008). Determinants of state fragility and implications for aid allocation. Research Paper, (2008/46).
Chauvet, L., & Collier, P. (2008). What are the preconditions for turnarounds in failing states? Conflict Management and Peace Science, 25(4), 332-348.
Chauvet, L., Collier, P., & Hoeffler, A. (2011). The Cost of State Failure and the Limits to Sovereignty. Fragile States: Causes, Costs, and Responses, Oxford University Press, Oxford.
Chuku, C., & Onye, K. (2017). State fragility, macroeconomic policies and macroeconomic outcomes in sub-Saharan Africa. AERC/IDRC PROJECT
Chuku, C., & Onye, K. (2018). Macroeconomic consequences of state fragility in sub-Saharan Africa. Review Of Development Economics. doi: 10.1111/rode.12570
Collier, P. (1995). Civil war and the economics of the peace dividend.
Collier, P. (1999). On the economic consequences of civil war. Oxford economic papers, 51(1), 168-183.
De Soysa, I. (2002). Paradise is a bazaar? Greed, creed, and governance in civil war, 1989-99. Journal of Peace Research, 39(4), 395-416.
Deléchat, C., Fuli, E., Mulaj, D., Ramirez, G., & Xu, R. (2018). Exiting from Fragility in Sub-Saharan Africa: The Role of Fiscal Policies and Fiscal Institutions. South African Journal Of Economics, 86(3), 271-307. doi: 10.1111/saje.12195
Easterly, W., & Levine, R. (1997). Africa's growth tragedy: policies and ethnic divisions. The quarterly journal of economics, 112(4), 1203-1250.
Easterly, W. (2005). National policies and economic growth: a reappraisal. Handbook of economic growth, 1, 1015-1059.
Easterly, W., & Rebelo, S. (1993). Fiscal policy and economic growth. Journal of monetary economics, 32(3), 417-458.
European Report on Development (2009) Overcoming Fragility in Africa: Forging A New European Approach, Robert Schuman Centre for Advanced Studies, European University Institute, San Domenico di Fiesole
Geda, A. (2019). Challenges of Macroeconomic Management in Fragile States of Africa. AERC Senior Policy Seminar Paper
Geda, A. (2017). Macroeconomic Management in Fragile States of Africa: Issues and Challenges. AERC Framework Paper, Nairobi, Kenya.
GIOVANNETTI, G. (2009). Overcoming Fragility in Africa. Forging a New European Approach. European Report on Development 2009, Robert Schuman Centre for Advanced Studies, European University Institute, Florence, 2009
Gylfason, T., 2011. Natural resource endowment: a mixed blessing? (No. 3353. CESifo working paper) Resour. Environ. Econ.
International Monetary Fund African Dept., & International Monetary Fund. (2013). Regional Economic Outlook: Sub-Saharan Africa: Building Momentum in a Multi-speed World. International Monetary Fund.
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Iqbal, Z., & Starr, H. (2008). Bad neighbors: Failed states and their consequences. Conflict Management and Peace Science, 25(4), 315-331.
Jong-A-Pin, R. (2009). On the measurement of political instability and its impact on economic growth. European Journal of Political Economy, 25(1), 15-29.
Karl, T. L. (2005). Understanding the Resource Curse, Covering Oil: A Reporter’s Guide to Energy and Development. Open Society Institute, 21.
Kirshner, J. (2016). The International Consequences of Financial Fragility. Current History, 115(777), 23.
Knack, S., & Keefer, P. (1995). Institutions and economic performance: cross‐country tests using alternative institutional measures. Economics & Politics, 7(3), 207-227.
Kuruc, K. (2018). The IMF and Fragile States: Assessing Macroeconomic Outcomes. IEO Background Paper No. BP/18-01/05 (Washington: Fonds monétaire international).
Lessnoff, M. (1990). Introduction: social contract. Social contract theory, 18.
Marshall, M. G., & Cole, B. R. (2009). Global report 2009: Conflict, governance, and state fragility. Center for Systemic Peace.
Menocal, A. R. (2010). State-building for Peace. A New Paradigm for International Engagement in Post-Conflict Fragile States.
Murdoch, J. C., & Sandler, T. (2004). Civil wars and economic growth: Spatial dispersion. American Journal of Political Science, 48(1), 138-151.
Nikolaidi, M. (2016). Essays on financial fragility, instability and the macroeconomy.
Nkurunziza, J. D. (2019). Growth in fragile states in Africa: Conflict and post‐conflict capital accumulation. Review of Development Economics.
Nkurunziza, J. (2017). Growth in Fragile States in Africa: Conflict and Post-conflict Capital Accumulation, Framework Paper, Project on Growth in Fragile States in Africa, African Economic Research Consortium, Nairobi
oecd. (2008). Growing unequal?: Income distribution and poverty in OECD countries.
Olowu D., Chanie P. (2016) Introduction: Renewed Interest in State Weakness and Fragility. In: Olowu D., Chanie P. (eds) State Fragility and State Building in Africa. United Nations University Series on Regionalism, vol 10. Springer, Cham
Organski, A. F. K. & Jacek Kugler, 1977. ‘The Costs of Major Wars: The Phoenix Factor’, American Political Science Review 71(4): 1347–1366
Persson, T., & Tabellini, G. (2006). Democracy and development: The devil in the details. American Economic Review, 96(2), 319-324.
Rocha Menocal, A., Fritz, V., & Rakner, L. (2008). Hybrid regimes and the challenges of deepening and sustaining democracy in developing countries. South African Journal of International Affairs, 15(1), 29-40.
Rodrik, D. (1999). Where did all the growth go? External shocks, social conflict, and growth collapses. Journal of economic growth, 4(4), 385-412.
Romer, P. M. (1986). Increasing returns and long-run growth. Journal of political economy, 94(5), 1002-1037.
Romer, P. (1990). Are nonconvexities important for understanding growth? (No. w3271). National Bureau of Economic Research.
Sachs, J. D., & Warner, A. M. (1995). Natural resource abundance and economic growth (No. w5398). National Bureau of Economic Research.
Sachs, J. D., & Warner, A. M. (1997). Sources of slow growth in African economies. Journal of African economies, 6(3), 335-376.
Sachs, J. D., & Warner, A. (1999). Natural resource intensity and economic growth. Development policies in natural resource economies, 13-38.
Solow, R. M. (1956). A contribution to the theory of economic growth. The quarterly journal of economics, 70(1), 65-94.
Stiglitz, J. E. (2005). More instruments and broader goals: moving toward the Post-Washington consensus. In Wider perspectives on global development (pp. 16-48). Palgrave Macmillan, London.
Vallings, C., & Moreno-Torres, M. (2005). Drivers of fragility: What makes states fragile? (No. 668-2016-45529).
Williamson, J. (2000). What should the World Bank think about the Washington Consensus? The World Bank Research Observer, 15(2), 251-264.
Wolf, H. (2005). Volatility: definitions and consequences. J, Aizenman and B. Pinto Managing economic volatility and crises: A practitioner’s guide, 45-64.
Acemoglu, D., Johnson, S., & Robinson, J. A. (2005). Institutions as a fundamental cause of long-run growth. Handbook of economic growth, 1, 385-472. NBER Working paper, No. 10481, Cambridge, MA: National Bureau of Economic Research.
Aghion, P., & Howitt, P. (1992). A Model of Growth Through Creative Destruction. Econometrica, 60(2), 323. doi: 10.2307/2951599
Aikman, D., Lehnert, A., Liang, J., & Modugno, M. (2016). Financial Vulnerabilities, Macroeconomic Dynamics, and Monetary Policy. Macroeconomic Dynamics, and Monetary Policy (2016-07-07). FEDS Working Paper, (2016-055).
Alesina, A. & Perotti R. “Income Distribution, Political Instability, and Investment.” European Economic Review (40.6). (1996).
Ansar, A., Flyvbjerg, B., Budzier, A., & Lunn, D. (2016). Does infrastructure investment lead to economic growth or economic fragility? Evidence from China. Oxford Review Of Economic Policy, 32(3), 360-390. doi: 10.1093/oxrep/grw022
Auty, R. M. (2001). Reforming Resource-Abundant Transition Economies: Kazakstan and Uzbekistan. Resource abundance and economic development, 260-276.
Azariadis, C., & Drazen, A. (1990). Threshold externalities in economic development. The Quarterly Journal of Economics, 105(2), 501-526.
Badeeb, R., Lean, H., & Clark, J. (2017). The evolution of the natural resource curse thesis: A critical literature survey. Resources Policy, 51, 123-134. doi: 10.1016/j.resourpol.2016.10.015
Barro, R. J. (1991). Economic growth in a cross section of countries. The quarterly journal of economics, 106(2), 407-443.
Barro, R. J., & Lee, J. W. (1993). Losers and winners in economic growth. The World Bank Economic Review, 7(suppl_1), 267-298.
Barro, R., & Wolf, H. (1989). Data appendix for economic growth in a cross section of countries. unpublished, November.
Barro, R. J. (1991). Economic growth in a cross section of countries. The quarterly journal of economics, 106(2), 407-443.
Barro, R. J., & Martin, S. I. X.(2004). Economic growth. Journal of Macroeconomics, 18, 552.
Bertocchi, G., & Canova, F. (2002). Did colonization matter for growth?: An empirical exploration into the historical causes of Africa's underdevelopment. European economic review, 46(10), 1851-1871.
Bertocchi, G., & Guerzoni, A. (2011). The Fragile Definition of State Fragility. Rivista italiana degli economisti, 16(2), 339-356.
Brinkerhoff, D. W. (2005). Organisational legitimacy, capacity and capacity development. European Centre for Development Policy Management, Maastricht.
Brinkerhoff, D. W. (2005). Rebuilding governance in failed states and post‐conflict societies: core concepts and cross‐cutting themes. Public Administration and Development: The International Journal of Management Research and Practice, 25(1), 3-14.
Cammack, D., McLeod, D., Menocal, A. R., & Christiansen, K. (2006). Donors and the ‘fragile states’ agenda: a survey of current thinking and practice. ODI Report submitted to the Japan International Co-operation Agency. London: ODI.
Campos, J. E., Lien, D., & Pradhan, S. (1999). The impact of corruption on investment: Predictability matters. World development, 27(6), 1059-1067.
Carment, D., Prest, S., & Samy, Y. (2008). Determinants of state fragility and implications for aid allocation. Research Paper, (2008/46).
Chauvet, L., & Collier, P. (2008). What are the preconditions for turnarounds in failing states? Conflict Management and Peace Science, 25(4), 332-348.
Chauvet, L., Collier, P., & Hoeffler, A. (2011). The Cost of State Failure and the Limits to Sovereignty. Fragile States: Causes, Costs, and Responses, Oxford University Press, Oxford.
Chuku, C., & Onye, K. (2017). State fragility, macroeconomic policies and macroeconomic outcomes in sub-Saharan Africa. AERC/IDRC PROJECT
Chuku, C., & Onye, K. (2018). Macroeconomic consequences of state fragility in sub-Saharan Africa. Review Of Development Economics. doi: 10.1111/rode.12570
Collier, P. (1995). Civil war and the economics of the peace dividend.
Collier, P. (1999). On the economic consequences of civil war. Oxford economic papers, 51(1), 168-183.
De Soysa, I. (2002). Paradise is a bazaar? Greed, creed, and governance in civil war, 1989-99. Journal of Peace Research, 39(4), 395-416.
Deléchat, C., Fuli, E., Mulaj, D., Ramirez, G., & Xu, R. (2018). Exiting from Fragility in Sub-Saharan Africa: The Role of Fiscal Policies and Fiscal Institutions. South African Journal Of Economics, 86(3), 271-307. doi: 10.1111/saje.12195
Easterly, W., & Levine, R. (1997). Africa's growth tragedy: policies and ethnic divisions. The quarterly journal of economics, 112(4), 1203-1250.
Easterly, W. (2005). National policies and economic growth: a reappraisal. Handbook of economic growth, 1, 1015-1059.
Easterly, W., & Rebelo, S. (1993). Fiscal policy and economic growth. Journal of monetary economics, 32(3), 417-458.
European Report on Development (2009) Overcoming Fragility in Africa: Forging A New European Approach, Robert Schuman Centre for Advanced Studies, European University Institute, San Domenico di Fiesole
Geda, A. (2019). Challenges of Macroeconomic Management in Fragile States of Africa. AERC Senior Policy Seminar Paper
Geda, A. (2017). Macroeconomic Management in Fragile States of Africa: Issues and Challenges. AERC Framework Paper, Nairobi, Kenya.
GIOVANNETTI, G. (2009). Overcoming Fragility in Africa. Forging a New European Approach. European Report on Development 2009, Robert Schuman Centre for Advanced Studies, European University Institute, Florence, 2009
Gylfason, T., 2011. Natural resource endowment: a mixed blessing? (No. 3353. CESifo working paper) Resour. Environ. Econ.
International Monetary Fund African Dept., & International Monetary Fund. (2013). Regional Economic Outlook: Sub-Saharan Africa: Building Momentum in a Multi-speed World. International Monetary Fund.
IMF (2014) Regional Economic Outlook: Sub-Saharan Africa Staying the Course. Washington, D.C.: International Monetary Fund.
Iqbal, Z., & Starr, H. (2008). Bad neighbors: Failed states and their consequences. Conflict Management and Peace Science, 25(4), 315-331.
Jong-A-Pin, R. (2009). On the measurement of political instability and its impact on economic growth. European Journal of Political Economy, 25(1), 15-29.
Karl, T. L. (2005). Understanding the Resource Curse, Covering Oil: A Reporter’s Guide to Energy and Development. Open Society Institute, 21.
Kirshner, J. (2016). The International Consequences of Financial Fragility. Current History, 115(777), 23.
Knack, S., & Keefer, P. (1995). Institutions and economic performance: cross‐country tests using alternative institutional measures. Economics & Politics, 7(3), 207-227.
Kuruc, K. (2018). The IMF and Fragile States: Assessing Macroeconomic Outcomes. IEO Background Paper No. BP/18-01/05 (Washington: Fonds monétaire international).
Lessnoff, M. (1990). Introduction: social contract. Social contract theory, 18.
Marshall, M. G., & Cole, B. R. (2009). Global report 2009: Conflict, governance, and state fragility. Center for Systemic Peace.
Menocal, A. R. (2010). State-building for Peace. A New Paradigm for International Engagement in Post-Conflict Fragile States.
Murdoch, J. C., & Sandler, T. (2004). Civil wars and economic growth: Spatial dispersion. American Journal of Political Science, 48(1), 138-151.
Nikolaidi, M. (2016). Essays on financial fragility, instability and the macroeconomy.
Nkurunziza, J. D. (2019). Growth in fragile states in Africa: Conflict and post‐conflict capital accumulation. Review of Development Economics.
Nkurunziza, J. (2017). Growth in Fragile States in Africa: Conflict and Post-conflict Capital Accumulation, Framework Paper, Project on Growth in Fragile States in Africa, African Economic Research Consortium, Nairobi
oecd. (2008). Growing unequal?: Income distribution and poverty in OECD countries.
Olowu D., Chanie P. (2016) Introduction: Renewed Interest in State Weakness and Fragility. In: Olowu D., Chanie P. (eds) State Fragility and State Building in Africa. United Nations University Series on Regionalism, vol 10. Springer, Cham
Organski, A. F. K. & Jacek Kugler, 1977. ‘The Costs of Major Wars: The Phoenix Factor’, American Political Science Review 71(4): 1347–1366
Persson, T., & Tabellini, G. (2006). Democracy and development: The devil in the details. American Economic Review, 96(2), 319-324.
Rocha Menocal, A., Fritz, V., & Rakner, L. (2008). Hybrid regimes and the challenges of deepening and sustaining democracy in developing countries. South African Journal of International Affairs, 15(1), 29-40.
Rodrik, D. (1999). Where did all the growth go? External shocks, social conflict, and growth collapses. Journal of economic growth, 4(4), 385-412.
Romer, P. M. (1986). Increasing returns and long-run growth. Journal of political economy, 94(5), 1002-1037.
Romer, P. (1990). Are nonconvexities important for understanding growth? (No. w3271). National Bureau of Economic Research.
Sachs, J. D., & Warner, A. M. (1995). Natural resource abundance and economic growth (No. w5398). National Bureau of Economic Research.
Sachs, J. D., & Warner, A. M. (1997). Sources of slow growth in African economies. Journal of African economies, 6(3), 335-376.
Sachs, J. D., & Warner, A. (1999). Natural resource intensity and economic growth. Development policies in natural resource economies, 13-38.
Solow, R. M. (1956). A contribution to the theory of economic growth. The quarterly journal of economics, 70(1), 65-94.
Stiglitz, J. E. (2005). More instruments and broader goals: moving toward the Post-Washington consensus. In Wider perspectives on global development (pp. 16-48). Palgrave Macmillan, London.
Vallings, C., & Moreno-Torres, M. (2005). Drivers of fragility: What makes states fragile? (No. 668-2016-45529).
Williamson, J. (2000). What should the World Bank think about the Washington Consensus? The World Bank Research Observer, 15(2), 251-264.
Wolf, H. (2005). Volatility: definitions and consequences. J, Aizenman and B. Pinto Managing economic volatility and crises: A practitioner’s guide, 45-64.
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2021-06-04
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