International financial integration and economic growth in ECOWAS countries: the role of governance.
DOI:
https://doi.org/10.59051/joaf.v9i2.166Keywords:
International financialintegration, Governance, Growth, PMG, ECOWASAbstract
The aim in view by this study is to analyze the effect of international financial integration on the growth and to see the way in which the governance conditions this effect on a sample of 13 ECOWAS countries during the period 1975 to 2014. We use in this study the external assets and liabilities reported to the GDP like variable of financial integration. The use of the method Pooled Mean Group made it possible to show that the measurement of Lane and Milesi-Ferretti impacts the economic growth negatively. However when this measurement is disaggregated, it arises that its component stock of the debt impacts the economic growth negatively and its component stock of the FDI impacts the economic growth positively. In addition, the study finds that the governance in the ECOWAS represented by the electoral democracy worsens the impact of the stock of the debt on the growth whereas in the case of the stock of the FDI it supports its effect.
Downloads
References
Artus, P., Cartapanis, A., (2008) « Globalisation financière et croissance dans les économies émergentes: La sous-estimation des contraintes macroéconomiques induites », Revue économique, Vol. 59, No. 6.
Barro, R. (1990), « Government Spending in a Simple Model of Endogenous Growth », Journal of Political Economy, 98 (5), 103-130.
Barro, R., &Sala-I-Martin, X. (1991), « Convergence accross states and regions » Brooking Papers on Economic Activity, 1(1), 107-182.
Barro, R., &Sala-i-Martin, X. (1992), « Convergence » Journal of Political Economy, 100, pp. 223-251
Barro, R., (1995), « Inflation and economic growth », NBER Working Paper Vol. 53, No. 26, pp. 166-176.
Barro, R.J., (1999) « Determinants of democracy », The journal of political economy, 107: pp. 158-183
Bayar, Y., (2016) « Impact of openness and economic freedom on economic growth in the transition economies of the european union », South-Eastern Europe Journal of Economics, 1, 7-19.
Beck,T. (2014) « Cross-border Banking and Financial Deepening : The African Experience, Mimeo.
Bekaert, G., Harvey, C.R., Lundblad, C., (2011) « Financial Openness and Productivity » World Development, 39, 1–19.
Blackburn, K., etPuccio, G.F., (2005) « Financial liberalization and bureaucratic corruption and economic development », University of Manchester, wp. No. 054.
Blundell R., & Bond S. (1998), « Initial conditions and moment restrictions in dynamic panel data models », Journal of Econometrics, 87, pp. 115-143.
Bobba, M., et Coviello, D., (2006) « Weak instruments and weak identification in estimating the effects of education on democracy », Economics Letters (forthcoming).
Bumann, S., Hermes, N., etLensink, R.,(2013) « Financial liberalization and economic growth: A meta-analysis », Journal of International Money and Finance, 33, 255–281.
De Nicolò, G., et Juvenal, L. (2014) « Financial integration, globalization, and real activity », Journal of Financial Stability, 10, 65– 75.
DorsafElbir, D., et Goaied M., (2012), « Are External Financial Liberalization and Corruption Control Substitutes in Promoting Growth? Empirical Evidence from MENA Countries », Journal of Statistical and Econometric Methods, vol.1, no.2, 53-64.
Edison, H.J., Levine, R., Ricci, L., Slok, T., (2002) « International Financial Integration and Economic Growth », NBER Working Paper, No. 9164.
Eichengreen B. (2002a), « Capital account liberalization: what do the cross country studies show us? », World Bank Economic Review 15: 341–366.
Ellis, J.C., et Fender, J., (2009) «The economic evolution of democracy », Economics of Governance, 10: pp. 119-145.
Fabro, G., Aixala, J., (2013) « Do the Models of Institutional Quality Differ Accordingto the Income Level of the Countries? The Case of theLow-Income Countries », Review of Public Economics, 206-(3): pp. 11-26
Farooq, A., Shahbaz M., Arouri M., et Teulon F., (2013) « Does corruption impede economic growth in Pakistan? », Economic Modelling, 35, pp. 622–633.Feeny S., Iamsiraroj, S., McGillivray, M., (2013) « Growth and Foreign Direct Investment in the Pacific Island countries », Economic Modelling, 37, 332–339.
Gazdar, K., et Chérif, M., (2015) « Institutions and the finance-growth nexus: Empirical evidence from MENA countries », Borsa Istanbul Review, 15-3, 137-160.
Gehringer, A., (2013) « Growth, productivity and capital accumulation: The effects of financial liberalization in the case of European integration », International Review of Economics & Finance, 25, 291–309.
Ghosa L, R., (2012). «The External Sector and Economic Growth », The International Association of Research in Income and Wealth.
Glaeser E.L., Ponzetto, A.M. Shleifer A., (2007) « Why does democracy need education? », Journal of Economic Growth (2007) 12:77–99.
Glaeser, E., LaPorta, R., Lopez-de-Silanes, F., and Shleifer, A. (2004) « Do institutions cause growth? », Journal of Economic Growth, 9, 271–303.
Goldsmith, A., (2001) « Donors, dictators, and democrats in Africa », Journal of Modern African Studies, 39(3): pp. 411-436.
Görg, H., & Greenaway, D. (2004), « Much Ado about Nothing? Do Domestic Firms Really Benefit fro Foreign Investment? » The World Bank Research Observer,19(2), 171 191.
Gourinchas P.-O., Jeanne O., (2007) « Capital Flows to Developing Countries: The Allocation Puzzle ? », IMF Working Paper.
Hausman. J.A., (1978) « Specification tests in econometrics », Econometrica.46(6): 1251-1271.
Hayek, F.A., (1960) « The Constitution of Liberty », University of Chicago Press, Chicago.
Huang C-J., (2016) « Is corruption bad for economic growth? Evidence from Asia-Pacific countries », North American Journal of Economics and Finance, 35, pp. 247–256.
Hurlin, C., et Mignon V.,(2007) « Une synthèse des tests de racine unitaire sur données de panel », Economie & prévision, 2005/3-4-5 n° 169-170-171, pp. 253-294.
Hurlin, C., et Mignon, V., (2007) « Une synthèse des tests de cointégration sur données de Panel », Economie & prévision, 2007/4 n° 180-181, pp. 241-265.
Im, K.S., Pesaran, M.H. et Shin, Y., (2003) « Testing for unit roots in heterogeneous panels », Journal of Econometrics, 115, pp. 53-74.
Keho, Y., (2012), « Le rôle des facteurs institutionnels dans le développement Financier et économique des pays de l’UEMOA », Revue Économique et Monétaire, (Décembre 2012), N° 12.
Kim, A. M., (2011), « The Impact of FDI on Economic Growth and Development in Keyna.»
Kinoshita, Y., (2000) « R&D and technologyspillovers via FDI: Innovation and absorptive capacity », WorkingPaper No. wp163, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
Kunieda, T., Okada K., Shibata, A., (2014) « Corruption, capital accountliberalization, and economicgrowth: Theory and evidence », International Economics, 139, 80–108.
Lane P.R. et Milesi-Ferretti G.M. (2001), « The ExternalWealth of Nations: Measures of ForeignAssets and Liabilities for Industrial and Developing Nations », Journal of International Economics, vol. 55, n°2, p.263-294.
Lane P.R. et Milesi-Ferretti G.M. (2007), « The ExternalWealth of Nations Mark II: Revised and Extended Estimates of ForeignAssets and Liabilities, 1970–2004 », Journal of International Economics, vol. 73, n°2, p.223-250
Levine Ross (2005), «Finance and growth: theory and evidence », Handbook of economicgrowth, vol. 1, p. 865–934.
Long, C., Yang, J. et Zhang, J., (2015) « Institutional Impact of Foreign Direct Investment in China », World Development Vol. 66, pp. 31–48.
Maddala, G., et Wu, S., (1999) « A Comparative Study of Unit Root Tests and a New Simple Test », Oxford Bulletin of Economics and Statistics, 61, pp. 631-652.
Mankiw N. G., Romer D. & Weil D. N. (1992), « A contribution to the empirics of economicgrowth », The Quarterly Journal of Economics, 107 (2), 407-437.
McKinnon R.,(1973), « Money and Capital in Economic Development » The Brooking Institution, Washington D.C.
McKinnon R.,(1989), « Financial Liberalisation and Economic Development: A Reassessment of Interest Rate Policies in Asian and Latin America », Oxford Review of economic Policy, volume 5, n°4, 29-54.
Mouley, S., Ayadi. R., (2013) « Monetarypolicies, bankingsystems, regulatory convergence, efficiency and growth in the Mediterranean », Palgrave – Mac Millan, London UK.
Mouley, S., (2012) « Challenges Arisingfrom Capital Account Liberalisation in the Countries of the South MediterraneanRegion », (SSRN ScholarlyPaper No. ID 2033080). MEDPRO TechnicalPaper No. 11, Social Science Research Network, Rochester, NY.
Mouley, S., Baccouche R., Bouoiyour, J., M’Henni, H., (2008) «Dynamique des investissements, mutations sectorielles et convertibilité du compte de capital : impact des mesures de libéralisation et expériences comparées Tunisie – Maroc ». Femise Report N°FEM 32-04, août.
Neto, D.G., Veiga, F.J., (2013), « Financial globalization, convergence and growth: The role of foreign direct investment », Journal of International Money and Finance, 37, 161–186.
Norman, Catherine, S., (2009) « Rule of Law and the Resource Curse: Abundance Versus Intensity. », Environmental and Resource Economics 43 (2), 183-207
North D.C., (1991) «Institutions», Journal of Economic Perspectives, Vol. 5 (winter), pp. 97-112.
North D.C., (2005), «Understanding the Process of Economic Change», Princeton UniversityPress.
Pesaran, M.H. et Smith R.P., (1995) « Estimating Long-run Relationship fromDynamicHeterogeneous Panel », Journal of Econometrics68(1), pp. 79–113.
Pesaran, M.H., Shin Y., et Smith R.P., (1999) « Pooled Mean Group Estimation of DynamicHeterogeneous Panels », Journal of American Statistical Association 94(446), pp. 621–634.
Prasad E., Rajan R, Subramanian A., (2007) « Capital and Economic Growth », Brookings Papers on Economic Activity.
Rappaport, J. (2000), « How Does Openness to Capital Flows Affect Growth? », Federal Reserve Bank of Kansas City: Mimeo.
Richards, D. L., Ronald, D. G., et D. H. Sacko (2001), « Money with a Mean Streak? Foreign Economic Penetration and Government Respect for Human Rights in Developing Countries », International StudiesQuarterly, 45(2), pp. 219–239.
Romer, P. (1986), « IncreasingReturns and Long RunGrowth », Journal of Political Economy, 94(5), 1002-1037.
Romer, P. M. (1990), « Endogenous technological change », Journal of Political Economy, 98(5), 71-102.
Ross, Michael L., (2001), « Does Oil Hinder Democracy? », World Politics 53, 325-361.
Roubini N. & X. Sala-I-Martin (1992), « Financial Repression and Economic Growth», Journal of Development Economics, volume 39, n°1, 5-29.
Sala-i-Martin, X., et Subramanian, A., (2003) « Addressing the Natural Resource Curse: An Illustration from Nigeria », NBERWorkingPaper No.9804,
Schumpeter, J., (1950) « Capitalism, Socialism and Democracy », Harper &Row, New York.
Shaw, D.,(1973), « Financial Deepening in Economic Development », New York: Oxford University Press.
Shuaib, A.S.,Okutimiren, O.A., Odunlami, D.A., Ajagbe, M.A., (2016) « Financial openness and economic growth in Nigeria », International Journal of Advanced Academic Research Vol. 2, Issue 6.
Solow, R. M. (1956), « A Contribution to the Theory of Economic Growth », TheQuarterlyJournal of Economics, 70(1), 65-94.
Swan, T.W., (1956), « Economic Growth and Capital Accumulation », The Economic Record, volume 32, 334-343.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2018 Romain Kouakou N'guessan
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
