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THE RELATIONSHIP BETWEEN FISCAL PERFORMANCE, GOVERNANCE QUALITY, AND ECONOMIC GROWTH: EVIDENCE FROM SUB-SAHARAN COUNTRIES

Year 2022, Volume: 11 Issue: 1, 1 - 16, 06.12.2022
https://doi.org/10.33722/afes.1139298

Abstract

Many studies in recent years have focused on the relationship between the government's ability to manage and economic performance indicators. There is ample empirical evidence that factors such as the presence of corruption, violence, and terrorism in a country, and the quality of institutions controlling the market affect the success of economic policies. Similarly, the issue of how the public debt stock affects economic growth has been the central question of many studies. Especially in recent years, the violence, terrorism, and separatist wars that have emerged in Africa have led to the intensification of studies on the continent. In addition, there are many studies supporting that the climate of insecurity created by the violence and terrorist incidents in the continent is the cause of the failure of governance in Africa. Governance failure is also an indicator of ineffectiveness in the formulation and implementation of public policies. This study focuses on investigating the effects of fiscal performance and governance quality on economic growth in Sub-Saharan African countries. In the study, data from 25 sub-Saharan African countries for the period 2002-2019 were used. According to the results of the analysis, as public expenditures increase in the mentioned countries, economic growth decreases. In terms of the focus of the study, it has been found that as fiscal performance and governance quality increase, economic growth also increases. As a fiscal performance indicator, the arithmetic average of the public's domestic and external debt stock was calculated and included in the analysis. An increase in the fiscal performance value means an increase in the country's debt stock.

References

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  • Agnor, P. and P. J. Montiel (2010) Development Macroeconomics. 3rd Edition. Princeton University Press.
  • Alesina, A. and Tabelline, G. (1990). A positive and normative theories of fiscal deficits and government debt. Review of Economic Studies, Vol. 57, pp. 403-414.
  • Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of econometrics, 68(1), 29-51.
  • Arrelano, M. & Bond, S. (1991), "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations.", Review of Economic Studies, C. 58, No: 2.
  • Baltagi, B. H., & Baltagi, B. H. (2008). Econometric analysis of panel data (Vol. 4). Chichester: John Wiley & Sons.
  • Banda, T. D., & Kumarasamy, M. (2020). Application of multivariate statistical analysis in the development of a surrogate water quality index (WQI) for South African watersheds. Water, 12(6), 1584.
  • Blundell, R. & Bond, S. (1998). Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics, 87, 115-143.
  • Budaev, S. V. (2010). Using principal components and factor analysis in animal behaviour research: caveats and guidelines. Ethology, 116(5), 472-480.
  • Caner, M., Grennes, T., Koehler-Geib, F., (2010). Finding the Tipping Point: when Sovereign Debt Turns Bad. Policy Research Working Paper Series 5391. World Bank.
  • Cerra, V., Rishi, M., Saxena, S.C., (2008). Robbing the riches: capital flight, institutions and debt. Journal of Development Studies, 44 (8), 1190–1213.
  • Cordella, T., Ricci, L.A., and Ruiz-Arranz, M. (2010). External Debt Overhang of External Debt Irrelevance? IMF Staff Paper, 57, 1-24.
  • Dabbous, A. (2018). The impact of information and communication technology and financial development on energy consumption: a dynamic heterogeneous panel analysis for MENA countries. International Journal of Energy Economics and Policy, 8(4), 70.
  • Das, P. (2019). Econometrics in theory and practice: Analysis of cross section, time series and panel data with Stata 15.1. Singapore: Springer
  • Dedaj, B., Ogruk-Maz, G., Carabregu-Vokshi, M., Aliu-Mulaj, L., & Kisswani, K. M. (2022). Improving ICTs (Mobile Phone and Internet) for Environmental Sustainability in the Western Balkan Countries. Energies, 15(11), 4111.
  • Edin, P. A., & Ohlsson, H. (1991). Political determinants of budget deficits: Coalition effects versus minority effects. European Economic Review, 35(8), 1597-1603.
  • Egert, B., (2015). Public debt, economic growth and nonlinear effects: myth or reality, Journal of Macroeconomy 43, 226–238.
  • Fagbemi, F. (2020). Assessing the role of governance in West african fiscal performance. The American Economist, 65(1), 97-122.
  • Greiner, Alfred. (2012). “Public Debt in a Basic Endogenous Growth Model.” Economic Modelling 29 (4): 1344–1348. doi:10.1016/j.econmod.2012.03.005.
  • Griffin, K.B., and Enos, J.L. (1970). Foreign Assistance: Objectives and Consequences. Economic Development and Cultural Change, 18, 313-327.
  • IMF, W. (2006). Applying the Debt Sustainability Framework for Low-Income Countries Post Debt Relief. Washington DC: FMI.
  • Kemoe, L., & Lartey, E. K. (2022). Public debt, institutional quality, and growth in sub-Saharan Africa: a threshold analysis. International Review of Applied Economics, 36(2), 222-244.
  • Laurent Kemoe & Emmanuel K.K. Lartey (2022) Public debt, institutional quality and growth in sub-Saharan Africa: a threshold analysis, International Review of Applied Economics, 36:2, 222-244, DOI: 10.1080/02692171.2021.1957785
  • Mensah, L., Bokpin, G., & Boachie-Yiadom, E. (2018). External debts, institutions and growth in SSA. Journal of African Business, 19(4), 475-490. Mlachila, M., Tapsoba, R., & Tapsoba, S. J. (2017). A quality of growth index for developing countries: a proposal. Social Indicators Research, 134(2), 675-710.
  • Navarro-Ortiz, J., Sapena, J., (2020). Is external debt sustainable? A probabilistic approach. Economic Modelling. 93, 142–153.
  • Özsoy, S., Ergüzel, O. Ş., Ersoy, A. Y., & Saygılı, M. (2022). The impact of digitalization on export of high technology products: A panel data approach. The Journal of International Trade & Economic Development, 31(2), 277-298.
  • Pattillo, M.C.A., Poirson, M.H., Ricci, M.L.A., (2002). External Debt and Growth (No. 2-69). International Monetary Fund.
  • Qayyum, U., Din, M.U., Haider, A., (2014). Foreign aid, external debt and governance. Economic Modelling, 37, 41–52.
  • Reinhart, Carmen M., Kenneth S. Rogoff. 2010. “Growth in a Time of Debt.” American Economic Review 100 (2): 573–578. doi:10.1257/aer.100.2.573.
  • Roodman, D.(2009): A note on the theme of too many instruments. Oxf. Bull. Econ. Stat. 71, 135–158
  • Roubini, N., & Sachs, J. D. (1989). Political and economic determinants of budget deficits in the industrial democracies. European Economic Review, 33(5), 903-933.
  • Tchamyou, V. S. (2020). Education, lifelong learning, inequality and financial access: Evidence from African countries. Contemporary Social Science, 15(1), 7-25.
  • Yerdelen Tatoğlu, F. (2013). İleri panel veri analizi stata uygulamalı. Baskı, İstanbul, Beta Yayınları.
Year 2022, Volume: 11 Issue: 1, 1 - 16, 06.12.2022
https://doi.org/10.33722/afes.1139298

Abstract

References

  • Acemoglu, D., Johnson, S., Robinson, J. A., & Thaicharoen, Y. (2003). Institutional causes, macroeconomic symptoms: Volatility, crises and growth. Journal of Monetary Economics, 50, 49–123. doi:10.1016/S0304-3932(02)00208-8
  • Acemoğlu, D., & Robinson, J. (2008). The role of institutions in growth and development (Vol. 10). Washington DC: World Bank.
  • Agnor, P. and P. J. Montiel (2010) Development Macroeconomics. 3rd Edition. Princeton University Press.
  • Alesina, A. and Tabelline, G. (1990). A positive and normative theories of fiscal deficits and government debt. Review of Economic Studies, Vol. 57, pp. 403-414.
  • Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of econometrics, 68(1), 29-51.
  • Arrelano, M. & Bond, S. (1991), "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations.", Review of Economic Studies, C. 58, No: 2.
  • Baltagi, B. H., & Baltagi, B. H. (2008). Econometric analysis of panel data (Vol. 4). Chichester: John Wiley & Sons.
  • Banda, T. D., & Kumarasamy, M. (2020). Application of multivariate statistical analysis in the development of a surrogate water quality index (WQI) for South African watersheds. Water, 12(6), 1584.
  • Blundell, R. & Bond, S. (1998). Initial Conditions and Moment Restrictions in Dynamic Panel Data Models. Journal of Econometrics, 87, 115-143.
  • Budaev, S. V. (2010). Using principal components and factor analysis in animal behaviour research: caveats and guidelines. Ethology, 116(5), 472-480.
  • Caner, M., Grennes, T., Koehler-Geib, F., (2010). Finding the Tipping Point: when Sovereign Debt Turns Bad. Policy Research Working Paper Series 5391. World Bank.
  • Cerra, V., Rishi, M., Saxena, S.C., (2008). Robbing the riches: capital flight, institutions and debt. Journal of Development Studies, 44 (8), 1190–1213.
  • Cordella, T., Ricci, L.A., and Ruiz-Arranz, M. (2010). External Debt Overhang of External Debt Irrelevance? IMF Staff Paper, 57, 1-24.
  • Dabbous, A. (2018). The impact of information and communication technology and financial development on energy consumption: a dynamic heterogeneous panel analysis for MENA countries. International Journal of Energy Economics and Policy, 8(4), 70.
  • Das, P. (2019). Econometrics in theory and practice: Analysis of cross section, time series and panel data with Stata 15.1. Singapore: Springer
  • Dedaj, B., Ogruk-Maz, G., Carabregu-Vokshi, M., Aliu-Mulaj, L., & Kisswani, K. M. (2022). Improving ICTs (Mobile Phone and Internet) for Environmental Sustainability in the Western Balkan Countries. Energies, 15(11), 4111.
  • Edin, P. A., & Ohlsson, H. (1991). Political determinants of budget deficits: Coalition effects versus minority effects. European Economic Review, 35(8), 1597-1603.
  • Egert, B., (2015). Public debt, economic growth and nonlinear effects: myth or reality, Journal of Macroeconomy 43, 226–238.
  • Fagbemi, F. (2020). Assessing the role of governance in West african fiscal performance. The American Economist, 65(1), 97-122.
  • Greiner, Alfred. (2012). “Public Debt in a Basic Endogenous Growth Model.” Economic Modelling 29 (4): 1344–1348. doi:10.1016/j.econmod.2012.03.005.
  • Griffin, K.B., and Enos, J.L. (1970). Foreign Assistance: Objectives and Consequences. Economic Development and Cultural Change, 18, 313-327.
  • IMF, W. (2006). Applying the Debt Sustainability Framework for Low-Income Countries Post Debt Relief. Washington DC: FMI.
  • Kemoe, L., & Lartey, E. K. (2022). Public debt, institutional quality, and growth in sub-Saharan Africa: a threshold analysis. International Review of Applied Economics, 36(2), 222-244.
  • Laurent Kemoe & Emmanuel K.K. Lartey (2022) Public debt, institutional quality and growth in sub-Saharan Africa: a threshold analysis, International Review of Applied Economics, 36:2, 222-244, DOI: 10.1080/02692171.2021.1957785
  • Mensah, L., Bokpin, G., & Boachie-Yiadom, E. (2018). External debts, institutions and growth in SSA. Journal of African Business, 19(4), 475-490. Mlachila, M., Tapsoba, R., & Tapsoba, S. J. (2017). A quality of growth index for developing countries: a proposal. Social Indicators Research, 134(2), 675-710.
  • Navarro-Ortiz, J., Sapena, J., (2020). Is external debt sustainable? A probabilistic approach. Economic Modelling. 93, 142–153.
  • Özsoy, S., Ergüzel, O. Ş., Ersoy, A. Y., & Saygılı, M. (2022). The impact of digitalization on export of high technology products: A panel data approach. The Journal of International Trade & Economic Development, 31(2), 277-298.
  • Pattillo, M.C.A., Poirson, M.H., Ricci, M.L.A., (2002). External Debt and Growth (No. 2-69). International Monetary Fund.
  • Qayyum, U., Din, M.U., Haider, A., (2014). Foreign aid, external debt and governance. Economic Modelling, 37, 41–52.
  • Reinhart, Carmen M., Kenneth S. Rogoff. 2010. “Growth in a Time of Debt.” American Economic Review 100 (2): 573–578. doi:10.1257/aer.100.2.573.
  • Roodman, D.(2009): A note on the theme of too many instruments. Oxf. Bull. Econ. Stat. 71, 135–158
  • Roubini, N., & Sachs, J. D. (1989). Political and economic determinants of budget deficits in the industrial democracies. European Economic Review, 33(5), 903-933.
  • Tchamyou, V. S. (2020). Education, lifelong learning, inequality and financial access: Evidence from African countries. Contemporary Social Science, 15(1), 7-25.
  • Yerdelen Tatoğlu, F. (2013). İleri panel veri analizi stata uygulamalı. Baskı, İstanbul, Beta Yayınları.
There are 34 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Articles
Authors

Özlem Öztürk Çetenak 0000-0002-4959-6031

Publication Date December 6, 2022
Published in Issue Year 2022 Volume: 11 Issue: 1

Cite

APA Öztürk Çetenak, Ö. (2022). THE RELATIONSHIP BETWEEN FISCAL PERFORMANCE, GOVERNANCE QUALITY, AND ECONOMIC GROWTH: EVIDENCE FROM SUB-SAHARAN COUNTRIES. Afro Eurasian Studies, 11(1), 1-16. https://doi.org/10.33722/afes.1139298

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