Doctoral Degrees (Economics)

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The monetary model of exchange rate behaviour: the case of South Africa.
(2024) Msomi , Simiso Sinqumo Sanele Gary.; Ngalawa , Harold Phellix Emmanuel.
The exchange rates behaviour has been a topic of interest in the macroeconomics literature. Despite the extensive body of the literature on the subject, the exchange rates movement remains controversial. In the previous 40 years, economists developed theories that intended to explain the behaviour of the floating exchange rates. However, the empirical results have not been consistent with the predictions of the theories. South Africa has also had challenges with its exchange rate behaviour since the beginning of World War I. Over the years, the monetary authorities tried various methods of managing the factors believed to influence the behaviour of the domestic exchange rates. The main problem of the domestic exchange rates has been constant depreciation. The domestic exchange rates continue to depreciate even to this day despite the efforts. This study focuses on the relationship of some monetary variables that are believed have effect on the behaviour of the exchange rates. The economic theory supports the link between monetary variables and the exchange rates behaviour. However, the relationship between domestic exchange rates fundamentals seems to diverge from what is expected. As noted, the literature fails to link the exchange rates with its fundamentals. In this study we use non-linear estimations to model the interaction between the macroeconomic fundamentals and the domestic exchange rates which are Markov Switching model, Bayesian VAR and Threshold Autoregressive model. Firstly, the study found that private information which is not observed might have more effect on the exchange rates behaviour than expectations of exchange rates. Secondly, we found that expectations of income have an impact on the domestic exchange rates in some occasions. While in other situations, the domestic exchange rates behaviour cannot be linked with the fundamentals. Lastly, the domestic exchange rates behaviour responds to interest rates differential, domestic debt and political uncertainty when the exchange rate fluctuation is relatively stable. When the domestic exchange rates are appreciating, only the interest rate differential can explain the domestic exchange rates behaviour. Furthermore, the domestic exchange rates response is asymmetric to effects of expectations.
The effectiveness of public health spending in Sub-Saharan Africa.
(2023) Kabongo, Wa Ntita Serge.; Mbonigaba , Josue.
This research conducted a thorough analysis of the effectiveness of public health spending (PHS) in enhancing population health outcomes (PHO) across sub-Saharan African (SSA) countries. Implementing PHS interventions in these countries faces challenges due to the disregard of critical intermediate factors that are specific to them. These factors include high prevalence of infectious diseases, inadequate immunization coverage, inefficiencies in the health system, governance issues, low levels of education, and underlying processes. Consequently, although the diligent allocation of financial resources towards enhancing health, PHO in the region persistently lag behind those of other global regions. This research aims to investigate the role of the above-mentioned intermediaries as transmission mechanisms of PHS and understand how these intermediaries interact with PHS to shape the effectiveness of PHS intervention. Moreover, the research assesses the benefits of using disaggregated data for measuring PHS. To achieve its objectives, the research employed panel data from selected SSA countries and applied several quantitative methodologies, such as longitudinal growth curve mediation modelling, partial least squares structural equation modelling, and system generalised method of moments. These approaches were chosen owing to the characteristics of the different processes investigated. The findings show that malaria incidence and female education, as indicators of infectious disease burdens and education, work sequentially as the transmission mechanism of PHS, while no indication of immunisation as a mediator was found. The findings also show that health system efficiency (HSE) and country governance are moderating factors in the PHS-PHO relationship, with weaker HSE or governance adversely affecting PHS effectiveness. Additionally, disaggregated data measuring PHS is shown to offer better evidence of PHS effectiveness. In conclusion, the research highlights the significant role of structural factors specific to SSA in shaping the effectiveness of PHS in improving PHO in the region. Its findings underscore the imperative of integrating these factors into the development of PHS interventions in SSA. The research provides invaluable insights into the complex nature of PHS effectiveness in SSA and proposes avenues for more targeted and impactful PHS interventions.
Foreign capital inflows and trade openness nexus: the case of selected Sub-Saharan Africa countries.
(2023) Nthangu , Noel Damson.; Bokana , Koye Gerry.
The focus of the study was to investigate the relationship between foreign capital inflows and trade openness in sub-Saharan Africa (SSA) countries. The research involved 31 countries of the SSA region. The study used unbalanced panel data from 1985 to 2018 from the International Monetary Fund, balance of payments yearbook and world development indicators. The first objective was to examine the relationship between foreign capital inflows and trade openness using a panel smooth transition regression model. The findings revealed the existence of a positive and significant bi-directional causality between foreign capital inflows and trade openness. This implies that the two flows are connected and therefore can exert a positive multiplier effect on each other. The second objective was to examine the socioeconomic determinants of foreign capital inflows. The study applied the random effect model (RE) and the dynamic model of generalised method of moment (SYSGMM). The findings showed that, real interest rate, real exchange rate, inflation, GDP growth rate and food security significantly impact on foreign capital inflows. The third objective was to investigate the impact of foreign capital inflows and trade openness on output performance. The researcher adopted the RE and the SYSGMM. The findings showed that FDI and FPI are statistically significant whereas, trade openness is not statistically significant to impact output performance. The study recommends that more steps should be taken to deepen interregional and regional economic integration in Africa, including the implementation of free trade agreements so as to promote trade and foreign capital inflows. Again, the governments of SSA countries that wish to attract more foreign capital inflows should improve on health facilities so as to increase life expectancy; ensure that there is food security; and improve the education system so as to increase the number of literates in the region. Lastly, an ideal bank for regional capital flow should be established subsequent to other banks, such as agricultural banks and banks of industries. This bank should be saddled with the responsibility of managing these investible funds and capital flow and channelling them to the appropriate sector for output performance monitoring.
Informal township businesses and socio-economic challenges: a case of South Africa.
(2023) Shezi , Sabelo.; Muller , Colette Lynn.
Most African countries continue to face challenges that negatively impact social wellbeing and the economy of the country such as unemployment, poverty, poor educational systems, gender inequality, income inequality, and poor health care systems. South Africa is no exception to these challenges and has recently faced another challenge, namely an increase in immigration. Immigration growth in SA has, inter alia, contributed to informal business growth in most townships in the country. Economic activities taking place in townships areas have an important role of ameliorating some of the existing socio-economic challenges for township residents. SA’s growth potential lies in promoting economic activities taking place in township communities. This thesis discusses the rise and nature of informal businesses across SA and within the Inanda, Ntuzuma and Kwamashu (INK) townships in relation to existing socio-economic challenges and provides insight into how informal businesses may help to ameliorate the socio-economic challenges citizens face. Using secondary data sourced from the Survey of Employers and Self-Employed for the period 2001–2017, a descriptive analysis was conducted to understand informal business activities and ownership nationally. Primary data was also collected (through a survey questionnaire) for the analysis of local versus foreign INK informal business ownership and activities, analysed through the descriptive analysis and multivariate econometric models (earnings regression model and probit model estimating improvement in standard of living of participants). The two econometric models were estimated on STATA software to determine how participation in INK informal business ownership and income generated may affect socio-economic conditions of participants. This study considers both aggregate information on the informal economy and micro level information through primary data collection and will therefore further the understanding of informal businesses on the ground, by permitting a level of questioning and information gathering that is not possible in the collection of aggregate data.
Health expenditure, health outcomes and productivity in sub-Saharan Africa: sustainable thresholds, moderation and forecasting.
(2023) Adegoke, Yetunde Oluranti.; George, Gavin Lloyd.; Mbonigaba, Josue.
SSA is known to be confronting distinctive health problems and growth challenges, thereby, inadequate health expenditure, poor health outcomes and their implications for productivity require investigation. This situation persists despite evidence-related policy produced in the past, suggesting the need to investigate further the nature of the relationship between interrelated variables. This study aims to investigate the nonlinear effect of PHE on health outcomes and the moderating role of education on health outcomes, forecast the performance of different PHE scenarios in achieving the 2030 Sustainable Development Goals (SDGs), examine the effect of PHE and health outcomes on TFP and assess the moderating role of education in the relationship between PHE and TFP. The study utilizes various techniques including Panel spatial correlation consistent-ordinary least squares (PSCC-OLS and PSCC-FE) for Objective One, Feasible quasi-generalized least squares (FQGLS) for Objective Two. Fixed and random models, panel two-stage least squares (P2SLS), and panel threshold regression for Objective Three. System panel generalized method of moments (GMM) for Objective four. This study concludes a nonlinear relationship between PHE and health outcomes exists. Furthermore, the interaction of PHE and education would improve health outcomes. Second, an overall increase in PHE by 30% would achieve the SDG target of 70 maternal deaths in only Botswana, Namibia and South Africa. In addition, about 60% of the countries in SSA might be able to achieve the SDG target for child mortality by the year 2030. Third, including PHE and health outcomes into the TFP framework would guarantee a further increase in TFP growth in SSA, and a threshold level of PHE above 3.5% of the GNP could achieve better health outcomes and a further increase in TFP growth in SSA. Fourth, the interactive impact of PHE and education might cause an improvement in TFP in SSA. The study pioneers the investigation of nonlinear, threshold, moderating, forecasting and collaborative effect of PHE, the information is essential for optimizing, redistributing and utilization of resources, specifically, a minimum of 38 dollars per person will achieve better health and productivity in SSA.
Analysis of the dynamics of carbon pricing: the role of speculation in the Emissions Trading System (ETS)
(2024) Isah, Kazeem Ovanero.; Adelakun, Ojo Johnson.
Purpose – To align with the global goal of keeping the temperature rise to well below 2 degrees Celsius, a market-based policy initiative, the "Emissions Trading System (ETS)," is to mitigate climate change. However, the carbon allowances traded at the ETS are held and traded not only by polluting companies, but also emissions non-compliance financial firms. These financial firms though engage in speculation, there has not been any compelling evidence of the extent to which speculation matters in carbon pricing. To bridge this gap, this study is premised on three separate but related essays to: (i) determine the accurate framework for modelling the dynamics of carbon pricing; (ii) determine the extent to which speculation matters in the predictability of carbon pricing; and (iii) determine whether speculation undermines or benefits the emission reduction effect of carbon pricing. Methodology –We employ the GARCH-MIDAS econometric technique to test the hypothesis that an all-inclusive framework that reflects the emission compliance and emissions noncompliance dynamics of the ETS is the most accurate approach to modeling carbon prices. We also employ some verifiable econometric procedures to arrive at the Feasible Quasi Generalised Least Square (FQGLS) as the most appropriate estimator to address some of the biases in the predictability of carbon prices. Findings – A modeling framework that captures both emissions compliance and emissions noncompliance dynamics of the ETS is the most accurate to modeling carbon prices. We find that speculation is a good predictor of carbon prices. We find that both emission compliance and emission non-compliance dynamics of the carbon market matter for the emissions reduction effect of the ETS and for enhancing the accuracy of climate change forecasts. Research Contribution – The literature on emission trading has continued to ignore the speculative behavior of the emissions non-compliance firms in the ETS. As a result, we construct a composite news-based speculation index to simultaneously capture the emissions compliance and emissions non-compliance dynamics of the ETS in a single framework. We provide the literature with a data-driven framework upon which the predictive power of speculation is examined both in the predictability of carbon pricing and in the forecast of emission reductions.
Impact of fiscal consolidation on domestic government debt in South Africa 1979 to 2022.
(2023) Buthelezi, Eugene Msizi.; Nyatanga, Phocenah.
This study delves into the intricate dynamics of fiscal consolidation and its ramifications on government debt and economic growth within the context of South Africa. Employing a variety of methodologies and frameworks, it scrutinizes the efficacy of fiscal policy measures in curbing government debt while stimulating economic growth. Fiscal consolidation, characterized by cuts in government expenditures and tax increases, aims to alleviate debt burdens by reducing interest rates and fostering economic expansion. However, existing measures such as the Cyclical Adjusted Primary Balance (CAPB) face limitations in capturing the nuanced variations in fiscal policy effectiveness and thresholds. Addressing these shortcomings, this study utilizes innovative approaches including Time-Varying Parameter Structural Vector Auto-Regression (TVP-VAR), Threshold Autoregressive Regime (TAR), Markov-switching dynamic regression (MSDR), and Two-Stage Least Squares (2SLS) models. Key findings reveal significant fluctuations in CAPB elasticity over time, highlighting the need for dynamic measures in assessing fiscal policy impact. Thresholds identified through TAR deviate from conventional benchmarks, underscoring the importance of context-specific thresholds in fiscal planning. MSDR analysis uncovers distinct states of government debt, each eliciting varied responses to fiscal consolidation measures. Notably, while fiscal consolidation proves effective in debt reduction under certain conditions, its impact on economic growth appears nuanced. Policy implications highlight the importance of tailored fiscal policies aligned with South Africa’s economic. By discerning the intricate interplay between fiscal consolidation, government debt, and economic growth, policymakers can devise more targeted strategies to navigate prevailing challenges. This study advocates for a nuanced approach to fiscal consolidation, emphasizing the need for context-specific thresholds and dynamic measures to foster sustainable economic growth while mitigating debt burdens.
Wellbeing in South Africa: regional economic disparities, conspicuous consumption, and the provision of infrastructure.
(2023) Mpungose, Sakhile Kieth.; Muller, Colette Lynn.; Dobreva, Ralitza Vassileva.
This thesis investigates the correlates of subjective well-being in South Africa, with a focus on the role of location, and specifically the impact of regional differences, conspicuous consumption, and access to public infrastructure in South Africa (SA). This thesis contributes to the body of welfare economics in SA by addressing three sets of aspects of well-being. The first of these (Chapter 3) is about individual differences in subjective well-being (SWB) across regions. This chapter makes use of five waves of the National Income Dynamics Study (NIDS) and the Quantac EasyData, corresponding to the NIDS waves. Using a combination of pooled ordered probit (POP), pooled ordinary least squares (POLS), and fixed-effects (FE) estimation, the overall finding from the first study shows that individual SWB differs across regions. Individuals located in urban district municipalities and economically thriving provinces report higher levels of individual SWB relative to individuals located in economically deprived regions. The second aspect (Chapter 4) examines the effect of conspicuous consumption by others on individual well-being. Using all five waves of the NIDS data, the findings suggest that, after controlling for comparator expenditure at the cluster and district level, conspicuous consumption by others at the district level decreases individual SWB after controlling for other important correlates of SWB. Also, it is worth mentioning that the findings differ depending on the proximity of the reference group. The findings suggest that individual SWB is negatively sensitive to conspicuous consumption by others that occurs in distant proximities, as opposed to close proximities. The third part (Chapter 5) examines the effect of access to public infrastructure on individual SWB. Access to infrastructure is measured by the distance individuals travel to the nearest educational, healthcare, and police service facility. Using data from the Living Conditions Survey (LCS) 2014/2015, the overall findings show that the effect of access on individual SWB differs across the various kinds of infrastructure facilities. Furthermore, long distances travelled to access public infrastructure pose a significant barrier for vulnerable segments of the population. Therefore, the government’s policy framework and commitment should be invigorated towards improving structural and systemic factors that hamper effective access to infrastructure. IQOQA Lo mbhalo wocwaningo uphenya ngenhlalakahle abantu ngabanye abazibona benayo eSouth Africa, ugxila endimeni edlalwa yindawo abahlala kuyo, ikakhulukazi umthelela wokwehluka kwezindawo, ukuthenga izinto ezibizayo kanye nokukwazi ukusebenzisa izingqalasizinda zomphakathi eSouth Africa (SA). Lo mbhalo wocwaningo unezela engqikithini yocwaningo olumayelana nendlela ukwabiwa kwemikhiqizo okuchaphazela ngayo inhlalakahle yomphakathi eSouth Africa (SA) ngokukhuluma ngezinto ezintathu eziphathelene nenhlalakahle. Okokuqala (Isahluko 3) kumayelana nokwehluka komuntu ngamunye endleleni achaza ngayo inhlalakahle yakhe, isubjective well-being (SWB) ezifundeni zonkana. Lesi sahluko sisebenzisa amahlandla amahlanu endlela yocwaningo olwaziwa njengeNational Income Dynamics Study (NIDS) kanye neQuantac EasyData, ehambisana namahlandla e-NIDS. Kusetshenziswa inhlanganisela yokuhlaziya imiphumela emibili, ipooled ordered probit (POP), indlela esetshenziswayo engavezi imiphumela ebonakalayo, ipooled ordinary least squares (POLS), kanye nendlela yokulawula uguquko, ifixed-effects (FE), kanti sekukonke okutholakele ocwaningweni lokuqala kubonisa ukuthi i-SWB ngayinye iyahluka ezifundeni ezihlukahlukene. Abantu abahlala komasipala bezifunda zasemadolobheni nasezifundazweni ezithuthukayo kwezomnotho babika amazinga aphezulu e-SWB yabantu ngabanye uma kuqhathaniswa nabantu abahlala ezindaweni ezintulayo kwezomnotho. Isici sesibili (Isahluko 4) sihlola umthelela wokuthenga izinto ezibizayo okwenziwa abanye okunawo enhlalakahleni yomuntu ngamunye. Kusetshenziswa imininingo eqoqwe kuwo womahlanu amahlandla e-NIDS, okutholakele kuveza ukuthi, ngemuva kokulawula izindleko zokuqhathanisa ezingeni leqoqo nelesifunda, ukuthenga izinto ezibizayo okwenziwa abanye esifundeni kuyayinciphisa i-SWB yomuntu ngamunye ngemuva kokulawulwa kwezinye izinto ezibalulekile ezinomthelela ku-SWB. Kufanelekile nokusho ukuthi okutholakele kuyehluka kuye ngokuthi asondelene kangakanani amaqembu okubhekiselwa kuwo. Okutholakele kuveza ukuthi i-SWB yomuntu ngamunye iyachaphazeleka nalapho abanye bethenga izinto ezibizayo ezindaweni eziqhelile, ngokungafani nasezindaweni eziseduze. Ingxenye yesithathu (Isahluko 5) ihlola umphumela okuba nawo ukufinyelela kuzingqalasizinda zomphakathi ku-SWB yomuntu ngamunye. Ukufinyeleleka kuzingqalasizinda kukalwa ngebanga umuntu alihambayo lapho eya ezikhungweni zemfundo, ezikhungweni zezempilo nasesiteshini samaphoyisa esiseduze. Kusetshenziswa imininingo evela kuhlolovo eyaziwa ngokuthi yiLiving Conditions Survey (LCS) 2014/2015, ingqikithi yalokho okutholakele iveza ukuthi ukufinyelela ezinhlotsheni ezahlukahlukene zezingqalasizinda kunomthelela ongefani endleleni umuntu ngamunye achaza ngayo inhlalakahle yakhe. Ngaphezu kwalokho, amabanga amade ahanjwayo ukuze kufinyelelwe kuzingqalasizinda zomphakathi ayingqinamba enkulu kubantu abantulayo. Ngakho-ke, uhlaka lwenqubomgomo kahulumeni nokuzibophezela kwakhe kufanele kufakwe umfutho ukuze kuthuthukiswe izakhiwo nezinhlelo ezikhinyabeza imizamo yabantu yokufinyelela kuzingqalasizinda.
Energy consumption and economic growth: evidence from African oil exporting countries.
(2022) Ogunsola, Akindele John.; Tipoy, Christian Kakese.
This thesis examines the relationship between energy consumption and economic growth in a sample of African oil-exporting countries (AOECs). The group comprises Algeria, Angola, Egypt, Gabon, Nigeria and the Republic of Congo. The thesis presents three separate, but interconnected essays based on annual data on the period 1980 to 2018. The persistent energy consumption issues are ascribed to the failure of energy planners to understand the various macroeconomic factors that influence energy consumption. Therefore, the first essay in Chapter 3 investigates the factors influencing energy consumption, using the cross-sectional autoregressive distributed lag and the cross-sectional distributed lag modelling estimators. These estimators consider the time dynamics and the heterogeneity of the different countries. Moreover, they are robust to cross-sectional dependence. The study explores the relationship between energy consumption and its major determinants, such as openness, economic structure and per capita income. The results reveal that openness has a positive and significant effect on energy consumption in AOECs during the period under study, while the economic structure has a negative and significant effect. The third variable of interest, namely per capita income, does not impact significantly on energy consumption. It is, therefore, recommended that these countries transform their economies structurally such that it will make economic growth more inclusive, driven by domestic value-added and not exogenous income from primary product exports. Most African net oil exporters are characterised by a unique paradox. They have low energy consumption despite their large energy deposits, and their economic growth rates are lower than both the global and African average. Hence, the second essay in Chapter 4 investigates the causal relationship between energy consumption and economic growth. The study uses both linear and non-linear estimators. The study estimates a panel smooth transition vector error-correction model, which is robust to cross-sectional dependence and endogeneity and conduct a regime-wide Granger causality test. The study finds that the nonlinearities between the two variables are better explained whenever energy consumption is the transition variable. The Granger causality results show that in the short run, neither energy consumption nor economic growth causes each other in both low and high-growth regimes. In the long run, however, energy consumption Granger causes economic growth in high-growth regimes only. The economic growth variable, Granger causes energy consumption in both regimes. We conclude that a high economic growth rate drives energy consumption in AOECs. Consequently, it is recommended that conservation policies such as eliminating fossil fuels should be implemented efficiently, as they can hinder growth in the long run. A close connection exists amongst oil price shocks, energy consumption and economic growth. This connection has consequences for the growth of an economy. Using the Bayesian structural vector autoregressive model, the third essay in Chapter 5 analyses the impact of oil price shocks on energy consumption and economic growth. The study finds that the oil price shocks impact energy consumption and economic growth of all six AOECs. Conversely, the domestic variables of energy growth and economic growth does not impact oil price inflation. The unexpected variations in energy consumption impacts positive influence on economic growth in Nigeria, the Republic of the Congo and Gabon, whereas it is an inverse relationship in Angola, Egypt and Nigeria. The shock of economic growth leads to positive change in energy consumption in Angola, the Republic of the Congo, Egypt and Nigeria, but with inverse relationship in Algeria and Gabon. It is on this basis that we recommend the diversification of these economies to lessen the effect of external shocks in AOECs.
Monetary policy shocks and industrial production in BRICS countries.
(2017) Kutu, Adebayo Augustine.; Ngalawa, Harold Phellix Emmanuel.
This study investigates monetary policy shocks and industrial production in BRICS countries. The study is presented in four separate but related essays. The first (chapter three) employs a Panel Structural Vector Autoregressive model (𝑃−𝑆𝑉𝐴𝑅) to investigate how monetary policy shocks affect industrial output in BRICS countries using monthly data for the period 1994:1 to 2013:12. A nine variable 𝑃−𝑆𝑉𝐴𝑅 with short-run restrictions among the variables is constructed for the analysis. The study finds that variations in the exchange rate have the largest impact on industrial output in the BRICS countries. It is also observed that inflation rates significantly increase industrial output, peaking after about 11 months. This suggests that monetary authorities should be cautious when formulating policies aimed at reducing the inflation rate because of the spill over effect on industrial output. Further analysis reveals that interest rates have a marginal effect on exchange rates, while money supply makes a relatively large contribution to exchange rate fluctuations. Again, it is observed that changes in money supply exert a very large impact on variations in the rate of inflation. Thus, money supply plays an important role in curbing inflation. The study also analyses variations in interest rates, money supply and inflation and recommends that monetary authorities in the BRICS countries adjust interest rates, and not money supply, in response to inflation expectations. The second essay (chapter four) models exchange rate behaviour in the BRICS countries. This study examines global shocks and variations in the BRICS countries local currency/United States dollar exchange rate using the symmetric Generalized Autoregressive Conditional Heteroscedasticity (GARCH), Exponential Generalized Autoregressive Conditional Heteroscedasticity (EGARCH) and Asymmetric Power Autoregressive Conditional Heteroscedasticity (APARCH) models to determine the relationship between the two. The GARCH, EGARCH and APARCH are employed under normal (Normal Gaussian) and nonnormal (Student‘s t and Generalized Error) distributions. Using monthly exchange rate data covering the period – , the study finds that exchange rates in Brazil, Russia and India can well be modelled by the symmetric GARCH (1,1) model while in China, the three models perform well. In South Africa, the results of the three models also perform well but the EGARCH (1,1) model is found to be the best. Further analyses of the models reveal that the Student‘s t distribution produces better fit for estimating exchange rate variations and global shocks in BRICS countries compared to the Normal Gaussian and GED values under the nonnormal distributions. Overall, the study recommends that the BRICS countries should consider the impact of oil prices and global interest rates when formulating and implementing policies that impact on exchange rates. The third essay (chapter five) examines whether the five BRICS countries share similar business cycles and determines the probability of any of the countries moving from a contractionary regime to an expansionary regime. The study further examines the extent to which changes in monetary policy affect industrial output in expansions relative to contractions. Employing the Peersman and Smets (2001) Markov-Switching Model (MSM) and monthly data from 1994:01 – 2013:12, the study reveals that the five BRICS countries have similar business cycles. The results further demonstrate that the BRICS countries‘ business cycles are characterized by two distinct growth rate phases: a contractionary regime and an expansionary regime. It is observed that area-wide monetary policy has significantly large effects on industrial output in recessions as well as in booms. It is also established that there is a high probability of moving from state 1 (recession) to state 2 (expansion) and that on average, the probabilities of staying in state 2 (expansion) are high for each of the five countries. It is, therefore, recommended that the BRICS countries should sustain uniform policy consistency (monetary policy), especially as they formulate and implement economic policies to stimulate industrial output. The fourth essay (chapter six) investigates the long run and short run dynamics between industrial production and the factors affecting production in the emerging market economies of BRICS countries. Using the Chudik and Pesaran (2013) P-ARDL model and monthly data from 1994:01 – 2013:12, the study finds evidence of a cointegrating relationship between industrial production and selected variables. It is further observed that capital, labour, per capita income and exports have a positive long run impact on industrial production in the BRICS countries. However, a currency appreciation (an increase in the exchange rate) has a negative impact on industrial production. In the short run, it is found that imports, exports, exchange rates, labour, capital and per capita income significantly affect industrial production. The policy implication stemming from the analysis is that a sound economic policy is important for output production and industrialization in BRICS countries while poor policy will result in a nexus of constraints from which escape may be difficult (or impossible). The industrial sector, therefore, should also be listed as a sector that can actualize the diversification process and boost economic performance in the EMEs. There should also be policy consistence in curtailing the declining trend of industrial production.
Monetary policy shocks and economic growth in economic community of west African states.
(2022) Famoroti, Olesugan Jonathan.; Omolade, Adeleke.
An effective economic management is contingent upon the knowledge of how shocks emanate from monetary policy and other sources that affect the economy. This study examines the monetary policy shocks and economic growth in the Economic Community of West African States (ECOWAS), segregated into sub-regions of WAMZ and WAEMU. This is carried out under three related sub-objectives, using quarterly secondary data from 1980(1) to 2020(4). The first objective offers an empirical investigation into the determinants of the monetary policy rate in ECOWAS, considering both internal and external variables, using ARDL. The results revealed that in order to ensure long-run stability in the policy rate among the members’ states of ECOWAS, determinant variables including exchange rate, inflation rate and the gross domestic product should be given closer attention, so that the trajectory for potent structure can be designed and incorporated into the economic structure and policy frameworks accordingly. The second objective of this study employed a Panel Structural Vector for the modelling of monetary policy transmission shock in the region. The key results suggest that fluctuations of the monetary policy do not have significant effects on economic growth but significantly impact the general price level. Moreover, the study finds that the exchange rate is persistently a vital mechanism that significantly influences the variables of the real economy. Our estimates further suggest that there is idiosyncratic evidence found in the results, which is the anomaly of Price puzzle. Furthermore, this study used the Markov switching model for the third objective to investigate the impact of monetary policy shocks in two regimes of the business cycles in ECOWAS countries. The results show that the countries are having common business cycles. In addition, the study offered enough evidence that the monetary instruments are significantly more potent at contractionary than expansionary regimes. ECOWAS region appears to have a comparatively shorter business cycle than the developed countries. Hence, the design of policies by the monetary authorities in this region, aimed at shortening the duration of the contractionary period must be meticulously formulated to avert negative consequences of strict contractionary policy and ditto to expansionary policy.
Childhood and adult disability: impacts on education and the labour market in South Africa=Ukukhubazeka kwabantwana nabadala: Umthelela kwezemfundo nakwezemisebenzi eNingizimu Afrika.
(2022) McKenzie, Tamlyn Candyce.; Vermaak, Claire Lauren.; Hanass-Hancock, Jill.
Abstract Equal opportunities in education and the labour market are prioritised on the global agenda for people with disabilities. It is widely acknowledged that people with higher levels of education are more likely to find employment and to earn more compared to people with lower levels of education. Any negative impact on educational attainment during school-going years may result in long term labour market consequences in adulthood. People who are unable to access education, may fall into poverty and poverty makes people more vulnerable to acquiring disabilities. In addition, people with disabilities are less likely to participate in the labour market and if they do are more likely to be unemployed thus perpetuating this disability and poverty cycle. As a means of monitoring the Convention on the Rights of Persons with Disabilities, an internationally recognised and comparable survey instrument designed by The Washington Group (WG) was incorporated into the General Household Survey (GHS) in South Africa from 2009. Very little academic research has been conducted in South Africa using the WG questions yet the White Paper on the Rights of Persons with Disabilities prioritises monitoring and evaluation through rigorous research. This thesis demonstrates the ways in which household survey questions on disability have evolved over time due to the conceptual changes from the medical model of disability to the social model and how these questions can be used to measure disability prevalence. Using the GHS and the WG set of questions, the thesis estimates how childhood disability is associated with school attendance and progression. The findings strongly suggest that children with disabilities, particularly those with more severe disabilities, are more likely to be out of school and when they are in school they are at least two years behind their peers without disabilities. For adults with disabilities the probability of labour market participation and employment is lower. In addition, there is a notable gap in earnings between people with and without disabilities. Severe disabilities (involving physical and cognitive impairments) have worse outcomes overall. Importantly, the results suggest that if people with disabilities are able to attain equivalent levels of education to their peers without disabilities, their labour market outcomes improve significantly. This study therefore demonstrates the vital importance of education and the need for education to be the primary focus of policy efforts for people with disabilities. Iqoqa Amathuba alinganayo kwezemfundo nakwezemisebenzi abekwa phambili ezinhlelweni zomhlaba wonke kulabo bantu abakhubazekile. Kuyinto eyaziwayo ngokubanzi ukuthi abantu abanezinga eliphakeme lemfundo banethuba elingcono ekutholeni umsebenzi nokuhola kangcono uma kuqhathaniswa nalabo abanezinga eliphansi lemfundo. Noma yikuphi okunomthelela ongemuhle ekutholeni imfundo ngeminyaka yokuya esikoleni kungaba nemiphumela enganambitheki uma umuntu esesebenza ebudaleni. Ngaphezu kwalokho, abantu abangakwazi ukuthola imfundo bangazithola becwile ekuhluphekeni kanti ububha benza kube lula ukuthi abantu bathole ukukhubazeka. Ukusebenzisa izibalomidanti ezibanzi zomphakathi kubalulekile ekukhuthazeni ukushintshwa kwenqubomgomo nokukhanyisela abenza inqubomgomo ngezinto ezidinga ukuqashelwa. Insizakusebenza yesaveyi eyamukelwa emhlabeni wonke eyakhiwa yiWashington Group yafakwa kwiGeneral Household Survey (GHS) eNingizimu Afrika ngonyaka wezi-2009. Imibono yongoti ebanzi eNingizimu Afrika igxilile ekuxhumaneni phakathi kokukhubazeka nobuphofu kanti ucwaningo oluxilonge imiphumela ngezemisebenzi alukaze lusebenzise imibuzo ngokweWashington Group. Lo msebenzi ukhombisa izindlela amasaveyi ngezamakhaya aseNingizimu Afrika angasetshenziswa ngazo ukuthola abantu abakhubazekile. Ngokusebenzisa iGHS, umthelela wokukhubazeka ekuyeni esikoleni nokuqhubeka emfundweni uyakwazi ukukaleka. Imiphumela yocwaningo iveza ukuthi abantwana abakhubazekile, ikakhulukazi labo abanokukhubazeka okukhulu, maningi amathuba okuthi bangasiqedi isikole kanti uma bekhona esikoleni basalele ngeminyaka emibili kontanga yabo abangakhubazekile. Kubantu abadala, abantu abakhubazekile banamathuba amancane okuzithola bebandakanyeka kwezemisebenzi, ukuqashwa nokuthi kube nemali abayiholayo. Ukukhubazeka okujulile (okusemzimbeni noma ngokuthikamezeka kwengqondo) kukhombisa isimo esibi kakhulu ngokubanzi. Kubalulekile okukhonjiswa yimiphumela kokuthi uma abantu abakhubazekile bekwazile ukuthola imfundo elingana neyozakwabo abangakhubazekile, imiphumela ngokwemisebenzi iyashintsha kakhulu. Lolu cwaningo ngaleyo ndlela lukhombisa ukubaluleka kwemfundo kanye nesidingo sokuthi imfundo ibhekelelwe ngokwenqubomgomo kubantu abakhubazekile. [Amagama asemqoka: Ukukhubazeka; Ezemfundo; Ezemisebenzi; Amasaveyi amakhaya]
Analysis of sexual and reproductive healthcare utilisation among young people in Zimbabwe.
(2020) Muchabaiwa, Lazarus.; Mbonigaba, Josué.
Despite the development and implementation of an adolescent and youth sexual and reproductive health (ASRH) strategic plan in 2010, Zimbabwe has the third-highest HIV prevalence amongst sexually active teenagers in Southern Africa. The country can potentially suffer future socioeconomic decline due to adverse health outcomes resulting from the current risky sexual and reproductive health behaviour among its youth and adolescents. The attainment of the United Nations’ Sustainable Development Goals (SDGs) may be compromised owing to this predicament. The thesis analysed the utilisation of adolescent and youth sexual and reproductive health services and their outcomes in four essays. The first essay investigated the socioeconomic factors that influence ASRH service utilisation, the resultant outcomes and their distribution. The essay updated existing literature by providing recent evidence on ASRH specific socioeconomic determinants and their equity connotations, which has been lacking since the implementation of the ASRH strategy in 2010. The essay applied the logistic regression and concentration index techniques on the Zimbabwe Demographic Health survey (ZDHS) data. Findings revealed that inequalities favouring advantaged groups widened in STI treatment, HIV testing, STI treatment, as well as in condom and contraceptive use. Progress was made in early childbearing, which declined among the uneducated. Another positive development was the disproportionately higher HIV infection among females, which declined by almost half between 2005 and 2015. The second essay analysed the impact of the government’s ASRH strategy on the utilisation of ASRH services. The essay’s contribution was its quantitative insight into whether a multi-pronged approach or commitment of more resources results in better ASRH outcomes. The difference-in-differences impact evaluation technique was applied to ZDHS data collected in 2010 and 2015. Results indicated that service utilisation for HIV testing and treatment of sexually transmitted infections (STIs) increased. The ASRH strategy also reduced HIV prevalence. These impacts differed by education status and place of residence. Results also showed that provinces that received more resources did not attain better ASRH outcomes, suggesting that future focus should be on the quality of services. The third essay sought to characterise the risk preferences of youth. Its contribution lies in using prospect theory to fit youth risk-taking in the domain of sexual and reproductive health as a departure from the normally assumed expected utility theory. Primary data was collected from university students in Zimbabwe using a socioeconomic questionnaire and pairwise lottery choice tasks based on hypothetical ASRH interventions with uncertain outcomes. Prospect theory parameters were estimated using patterns of the respondents’ choices over the lottery tasks. This is the first study, to the researcher’s best knowledge, that estimates ASRH risk parameters within the prospect theory framework. Bivariate techniques, ordinary least squares and interval regression methods were used to examine socioeconomic differences in risk preferences. Results indicated that the ASRH behaviour of youth fits within prospect theory. Bivariate and multivariate regression analyses showed that income, prior sexual and reproductive health knowledge, and alcoholism were associated with risk and loss aversion. The fourth essay investigated the long-term consequences of ASRH practices from the female youths’ perspective as the hardest hit gender. The essay’s contribution lies in unearthing the magnitude of lifelong effects of failure to utilise ASRH interventions during adolescence, which is missing from Zimbabwean literature. The essay applied propensity score matching and multivariate regression techniques on ZDHS data collected in 2015. Findings revealed that non-utilisation of ASRH services leads to lower educational attainment, lesser chances of career development, poverty, as well as the contracting of STIs and HIV infections. Overall, these findings have several implications. Firstly, health policymaking must consider inclusive ASRH strategies that target currently excluded youths in rural areas, uneducated and poor households, and consider their unique risk preferences. In addition to that, future ASRH strategies should focus on service quality and increased coverage to improve outcomes and attain SDG targets. Secondly, the nature of youths’ risk preferences entails that ASRH awareness campaigns be positively framed to improve uptake of ASRH services. In addition to that, policymakers need to facilitate youth economic emancipation to increase economic prospects, which improves economic reference points that are critical facilitators of risk aversion. Lastly, future ASRH strategies need to have better coordination and monitoring since they involve different implementers. Furthermore, the ASRH strategy needs to be integrated into other sectors' goals that it impacts, such as education and labour.
Oil price shocks, exchange rates and output performance in Africa's oil exporting countries.
(2021) Rotimi, Mathew Ekundayo.; Ngalawa, Harold Phellix Emmanuel.; Kutu, Augustine Adebayo.
This thesis examines oil price shocks, exchange rates and output performance in a sample of Africa’s Oil-Exporting Countries (AOECs) (Algeria, Egypt, Gabon, Libya, and Nigeria). Using quarterly data from 1980 to 2018, it is presented in three separate, but interrelated essays. The first essay presented in chapter three constructs a seven-variable Panel Structural Vector Autoregressive (PSVAR) model with the imposition of short-run restrictions to examine the oil price shocks transmission mechanism. In the same framework, trends in output growth and oil prices are examined and it is established that oil price shocks have statistically significant impacts on output and exchange rates in AOECs. The essay concludes that exchange rates is the channel through which oil price shocks are transmitted to the economy. It is thus recommended that stabilizing exchange rates is vital for sound economic performance in AOECs. The second essay which is presented in chapter four forecasts the AOECs’ exchange rates. Using quarterly data covering 1980 to 2018, it employs Autoregressive Distributed Lag (ARDL). The regression is estimated using data from 1980-2015 and forecasting data from 2016-2018. The forecasting model, which uses various forecasting evaluation criteria, supports the suitability of the model to forecast exchange rates. Furthermore, the results show that forecast combination methods may have a good predicting power on exchange rates. Combined forecasting is therefore recommended as a way to achieve predictive forecasting accuracy in AOECs. Employing a Panel VAR model, the third essay investigates the asymmetric relationship between oil price and output. Using quarterly data from 1980 to 2018, oil prices are decomposed into positive and negative components to examine how output responds. The findings reveal an asymmetric relationship between oil prices and output. They show that, on average, positive oil price shocks positively impact output and this effect remains significant in the long run. The reverse is observed in negative oil price shocks. In terms of magnitude, the study finds that negative oil price shocks impact output at more than double the rate of positive oil price shocks. The results also reveal that low output in AOECs is associated with uncertain variations in oil prices and that an increase in oil prices results in increased inflation, which could result in higher levels of unemployment. This finding is associated with the inadequacy of refining capacity in the AOECs, causing them to import refined fuel at a high cost. It is thus established that the economies of the AOECs are vulnerable to negative oil price shocks that negatively affect exchange rates, while positive oil price shocks positively affect the cost of production. It is on this basis that the study recommends that AOECs should build sufficient external reserves to minimize the impact of negative oil price shocks on exchange rates.
Do competition regimes matter in international trade? a case study of the Tripartite Free Trade Area.
(2021) Dube, Cornelius.; Sibanda, Mabutho.; Holden, Merle Gwendoline.
This thesis assesses the importance of competition policy and competition reforms in enhancing regional and continental integration processes. While using the envisaged Tripartite Free Trade Area (TFTA) as a case study, it assess competition reforms in the individual countries as well as bilateral trade flows between the countries that would become members of the TFTA. As strides are now being made towards continental integration, the role that competition policy adoption and enforcement can play in enhancing benefits from the integration remains largely unexplored. The thesis’s objectives were threefold. Firstly, it aimed to demonstrate the need for competition reform to be part of the discussions on regional integration at the level of the envisaged TFTA by showcasing how existing bilateral trade flows between the countries were influenced by competition reforms in the countries. Secondly, the study investigated whether the existing competition regimes in the countries that would form the TFTA reflect a general belief in competition policy. Thirdly, it aimed to assess whether changes in levels of economic development over time within the African context, as reflected by members of the envisaged TFTA, influenced decisions to tighten competition regimes. An index, the Competition Reform Index (CRI), which quantitatively measures the strength of competition regimes, was designed to assess the level of acceptance of the competition reform agenda among the countries constituting the TFTA. Such acceptance is inferred based on univariate methods, specifically how the levels of the mean CRI, the standard deviation of the CRI and the maximum CRI score, have evolved over time. CRI data for 23 countries over the period 1998 to 2018 is used for this purpose. The manner in which competition reforms impact international trade was estimated using panel data models, with a measure of the strength of competition regimes included among the explanatory variables. More specifically, the gravity models of international trade were estimated through random effects panel data models and Generalised Methods of Moment (GMM) models, using bilateral country exports and imports for countries that would be part of the envisaged TFTA. The estimation for the random effects and GMM models was over the period 2001 to 2016 across 20 countries1 that would all be part of the proposed TFTA. The extent to which adoption of competition reforms in the envisaged TFTA could have been the result of changes in economic performance in these countries was estimated using panel Granger causality methods, for 23 countries over the period 1998 to 20182. More specifically, the study estimated the extent to which changes in Gross Domestic Product (GDP) levels in the proposed TFTA countries Granger cause changes in the CRI. The mean score of the CRI shows that although only 20% of the countries in the TFTA have not yet embraced competition reforms, few countries have been subjected to high quality competition regimes for a long period of time. The standard deviation of the CRI reflects some attempts to improve competition reforms over time in the region, although only 44% of the countries in the TFTA have high quality competition regimes. This confirms earlier studies that showed that some competition laws were adopted among the countries in the envisaged TFTA, but were designed to ensure that other public interests are not compromised. The study established that tightening competition reforms in the exporting country, reflected in an increase of 1% in the competition reforms variable will, on average, result in bilateral exports increasing by between 0.1% and 0.16%, holding other influencing variables constant. However, if the importing countries increase their competition variable by 1%, an average short-run decrease of 0.46% in bilateral exports would be expected, holding other things constant. With respect to imports, the results show that bilateral imports among countries in the proposed TFTA will increase by between 0.07% and 0.18% if the exporting countries increase their competition reforms by 1%, holding other influencing variables constant. The findings from the Granger causality tests of panel data do not produce statistically significant evidence that there is short-run causality from GDP to CRI. However, in the long run, this relationship is statistically significant. There are three major implications of these findings. Firstly, there is still room for countries to improve their competition regimes and enjoy more benefits from regional integration within the envisaged TFTA. Second, competition reforms should be enhanced in a quest to promote regional competitiveness and ultimately, global penetration rather than bilateral trade within the TFTA. This is due to the fact that an increase in bilateral exports in the TFTA is only apparent if other countries are lagging behind in competition reforms. Thus, if all countries in the TFTA were to adopt competition reforms, this added advantage would be neutralised. Third, the absence of short-run causality between GDP and competition reforms implies that regulatory capture and vested interests, which are characteristic of countries with low levels of development, are no longer a significant obstacle in the TFTA. This is encouraging from a policy perspective, as efforts to promote competition reforms at regional level can be continued across all countries with little fear of country vulnerability to capture by business and other vested interests.
Financial stability and monetary policy in South Africa.
(2020) Dlamini, Lenhle Precious.; Ngalawa, Harold Phellix Emmanuel.
This thesis is presented in three distinct but related essays. The first essay (Chapter four) explores how financial stress interacts with monetary policy. Financial stress was measured using a time-varying financial conditions index constructed by Kabundi and Mbelu (2017) for South Africa employing thirty-nine monthly financial market variables and macroeconomic variables. The study employed a Markov Switching Vector Autoregression (MSVAR) model estimated with Bayesian methods to investigate this dynamic relationship. The findings reveal that interest rates respond negatively to a high financial stress shock, leading to an increase in credit growth. Despite the expansion of credit, real GDP growth increases marginally and then gradually declines. Given the complementary objectives of financial stability and monetary policy, it is concluded that monetary policymakers need to consider financial stability. Furthermore, the impact of monetary policy is not restricted to adjustments in interest rates; it affects other factors such as lending risk functions. The second essay (Chapter five) examines the interaction of housing-related macro-prudential policies and monetary policy. The study uses housing cycles in a Dynamic Stochastic General Equilibrium (DSGE) model with a small, open economy framework. We estimate the model with Bayesian techniques using South African data covering the period 2000Q1 to 2018Q4. The results indicate that monetary policy has negligible effects on house prices. We consider a loan-to-value (LTV) tool for macro-prudential policy. The results show that a one per cent rise in the LTV ratio, a tight macro-prudential policy, leads to increasing house prices, with significant effects on Consumer Price Index (CPI) inflation. The effects on CPI inflation suggest that monetary policy is not very effective. Efficient policy frontier analysis indicates that the introduction of macro-prudential policy yields an improved, effective outcome that lowers output and inflation volatility. The findings suggest that there is a need for coordination of monetary policy and macro-prudential policy. The third essay (Chapter six) investigates monetary policy and the role of countercyclical bank capital regulation in fostering macroeconomic and financial stability. We employ a DSGE model with a borrowing cost channel and endogenous financial frictions driven by bank losses, bank capital costs and credit risk. The study finds that a policy regime that combines an optimal Taylor rule and macro-prudential policies shows a clear trade-off between price and macroeconomic stability. The results emphasise the significance of the Basel III Accord in mitigating the output-inflation variability faced by the policy authorities, and questions the simultaneous deployment of an optimal Taylor rule.
Impacts of military expenditure and institutional quality on inclusive growth in BRICS countries.
(2019) Anifowose, Oladotun Larry.; Omolade, Adeleke.; Mukorera, Sophia Zivano Elixir.; Nyatanga, Phocenah.
This study investigated the relationship between military expenditure, institutional quality and inclusive growth in BRICS countries from 1970 to 2017. The increase in military expenditure by BRICS and the worsening inclusive growth indices such as unemployment, inequality, poverty, among others, necessitated the assessment of the relationship between military expenditure, institutional quality and inclusive growth in the BRICS countries. The study was carried out under three modular themes, which also form the objectives of the study, namely; the determinants of military expenditure, computation of inclusive growth index for the BRICS and the effects of military expenditure and institutional quality on the inclusive growth index of the BRICS countries. Panel data analysis was applied for the first objective, the Z-score technique was used for the second objective, which involved the computation of inclusive growth index for BRICS. The third objective was analysed using the Auto-Regressive Distributed Lags ARDL for BRICS countries by using times series data. The results obtained on the first objective revealed that BRICS military expenditure was significantly and majorly determined by Gross Domestic Product (GDP), trade balance, security web and inflation rate for the period under analysis. The results on Objective 2 revealed that the average inclusive growth index for Russia was the highest among the five BRICS countries, followed by China and Brazil. However, South Africa and India fell below the average inclusive growth index computed for BRICS. The results on Objective 3 showed that the impacts of military expenditure and institutional quality on inclusive growth varied among the BRICS countries. From the literature, the most effective way of assessment is to focus on the impact of the interactive form of military expenditure and institutional quality. Findings revealed that the interactive form of military expenditure and institutional quality (MCP) only have significant impact on inclusive growth of Russia because the coefficient is positive and significant. The coefficient is negative and significant for China and South Africa while the same coefficient is not significant at all in Brazil and India. This implies that Russia is the only country in the BRICS where the interaction of military expenditure and institutional quality supports inclusive growth. Notwithstanding, other control variables such as education and population have statistically significant effects on inclusive growth in Brazil, China and South Africa. Results on India emerged as a complete outlier among the five as none of the variables, including the control variables was found to have a statistically significant relationship with inclusive growth. Again, the efforts in this study included a comparison of the inclusive growth results with those of economic growth and per capita income which have been used by previous studies to investigate the effect of military expenditure on the BRICS economy. The results showed that findings under the Inclusive Growth Model were the same for that of economic growth and per capita income for Russia, China and South Africa. However, there are some differences firstly; the negative effect of the interaction of military expenditure and institutional quality in Brazil which is significant on inclusive growth is not significant on economic growth and per capita income. This shows that the adverse effect of this variable was more felt on inclusive growth than economic growth in Brazil. Again, military expenditure and institutional quality showed a positive significant impact on India’s economic growth and per capita income, but the effect on inclusive growth was not significant. Finally, levels of investment in all the countries have shown significant positive impacts on economic growth and per capita income, but the current levels of investments in the BRICS fail to drive inclusive growth significantly except in Russia. These results further confirmed that assessment of the impacts of military expenditure and institutional quality using economic growth and not inclusive growth might be misleading. Based on the findings from this study, the following recommendations are made: First, there is the need for improvement of synergy between military expenditures and institutional quality before the challenge of inclusive growth in the BRICS can be tackled effectively. Second, prioritising inclusive growth more than economic growth is more germane to the assessment of the effectiveness of military expenditure.
Socio-economic, environmental and institutional sustainability and economic growth within BRICS: what are the best policy options?
(2020) Awolusi, Olawumi Dele.; Mbonigaba, Josué.
Due to diverse socio-economic, environmental, institutional characteristics and different levels of industrial development, a major problem in BRICS (Brazil, Russia, India, China, and South Africa) countries is how bloc member countries can work together to advance the goals of economic growth without compromising individual member countries aspirations to sustainability. For BRICS cooperation to bring about improved welfare in individual countries, economic growth in the bloc needs to be conducive to sustainability in individual countries. Otherwise, policies need to be enacted to ensure sustainability in the bloc. The formulation of policy options would require extensive knowledge of how economic growth relates to identified sustainability variables. Consequently, the overall objective of this thesis is: To examine the effect of economic growth on socio-economic, institutional, and environmental sustainability within the BRICS as well as compare evidence on relationships between economic growth and sustainable developments within the BRICS bloc. To accomplish the stated objective, the thesis used various non-linear and linear estimators that are robust to both small sample size bias and cross-sectional dependence errors, contrary to most literature on the topic. The overall argument of the thesis was supported by four different pieces of analysis, each contained in a publishable paper. The first article (chapter 3) titled "Socio-economic sustainability and economic growth in BRICS: relationships and policy options" investigates the influence of economic growth on socio-economic sustainability in BRICS to observe possible patterns in this bloc. The paper uses Pesaran et al. (2001) autoregressive distributed lag (ARDL) co-integration technique, as well as, Toda and Yamamoto (1995) granger non-causality approach in a two-variable vector autoregression model. In this paper, the results established the existence of co-integrating vectors and short-run causal relationships, which run either unidirectionally or bidirectionally in all the variables. Our study, therefore, concluded that the long-run equilibrium relationships between economic growth and socioeconomic sustainability in BRICS vary from one country to another, but were largely insignificant in the models of Russia and China during the study period. This conclusion is tacit support for the Kuznets hypothesis in both China and Russia. The study concluded that a common policy option was not possible and that for the block to pursue its economic prosperity goals without compromising individual countries' needs for socio-economic sustainability, varied radical policy options were inevitable in Brazil, India, and South Africa. These include radical law reforms and independent organisations; population growth control, speedy poverty alleviation and basic education; market development; and creation of societal culture to promote socio-economic sustainability. Article 2, titled "Economic growth and institutional sustainability nexus within BRICS: Relationships and policy options" in Chapter 4 of the thesis examines the influence of economic growth on institutional sustainability within BRICS. The paper adopted a panel data cointegration analysis and Hausman specification test. As a robustness check, the study launched the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimations at individual and panel levels over the study period. The study concluded that the effect of economic growth on institutional fitness within BRICS, though significant and positive, was limited and varied. Specifically, the study observed that China performed well among the five countries. Consequently, this study posited a more radical policy mix to enhance institutional sustainability in the three (Brazil, India, and South Africa) less developed countries in the bloc. The policies could focus more on developing radical institutional strategies; superior growth induced domestic investment, financial developments, and circular economic model. vi Article 3 in Chapter 5 of the thesis, titled “Economic growth and environmental sustainability within BRICS countries: A comparative analysis " focused on the influence of economic growth on environmental sustainability within BRICS. Due to the probable crosssectional dependency errors, the estimates via the autoregressive distributed lag (ARDL) were supported by cross-sectional autoregressive distributed lag (CS-ARDL). The results confirm that economic growth and environmental sustainability are co-integrated at the panel level. Specifically, the study concluded that GDP growth exhibits a significant negative impact on C02 emissions in the short-run but reversed in the long-run, tacit support for the Environmental Kuznets Curve (EKC) hypothesis as supported by both the neoclassical and the new growth theories. The study, therefore, recommended policies to improve green economic growth, the nature of technology usage, energy consumption, and institutional fitness to achieve healthy environmental sustainability in BRICS. Article 4, Chapter 6, titled Economic growth and sustainable developments within the BRICS, MINT and G-7 countries: A comparative panel data analysis focused on the effect of economic growth on sustainable developments within the BRICS, MINT and G-7 countries, in an attempt to compare evidence, since differing levels of industrial development might mean different concerns about sustainability issues. The estimates via the autoregressive distributed lag (ARDL) were supported by cross-sectional autoregressive distributed lag (CS-ARDL) and crosssectional distributed lag (CS-DL). The results confirm that economic growth increases the level of sustainable developments in all BRICS countries in the short-run, but constitutes a drag on sustainable development in the BRICS sub-sample 1 (Brazil, India and South Africa) countries in the long-run. Consequently, this study recommended a more radical policy mix to reduce the negative impact of economic growth on the level of sustainable development in Brazil, India, and South Africa. These policies should take the form of focused, sustainable development strategies and energy policies, the creation of a new economy, and improved education. Overall, the validation of the Kuznets hypothesis in the relationship between economic growth and socio-economic sustainability in the BRICS bloc, as attested by the empirical validation of a probable EKC argument, depicted the necessity for a more radical sustainability policy mix by in three vulnerable countries (Brazil, India and South Africa). When compared with the two more advanced countries (China and Russia) for the more desired goal of sustainable economic growth to be realized, the outcomes were different. To the best of our knowledge, this is the first comprehensive study to analyses the effect of economic growth on sustainability to devise possible policy options that would take care of priority needs of individual countries (or subgroup of countries) in aspects of socio-economic, environmental and institutional sustainability in the BRICS bloc. Again, contrary to the practice in the literature, the study corrected for cross-sectional dependence. The study also addressed endogeneity issues in both linear and non-linear frameworks. Our results conform to all robustness checks, including temporal and spatial changes. The novelty of this thesis also rests on the provision of novel crossvalidation of estimation techniques, as well as the construction of socio-economic, institutional fitness, financial development, and sustainable development indices that are robust to small sample bias and cross-sectional dependence issues.
Analysis of the impact of foreign aid on economic growth in COMESA.
(2020) Gondwe, Grace.; Mbonigaba, Josué.
The Common Market for East and Southern Africa (COMESA) was officially established in 1994. Its primary objective was to help its member states attain sustainable economic growth and development through regional integration and trade. In this regard, the region’s specific goals encompassed: (a) comparable and balanced development of human capital, production and market structures in its respective member countries. (b) harmonization of the individual economic and trade policies among its member countries in line with its collective regional growth and development goals. Among the tools for the realisation of these goals, is a coherent and consistent development financing plan for the essential investments across its sectors. Accordingly, focusing on the region’s core objective of economic growth, this study empirically investigated how foreign aid, as one of the region’s vital development financing resource has influenced economic growth in the respective COMESA countries. Contrary to the existing literature, this thesis adopted a comprehensive approach that encompassed aggregate and sectoral implications of aid receipts in the region without undermining the role of the factors affecting its utilization as mostly discussed in the literature. From the political economy perspective, recent debates on Africa’s inclusive and sustainable growth have focused on structural transformation as a critical priority in transforming its development platform. Based on these debates, the thesis focused on two crucial sectors for comprehensive econometric assessments of direct and indirect effects of sectoral aid on growth. For direct effects of aid on growth, the work chose the agricultural sector, which continues to sustainably support the region’s structural transformation process through the provision of at least 50% of the raw materials to the industrial sector. The agricultural sector also supports livelihoods of at least 60% of the region’s population. For indirect effects, the thesis selected economic infrastructure as a critical enabler of effective backward and forward linkages between the agricultural sector and the industrial/ service sectors. This comprehensive assessment was therefore accomplished firstly by assessing the extent to which the received aid volumes in the respective COMESA countries consistently closed their overall and specific sectoral development financing gaps. Trends analysis of aid and economic growth performance showed that foreign aid is the dominant source of foreign capital, accounting for an average of 60 percent of the development financing gaps annually in COMESA countries. Although better growth performances were expected among aid recipients, erratic growth rates below the 7% minimum stipulated in the Sustainable Development Goals are widespread across the countries. Aid volatility and misalignment of iv the aid allocations across (within) sectors and among countries compromise the potency of aid in the region. Incidences of foreign aid receipts over and above the estimated external development financing gaps are partially due to the large share of humanitarian assistance in some countries. However, they also imply a lack of systematic assessment of the region’s development financing needs, particularly in countries whose public investments were fully covered by domestic resources yet these countries received foreign aid. Furthermore, sectoral prioritization in favour of non-growth enhancing consumption, mostly in the social sectors, may be redundant as far as growth is concerned. In this regard, the thesis recommends a joint donor-recipient country financing needs and COMESA-wide capacities assessments for effective targeting to improve growth outcomes of aid. This approach to development financing will be more effective if accompanied by policies that focus on strengthening domestic institutions and increasing domestic resource mobilization. Secondly, contending for comparable impacts of aid across the countries in the region for the attainment of unified regional growth and development goals, Chapter 5 assessed how the received aid affected growth in the respective countries using the Pooled Mean Group (PMG) estimator. The thesis found that although aid had a significant positive impact on growth in the short run, its long-term effect was negative. The results show that the long-term impact of grants on growth is positive and significant, while the net effect of loans on growth was negative and significant. In line with the visible adverse effects of corruption on aid utilization in the short run in most countries, the results show that corruption has a net negative impact on the utilization of loans and grant. Accordingly, the short-run effects of loans and grants varied significantly among the countries in the region, potentially reflecting which component of aid is mostly affected by their respective weak institutions. Overall, the results show thart the potency of total foreign aid is equally compromised by corruption in the long term . Furthermore, Chapter 5 found that domestic savings have a positive effect on growth both in the short and long run. Therefore, the chapter postulates better outcomes from aid if COMESA effectively addresses corruption in all its member countries. This should be complemented with policies and strategies that focus on effectively increasing domestic revenue (savings) to further enhance their growth outcomes complemented with foreign aid. Lastly, rationalisation of the region’s exports to enhance their competitiveness remains imperative if the exports are to productively contribute to its regional growth goals. v Thirdly, Chapter 6 analysed the impact of agricultural foreign aid on agricultural productivity and growth in a Panel Vector Autoregressive (PVAR) framework. The chapter finds a significant unidirectional causality from agricultural growth to foreign aid and thus confirming the theoretical dispositions of the developmental role of foreign aid. However, instead of complementing domestic resources in this regard, the results showed that foreign aid in the sector substitutes government financing, which effectively reduces its effectiveness. A mismatch in government resources and aid allocations to a sub-sector erodes the synergy that should typically exist between donor aid and government expenditure in a sector. This mismatch implies that a policy shift towards Result-Based (Aid on Delivery) approaches in aid disbursements will be critical to eliminating fungible resources. Misalignment of aid allocations with the respective sub-sectoral relative importance in the sectoral development goals was further found to undermine the potency of aid in the sector. Accordingly, the thesis contends for a better understanding of the role various sub-sectors play to the overall growth of the agriculture sector. This understanding will be crucial for equitable resource allocation and enhanced aid effectiveness. Moreover, the higher impact of domestic resources compared to foreign aid calls for policies to increase domestic resource mobilization and a broader focus on reducing aid. Lastly, the thesis assessed the contribution of foreign aid to the region’s infrastructure development in Chapter 7. Using the Blundell-Bond (BB) system Generalised Methods of Moments, the paper found that foreign aid has a net negative effect on infrastructure development mainly because of corruption which increases the cost of its loans. Although the results shows that corruption does not affect net utilization of grants, the regional effect of grants on infrastructure development negative. Notably, grants have been steadily declining since 2009 (Figure 3). Overall, the chapter shows the potential that loans have in turning around the infrastructure deficit in the region, particularly if corruption is effectively addressed in all the COMESA countries. Thus, the chapter concludes that unless COMESA countries effectively addresses corruption, it cannot adequately close its infrastructure gaps and cannot enhance its growth with foreign aid. With the highlighted positive and significant impact of domestic resources on infrastructure development in its core model, the chapter further recommends the exploring of other avenues of revenue for closing the infrastructure gaps. This examination will be beneficial in fast-tracking infrastructure development and enhance economic growth in the region. vi Overall, notwithstanding the comparable short-run positive effects of aid on growth across the countries in the region, the research failed to conclude that foreign aid positively contributes to the region’s long- term sustainable growth and development objective. While it marginally enhances productivity and growth of its core growth sector, foreign aid in the region has failed to bring about the desired changes in the growth-enhancing support sectors (economic infrastructure and social sectors). High levels of corruption in some of its member countries, which potentially lead to unnecessary increases in the overall financial costs of its loans, undermines the potency of foreign aid. Similarly, the substitution effect of aid on domestic resources further compromise the performance of foreign aid in the region. In this regard, “aid on delivery” (result based) approaches remain the best policy option to effectively eliminate fungible resources in all countries in the region. Furthermore, poor alignment of aid to the respective development financing gaps both across (within) sectors and countries is vital in accounting for aid inefficiency in enhancing the region’s growth. On the one hand, there is evidence of the lack of systematic assessment on the part of the region’s development partners (donors) to properly align aid to the region’s development financing gaps as reflected by episodes of aid over and above existing development financing gaps. While the large component of humanitarian aid in some of the countries in the region comprehensively explains this mismatch, it does not provide enough explanation about other countries in the region, including those whose investments were fully covered by domestic resources in the presence of aid receipts. On the other hand, poor sectoral prioritization of the received aid across the countries in favour of non-growth enhancing consumption, mostly in the social sectors, is redundant for the attainment of its growthenhancing objectives. In this regard, a thorough understanding of the region’s development financing needs and capacities to ensure the right targeting and effective utilization of both foreign aid and domestic resources remains imperative. Enhancing domestic resource mobilization will further be beneficial in reducing aid dependency in the region.
Drivers of mergers and acquisitions and firm value growth in emerging markets.
(2019) Okofo-Dartey, Emmanuel.; Kwenda, Farai.
This study investigates drivers of mergers and acquisitions (M&As) and firm value growth in emerging markets. It was targeted at acquirer firms from emerging markets since there is a continuous surge in acquisition transactions both locally and internationally by firms from the emerging markets. These acquirer firms have been using domestic and cross-border M&As as growth strategies to establish their presence and dominance in local and foreign markets. The study was executed with three distinct objectives. First, whether working capital positions of emerging market acquirer firms drive their M&A transactions and influence their decisions regarding the type of mergers they pursue using probit regression analysis. The free cash flow hypothesis was also tested to determine whether free cash flow available to these acquirer firms motivate them to undertake M&A deals. Second, whether managerial share ownership in firms drive M&A transactions by acquirers from the emerging markets and influences the sizes of target firms they acquire during acquisitions, again using a probit regression technique. The study under this objective further investigated the relationship between managerial discretion and the acquirers’ profitability levels. As a third objective, the study explored whether M&As transactions undertaken by emerging market acquirers are value-adding or value-destroying to shareholders of these firms by applying the Generalised Method of Moments (GMM) methodology. The study covered a period of 10 years from 2004 to 2013 for 160 acquirer firms from ten (10) selected emerging market countries. Data were gleaned from the Bloomberg Terminal and DataStream. Results of this study suggest that, working capital positions of acquirer firms from the emerging markets are less likely to motivate them to undertake acquisition deals. However, the study reveals the marginal effect coefficient for the firms’ total assets to be positive and statistically significant at 1%, suggesting that, their total assets rather are more likely to influence them to execute acquisition transactions, all other things being equal. There is no evidence of the firms’ level of financial leverage, returns on assets (ROAs) and Tobin’s Q having the potential to influence these acquirers to pursue M&As. The study further concludes that, the firms’ free cash flows (FCFs) motivate them to execute M&As compared to their working capital positions. Regarding whether the acquirer firms’ working capital positions influence the type of M&As they pursue, the results indicate that, it is less likely to encourage them to undertake either a horizontal or vertical type of merger. Further, our results revealed that, managerial share ownership of emerging market acquirers is also less likely to drive them into acquisition transactions and influence them to pursue smaller-sized targets during M&As deals. Results from the study further suggest that, managerial discretion has a negative relationship on profitability levels of acquirer firms from the emerging market as far as their acquisition pursuits are concerned. Finally, results of the study show that, emerging market acquirers do not experience value growth in terms of profitability and growth opportunities in the first three years after M&As deals. A number of policy prescriptions arising from this thesis are presented to guide managers, practitioners and shareholders of firms in the emerging markets to shape their thoughts on M&As executions. Highlights of these policy prescriptions this study proffers include the following; managers should not ignore the efficient management of working capital. They should institute proper working capital management practices in their companies, in order not to experience liquidity challenges of either excess or shortages as any of them could impact adversely on the efficient running of their business activities particularly in the short-term period. An acquisition or a merger should be seen as a two-edged sword. When finally, firms take a decision to pursue M&As as an investment strategy option, they must fully take into account the issue of resources availability too. The target firm should be evaluated before an acquisition or a merger is performed. After an acquisition or merger, firms should restructure and integrate their resources. Also, for managers to have absolute control over firms and be able to influence investments decisions such as M&As especially in the emerging markets, their ownership percentage should be above the suggested significant level of 20%. Policy makers should also take a second look at their firms’ financial leverage positions and growth in total assets if they desire to improve on their profits levels because results of this study indicate that they have a significant impact on the firm’s ability to engage in M&As. Further, when firms from the emerging markets are planning or considering M&As for immediate value growth, they should recognise that M&A may not provide immediate growth in the first three years after M&A. Rather, the effects of M&A on firms’ value growth may be expected in the long-term period of five years and beyond. However, apart from using M&As for growth purposes, they may be used to create other types of value, such as market power enhancement, risk minimisation through market or product diversification or cost efficiency. Furthermore, since uncertainties exist in M&As, advance preparation is needed before an acquisition or a merger is executed, including a development of planning strategies and improvement of firm governance structure. It is, therefore, important for institutions and government to cooperate to come up with stronger systems to monitor corporate governance practices to bring some sanity to the business community. Lastly, diversifying internationally appears to be an important strategy for reducing risk after a successful merger. It is more likely for investors, all other things being equal, to reduce the levels of risks associated with their investment portfolio if they invest in internationally diversified merged firm.

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