Ease of Doing Business and Economic Growth: A Panel Analysis of Selected Sub-Sahara African Countries

Authors

  • Prof. Silva Opuala-Charles Garden City Premier Business School, Plot 13, Herbert Macauley Street, Old GRA, Port Harcourt, Rivers State, Nigeria
  • Oshilike Ijeoma Victoria 3Garden City Premier Business School, Plot 13, Herbert Macauley Street, Old GRA, Port Harcourt, Rivers State, Nigeria
  • Christian Nkama Garden City Premier Business School, Plot 13, Herbert Macauley Street, Old GRA, Port Harcourt, Rivers State, Nigeria

DOI:

https://doi.org/10.51699/cajitmf.v4i10.637

Keywords:

Ease of Doing Business; SMEs; Sub-Sahara African Countries; Worldwide Indication

Abstract

Entrepreneurship emerges as a catalyst for growth and advancement through production and trade. This work jointly examines the influence of ease of doing business and worldwide governance indicators on economic growth of selected SSA countries from 2010 to 2020. Adopting an empirical approach, the study tries to ascertain this relationship using a random effect panel regression model and Kao co-integration estimation. A balanced panel consisting of Forty one (41) out of forty eight (48) countries were selected for the analysis. Eight (8) variables out of eleven (11) ease of doing business indicators, and three (3) out of six (6) governance indicators were selected for the study. They were chosen based on their appropriateness for the research according to the authors instincts and prevalent challenges bedeviling Sub-Saharan African countries. We identify a positive significant relationship between getting credit and economic growth, while a negative association between political stability and regulatory requirement. The study recommends greater access to finance for businesses, especially small and medium enterprises (SMEs), and capacity building among others, as one of the ways to maximize the dividends of local and international trades across the region. Sub-Saharan governments should establish a robust evaluation and monitoring framework to catalyze the success of policy interventions.

References

1. African Development Bank Group. (2020). African Economic Outlook 2020.
2. African Union. (n.d.). Agenda 2063: The Africa We Want.
3. Aghion, P., Akcigit, U., & Howitt, P. (2019). What Do We Learn from Schumpeterian Growth Theory? (No. w24109). National Bureau of Economic Research.
4. Adepoju, U. K. (2017). Ease of doing business and economic growth. Working Paper, Department of Economics of the University of Ottawa, (December).
5. Aterido, R., Hallward-Driemeier, M., & Pagés, C. (2011). Big Constraints to Small Firms' Growth? Business Environment and Employment Growth across Firms. Economic Development and Cultural Change, 59(3), 609-647.
6. Bajra, U. Q., Halili, Z., & Berisha, N. (2020). Frontier economies and economic growth: Evidence from European and Central Asian Countries. Borsa Istanbul Review, 20(3), 279–291. https://doi.org/10.1016/j.bir.2020.04.002
7. Banwari, V. (2019). Ease of doing Business in India – Road Ahead. International Journal of Management Studies, VI(1(1)), 114. https://doi.org/10.18843/ijms/v6i1(1)/15
8. Bétila, R. R. (2021). The impact of Ease of Doing Business on economic growth: a dynamic panel analysis for African countries. SN Business & Economics, 1(10). https://doi.org/10.1007/s43546-021-00143-9
9. Bhattacharya, M, Paramati, S. R, Ozturk, I, Bhattacharya, S. (2016). The effect of renewable energy consumption on economic growth: evidence from top 38 countries. Applied Energy 162(C)
10. Bonga, W., & Mahuni, K. (2018). Assessing the Impact of Ease of Doing Business and Corruption on Economic Growth for Africa Free Trade Zone (AFTZ) Member States. MPRA Paper, (88932).
11. Bota-avram, Crsistina (2014) “Good governance and doing business: evidence from a cross-country survey.” Transylvanian Review of Administrative Sciences, No. 41, 27-45.
12. Cui, X., Yao, Y., Bian, Y., & Cui, L. (2022). Can better business environments promote trade partners’ economic growth? Applied Economics Letters, 29(6), 540–544. https://doi.org/10.1080/13504851.2021.1875115
13. Dabla-Norris, E., Mottaghi, L., & Suphaphiphat, N. (2013). The Size of the Bureaucracy and Economic Growth. Journal of Public Economics, 97, 220-230.
14. Deininger, K., & Byerlee, D. (2011). Rising Global Interest in Farmland: Can It Yield Sustainable and Equitable Benefits? The World Bank.
15. Djankov, S., La Porta, R., López-de-Silanes, F., & Shleifer, A. (2002). The Regulation of Entry. The Quarterly Journal of Economics, 117(1), 1-37.
16. Djankov, S., McLiesh, C., & Ramalho, R. M. (2006). Regulation and Growth. Available at SSRN: https://ssrn.com/abstract=893321 or http://dx.doi.org/10.2139/ssrn.89332.
17. Doing Business Archive. (n.d.). World Bank. https://archive.doingbusiness.org/en/scores?topic=
18. Garcia, C. M., & Hinayon, D. E. (2018). Components of Ease of Doing Business Inferred from Macroeconomic Performance Indicators. Journal of Educational and Human Research Development, 6, 161–171.
19. Greene, W. H. (2017). "Econometric Analysis." Pearson.
20. Kao, C. (1999). Spurious regression and residual-based tests for cointegration in panel data. Journal of Econometrics, 90(1), 1-44.
21. Kaufmann, D., Kraay, A., & Mastruzzi, M. (2010). The Worldwide Governance Indicators: Methodology and Analytical Issues. Policy Research working paper; no. WPS 5430. http://hdl.handle.net/10986/3913.
22. Khan, A., Hasan, R., & Datt, G. (2019). The Role of the Business Environment in Job Creation. The World Bank Economic Review, 33(3), 695-714.
23. Klapper L., Laeven L., Rajan R. (2004) ‘‘Business Environment and Firm Entry: Evidence from International Data.” National Bureau of Economic Research, Working Paper No. 10380
24. Maingi, M. W. (2018). Economic Integration, Ease of Doing Business, Economic Growth and Foreign Direct Investment in the East African Community. Economic Integration, Ease of Doing Business, Economic Growth and Foreign Direct Investment in the East African Community, 6(4), 1–58.
25. Mauro, P. (1995). Corruption and Growth. The Quarterly Journal of Economics, 110(3), 681-712.
26. Mongay, J. and Filipescu D. (2012). ‘‘Corruption and ease of doing business: a correlation analysis in 172 nations and its implications in international business.” In International Business: New Challenges, New Forms, New Perspectives, 13-26. Palgrave Macmillan, NY: St. Martin’s Press LLC.
27. Pedroni, P. (1999). Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bulletin of Economics and Statistics 61(1).
28. Pedroni, P. (2004). Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Economics Theory, 20(3).
29. Pesaran, M. H. (2007). A Simple Panel Unit Root Test in The Presence of Cross-Section Dependence. Journal of Applied Economics, 22(2) 265e312.
30. Wikipedia contributors. (2023, January 16). Ease of doing business index. In Wikipedia, The Free Encyclopedia.
31. Wooldridge, J. M. (2019). "Introductory Econometrics: A Modern Approach." Cengage Learning.
32. World Bank Enterprise Surveys (EBES) (2023) http://www.enterprisesurveys.org
33. World Bank (2017). Doing business 2017: Equal opportunity for all. -World Bank
34. World Bank. (2019). Doing Business 2019: Training for Reform. World Bank Group.
35. World Bank. (2020). Doing Business 2020: Comparing Business Regulation in 190 Economies. World Bank Group.
36. International Monetary Fund. (2021). Regional Economic Outlook: Sub-Saharan Africa. Retrieved from https://www.imf.org/en/Publications/REO?year=2021&sortby=Date&series=Sub-Saharan%20Africa.

Downloads

Published

2023-10-10

How to Cite

Prof. Silva Opuala-Charles, Oshilike Ijeoma Victoria, & Christian Nkama. (2023). Ease of Doing Business and Economic Growth: A Panel Analysis of Selected Sub-Sahara African Countries. Central Asian Journal of Innovations on Tourism Management and Finance, 4(10), 141–158. https://doi.org/10.51699/cajitmf.v4i10.637

Issue

Vol. 4 No. 10 (2023): October 2023

Section

Articles

License

In submitting the manuscript to the Central Asian Journal of Innovations on Tourism Management and Finance, the authors certify that:

  • They are authorized by their co-authors to enter into these arrangements.
  • The work described has not been formally published before, except in the form of an abstract or as part of a published lecture, review, thesis, or overlay journal.
  • That it is not under consideration for publication elsewhere,
  • The publication has been approved by the author(s) and by responsible authorities – tacitly or explicitly – of the institutes where the work has been carried out.
  • They secure the right to reproduce any material that has already been published or copyrighted elsewhere.
  • They agree to the following license and copyright agreement.

License and Copyright Agreement

Authors who publish with Central Asian Journal of Innovations on Tourism Management and Finance agree to the following terms:

  1. Authors retain copyright and grant the Central Asian Journal of Innovations on Tourism Management and Finance right of first publication with the work simultaneously licensed under Creative Commons Attribution License (CC BY 4.0) that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  2. Authors can enter into separate, additional contractual arrangements for the non-exclusive distribution of the Central Asian Journal of Innovations on Tourism Management and Finance published version of the work (e.g., post it to an institutional repository or edit it in a book), with an acknowledgment of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.