Thesis (MDF (Development Finance))--University of Stellenbosch, 2007. / ENGLISH ABSTRACT: It is a fact that development aid represents the single most important source of external finance for most developing countries. This study sought to answer an important question relating to whether aid has a positive impact on economic growth or not. There is much literature on the subject and the views are quite diverse. Using the World Development Indicators (WDI) data, a cross-section regression analysis was performed over a period of 16 years and existing literature on the subject was re-examined. Of importance, this study tries to understand what the determinants or triggers of economic growth are, especially in developing economies. The results show that, although no significant relationship could be found between economic growth and development aid, there is strong evidence that there is a significant positive relationship between economic growth and the important triggers of economic growth used in the study, namely exports and investments. These are important components for the growth of any economy. The implicit conclusion is that since these two components are being impacted positively by aid, it follows then that the link between economic growth and aid can be considered to be a positive one. These findings go against the critics of development aid who maintain that aid that is being pumped into developing economies, especially the African continent, is actually just going into a big black hole and could be used more effectively somewhere else. This study proves that this is not the case and donor countries need to intensify their efforts of providing aid to poor countries because they need it and it is actually making a difference. AFRIKAANSE OPSOMMING: Dit is ‘n algemeen aanvaarde feit dat ontwikkelingsteun die enkel belangrikste bron van eksterne finansiering is vir die meeste ontwikkelende lande. Hierdie studie poog om antwoorde te vind vir die belangrike vraag of steun ‘n positiewe impak op ekonomiese groei het of nie. Daar is volop literatuur oor die onderwerp beskikbaar en die opvattings is uiters uiteenlopend. Deur die World Development Indicators data te gebruik, is ‘n deursnit regressie analise gedoen oor ‘n periode van 16 jaar en bestaande literatuur oor die onderwerp is weer ondersoek. Die belangrikste oogmerk van die studie is om te probeer verstaan wat die bepalers of snellers van ekonomiese groei is, veral in ontwikkelende ekonomië. Die uitslae toon dat, alhoewel daar geen beduidende verhouding gevind kon word tussen ekonomiese groei en ontwikkelingsteun nie, daar wel sterk bewyse is vir ‘n beduidende positiewe verhouding tussen ekonomiese groei en die belangrike snellers van ekonomiese groei soos gebruik in die studie, naamlik uitvoere en beleggings. Hierdie is belangrike komponente vir die groei van enige ekonomie. Die implisiete afleiding is dus dat, aangesien hierdie twee komponente positief beïnvloed word deur ontwikkelingsteun, dit volg dat die skakel tussen ekonomiese groei en steun ook as ‘n positiewe een beskou kan word. Hierdie bevindings is lynreg in teenstelling met die kritici van ontwikkelingsteun wat handhaaf dat steun wat aan ontwikkelende lande, veral in Afrika, gegee word, eintlik net in ‘n groot swart gat verdwyn en meer effektief elders aangewend kan word. Hierdie studie bewys dat dit nie die geval is nie en dat skenker lande eerder hulle pogings om steun aan arm lande te bied moet verskerp omdat hulle dit nodig het en omdat dit regtig ‘n verskil maak.

Research report submitted towards the award of Master of Arts Department of International Relations University of the Witwatersrand, Johannesburg, 2017 / This dissertation investigates FOCAC and TICAD contributions towards development on the African continent. The research explains the architecture of the latter conference diplomacy institutions. Japan and China are argued to be competing through evidence from the different fields that give foreign assistance to. Jospeh Nye’s soft power as theoretical framework will guide the research’s understanding of Chinese and Japanese engagements in African development. The research found that FOCAC outweighed TICAD in financial contributions however TICAD through JICA had more grassroots level contributions. China was seen to be focused on bilateral relations aimed at supporting state-led companies in big infrastructure development. Japan is argued to be more engaging with external actors while supporting African development and in addition, showed more support for the African Union’s policies. China has ‘win-win’ and Japan has ‘partnership’ both in line with African Pan -African ideals. Africans are lacking policy and guidelines in dealing with foreign partners and argued to organise themselves and respond to Japanese and Chinese interests collectively. Agenda 2063 that mentions external partners as a source of funding for development is not enough to use a policy. African development policies are seen to have failed previously due to unfulfilled promises from external partners. The research argues that African people should take FOCAC and TICAD as learning spaces and take a leadership role in their own development. / XL2018

This study empirically examines the impact of monetary policy on economic growth in three East African countries (Uganda, Kenya and Tanzania). The role of monetary policy in promoting economic growth remains empirically an open research question, as both the empirical and theoretical underpinnings are not universal, and the results remain varying, inconsistent, and inconclusive. This study may be the first of its kind to examine in detail the impact of monetary policy on economic growth in Uganda, Kenya and Tanzania – using the autoregressive distributed lag (ARDL) bounds-testing approach. This study used two proxies of monetary policy, namely, money supply and interest rate, to examine this linkage. The results were found to differ from country to country and over time. The Uganda empirical results reveal that money supply has a positive impact on economic growth, both in the short run and in the long run. However, interest rate was found to have a positive impact on economic growth only in the short run. In the long run, interest rate has no significant impact on economic growth. In Kenya, both short-run and long-run empirical results support monetary policy neutrality, implying that monetary policy has no effect on economic growth – both in the short run and in the long run. The results from Tanzania also reveal no impact of monetary policy on economic growth in the long run – irrespective of the proxy used to measure monetary policy. However, the short-run results only reveal no impact of monetary policy on economic growth only when the interest rate is used as a proxy for monetary policy. When money supply is used to measure monetary policy, a negative relationship between monetary policy and economic growth is found to dominate. Overall, the study finds that monetary policy is only relevant for economic growth in Uganda and only when money supply is used as monetary policy variable. Therefore this study recommends a money supply based monetary policy framework for Uganda. The study findings also suggest that monetary policy may not be a panacea for economic growth in Kenya and Tanzania. / Economics / M. Com. (Economics)

Financial systems (i.e. banking systems and stock markets) can influence economic growth by performing the five key financial functions, namely: mobilising savings, allocating capital, easing of exchange, monitoring and exerting corporate governance, as well as ameliorating risk. The level of development of the financial system is a key determinant of how effectively and efficiently these functions are performed. This study examines the short-run and long-run relationships between financial system development and economic growth for a panel of seven African countries (namely: Egypt, Ivory Coast, Kenya, Morocco, Nigeria, South Africa and Tunisia) covering the period 1988 to 2008. While numerous empirical studies have researched this topic, none of the previous African empirical literature have investigated thjs by using three groups of financial development measures (i.e. overall financial development, banking system development and stock market development measures) as well as employing panel cointegration analyses. The investigation of the long-run finance-growth relationship is conducted using two methods; the Pedroni panel cointegration approach and the Kao panel cointegration technique. The Pedroni panel cointegracion approach is more often applied in empirical research as it has less restrictive deterministic trend assumptions, while the Kao panel cointegration technique is employed in this study for comparison purposes. Furthermore, the short-run linkages bet\veen financial development and economic growth are analysed using the Holtz-Eakin d of (1989) panel Granger causality test. The results of the Pedroni cointegration tests show that there are long-run relationships between overall financial development (measured by LOFD and OFD2) and economic growth, banking system development (measured by LPSC) and economic growth, as well as stock marker development (measured by LMCP and LVLT) and economic growth. In contrast, the Kao test fails to find any cointegration between finance and growth. However, on the balance, findings largely support a conclusion of cointegration between financial development and economic growth since the Pedroni approach is more appropriate for examining cointegration in heterogeneous panels. Estimates of these long-run cointegrating relationships show that all five financial development measures have the expected positive linkages with growth. However, only four of the five financial development measures were found to have significant long-run linkages with growth, as the relationship between LOFD and growth was not found to be significant in the long-run. The panel Granger causality results show that economic growth Granger causes banking system development in the short-run (i.e. there is demand-following finance), irrespective of the measure of banking development used. While there is bi-directional, reciprocal causality between economic growth and both of the measures of overall financial development and one measure of srock market development (i.e. LVLT). Thus, pulicy makers should focus on formulating policy which promotes faster paced economic growth so as to stimulate financial development, while at the same time encourage policy that promotes the balanced expansion of the banking systems and srock markets in ordet to augment economic growth.

The purpose of the study has been to assess the question of sustainability of economic growth and human development, particularly using sub-Saharan Africa in context. Sub-Saharan Africa is an interesting case study because, on the one hand, it has been mired in poverty and remains the least developed region in the world, and on the other, it has experienced a revival in economic growth since the mid-1990s. Economists tend to use the term economic development and economic growth interchangeably. However, questions have been raised about whether Africa’s latest growth episode is indeed ‘development’. Although there are many issues at stake, the key question, and the focus of this thesis, is whether sub-Saharan Africa’s revival is sustainable. The paper sets out the debate between the ‘World Bank view’ and the ‘alternative view’. The main debate lies around how genuine development should be achieved. Firstly, the ‘World Bank view’ claims that economic growth is necessary and sufficient condition to achieve development. Economic growth will be generated by ‘orthodox’ policies and this growth will automatically trickle-down and stimulate development. Secondly, the ‘alternative view’ argues that economic growth is necessary but it is not sufficient to stimulate sustainable development. Economic growth without ‘qualitative’ change is not ‘sustainable’. Indeed, human development shortfalls (as well as other, social, political and structural problems), if not addressed through appropriate policy interventions, can undermine economic growth. The ‘alternative view’ appears to be strongly supported by evidence from other developing regions such as Latin America and East Asia. The empirical study conducted in this thesis reinforces doubts about ‘sustainability’. Even though there are signs of convergence in some indicators; this is not the case for all indicators. More importantly the gap between sub-Saharan Africa and other developing regions remains very wide. Sub-Saharan Africa’s development path remains uncertain. The intention in this study is not to be conclusive that sub-Saharan Africa cannot achieve sustainable development. Rather the study attempts to identify potential hindrances to sub-Saharan Africa’s development and to provide a solid foundation for further research in the same direction.

The informal sector has emerged as an important sector in Africa where many countries are striving to attain Sustainable Development Goal (SDG) number 8 on decent work and economic growth. The presence of a growing number of individuals and firms in the informal sector in Africa and the need to attain SDG 8 through formalisation have reignited the debate on informality and its possible causes and effects on the growth trajectory of African economies. Empirical questions on the determinants of informality are still not adequately answered. One question which continues to generate a lot of debate and contrasting results is the relationship between the informal sector and corruption. Both informality and corruption have emerged as ‘twin challenges’ in Africa, with a far reaching impact on economic development. The relationship between the informal sector and corruption has been an inconclusive and a polemical issue in both academic and developmental discourse. From a theoretical perspective, the two can be substitutes or complements, but the exact nature of the relationship is not clear. The main objective of this study is to empirically investigate the relationship between the informal sector, corruption and economic development in Africa, over the period 2005 to 2015. The objective of the study was answered through two ways: theoretical and empirical methodology. In the theoretical methodology, a classical approach was applied. The classical theory suggests that in the presence of a market for corruption, corruption control can reduce the size of the informal sector through reducing the supply of corruption, thereby raising the price of corruption. The negative relationship between corruption control and the size of the informal sector is supported by the described empirical data for Africa. The results from descriptive statistics, in particular the scatter plots, demonstrate that control of corruption, government effectiveness and economic development as measured by the Human Development Index (HDI) are negatively associated with the size of the informal sector. The negative association between the control of corruption and the size of the informal sector entails that corruption increases the size of the informal sector. With regards to the empirical solution, the total population of 54 African countries was considered for the study. However, a panel of 46 countries was analyzed as the other eight countries, although considered together with the rest, were scientifically isolated from the panel due to data challenges. Robustness checks were carried out to check if estimates are not sensitive to sample size or region. Further, for purposes of this study, the sample was also divided into Southern and Eastern Africa, and Northern and Western Africa. Panel data was applied in order to account for both time and country-specific heterogeneity. The use of panel data allows one to study variability through comparability of the level of informality in countries such as Zimbabwe where the economy has remained largely informalised. Four panel estimators, namely, the Pooled Effects, Fixed Effects or Within Effects, Random Effects or GLS, and Dynamic Panel Model (Arrelano-Bond), were applied. Model specification tests identified the Fixed Effect Model as the most appropriate model. Hence, the discussed results are largely from the Fixed Effects Model. On measurement of informality, the study relied on the shadow economy estimates constructed by Medina and Schneider (2018) for 158 countries from 1991 to 2015. On corruption, the study used the Control of Corruption Index (COCO) published by the World Bank, in the Governance Index Report. Unlike previous studies which used GDP per capita only as a proxy for economic development, this study went a step further and used Human Development Index (𝐻𝐷𝐼) as a proxy for economic development. Profit tax as a percentage of GDP was also tested as a potential determinant of informality. The endogeneity of the corruption variable was corrected using an instrumental variable. The findings show that an improvement in the control of corruption or government effectiveness reduces the level of informality in Africa while, an increasing informal sector is a breeding ground for corruption. The two variables are complements or jointly determined. Countries with large underground economies possess high levels of corruption, and countries with high levels of corruption are associated with large underground economies. The complementarity of corruption and the size of underground economy implies that policies that target one of the two will also help in tackling the other. In addition, the results show that economic development reduces the magnitude of informality, while a larger informal sector today implies a bigger informal sector in the future. One of the findings of this study is that previous studies which applied GDP per capita as a measure of economic development largely underestimated the impact of economic development on the size of the informal sector. The findings of the study show that the negative association between the control of corruption and the size of the informal sector holds for both the Northern and Southern regions of Africa. The impact is however bigger in the Northern Region, as a marginal improvement in corruption control has a bigger impact in reducing the size of the informal sector compared to the Southern Region. The results from the study also show that the level of informality in a country has a memory. A bigger informal sector today is likely to propel the level of the informal sector in the future. The findings show that a growth of the informal sector by one percentage point today will increase the informal sector by about 0.185 percentage points in the following year. The results from time dummies also indicate that the size of the informal sector in Africa started to grow significantly during the financial crisis period in 2009. The main implication of these findings is that African countries can target one of the two in order to reduce both the size of the underground economy and corruption. The other implication is that a policy that targets curing one of the problems will have positive external effects in curing the other unintended problem. Furthermore, the findings imply that African countries with large underground economies may continue to experience growing informal economies due to lack of regulatory capacity and weak enforcement. Solving the two problems is a double hurdle for African countries. / Economics / D. Com. (Economics)

The study investigated the impact of remittances on financial development in Africa using the dynamic generalised methods of moments (GMM) and other panel data analysis methods with data from 2003 to 2015. Using the same econometric estimation methods, the study also explored the influence of the complementarity between remittances and economic growth on financial development in Africa. Literature on the relationship between remittances and financial development is mixed, inconclusive and indecisive. The desire to contribute towards literature on the influence of remittances on financial development in the African context prompted this study. In Africa, personal remittances had an insignificant positive impact on financial development across all the econometric estimation approaches in all the four models, in line with some empirical studies on the subject matter. African countries are urged therefore to avoid wasting their time developing and implementing remittances, foreign aid and human capital development enhancement policies as a way of spearheading financial development. Using both broad money (as % of GDP) and domestic private credit ratio as measures of financial development, the interaction between remittances and economic growth was found to have a non-significant negative effect on financial development in Africa. The policy implication is that Africa needs to avoid over relying on economic growth as a channel through which financial development can happen / Die studie het die impak van betalings op finansiële ontwikkeling in Afrika ondersoek – deur middel van die dinamiese veralgemeende momentemetode (GMM) en ander metodes van paneeldata-ontleding, met data van 2003 tot 2015. Dieselfde ekonometriese beramingsmetodes is ook ingespan om die invloed van die komplementariteite tussen betalings en ekonomiese groei op finansiële ontwikkeling in Afrika te ondersoek. Die literatuur oor die verwantskap tussen betalings en finansiële ontwikkeling is gemeng, onoortuigend en vaag. Die begeerte om tot die literatuur oor die invloed van betalings op finansiële ontwikkeling in die Afrika-konteks by te dra, het tot hierdie studie aanleiding gegee. In Afrika het persoonlike betalings ʼn onbeduidende positiewe impak op finansiële ontwikkeling in al die benaderings tot ekonometriese beraming in al vier modelle gehad, wat strook met sommige empiriese studies oor die onderwerp. Afrika-lande word dus gemaan om nie hul tyd te mors met die ontwikkeling en implementering van betalings en buitelandse hulp en beleide om mensekapitaalontwikkeling te verbeter as ʼn manier om finansiële ontwikkeling te lei nie. Daar is bevind dat sowel breë geldvoorraad (as ʼn persentasie van BBP) en die binnelandse private kredietverhouding as maatstawwe van finansiële ontwikkeling, die wisselwerking tussen betalings, en ekonomiese groei ʼn nie-beduidende negatiewe uitwerking op finansiële ontwikkeling in Afrika het. Die beleidsimplikasie is dat Afrika moet waak teen oorafhanklikheid van ekonomiese groei as ʼn kanaal waardeur finansiële ontwikkeling kan plaasvind. / Ucwaningo beluphenya umthelela wezimali ezibhadalwayo mayelana nokuthuthukiswa komkhakha wezezimali e-Afrika ngokusebenzisa izindlela ezifanayo zezikhathi (GMM) kanye nezinye izindlela zokuhlaziywa idatha yephaneli ngokusebenzisa idatha yonyaka ka 2003 ukufikela ku 2015. Ngokusebenzisa izindlela ezifanayo zohlelo lokulinganisa isimo somnotho (econometric estimation), ucwaningo futhi luye lwahlola umthelela wousebenzisana okuphakathi kwezimali ezibhadalwayo kanye nokuhluma komnotho mayelana nokuthuthukiswa ngezimali e-Afrika. Umbhalo wobuciko mayelana nobudlelwano phakathi kwezimali ezibhadalwayo kanye nokuthuthukiswa kwezinhlaka zezimali uxutshwe ndawonye, awunaso isiphetho futhi awukwazi ukuthatha izinqumo. Isidingo sokufaka igalelo embhalweni wobuciko mayelana nomthelela wezimali ezibhadalwayo kwihlelo lokuthuthukiswa kwezimali ngaphansi kwesizinda sase-Afrika, ykho okuphembelele ukuthi kube nalolu cwaningo. E-Afrika, izimali ezibhadalwa abantu ziye zaba nomthelela omuhle kwintuthuko yezimali kuzo zonke izindlela zokulinganisa izinga lentuthuko yezomnotho kuwo wonke amamodeli amane, ngokuhambisana nezinye izifundo zocwaningo oluphathekayo lwalesi sifundo. Ngalokho-ke amazwe ase-Afrika ayanxenxwa ukuthi agweme ukumosha isikhathi sawo athuthukisana futhi asebenzisa uhlelo lokuthumela izimali futhi agweme ukuqinisa imigomo yoncedo oluvela emazweni angaphandle kanye nokuthuthukisa abantu ngokwamakhono omsebenzi, njengento yokuhlahla indlela yohlelo lokuthuthukiswa kwezimali. Ukusethenziswa kokubili imali ebanzi (njengephesenti le-GDP) kanye njengesilinganiso sesikweletu, phecelezi-domestic private credit ratio sisebenza njengesilinganiso sezinga lokutthuthuka ngokwezimali, ukusebenzisana phakathi kwezimali ezibhadalwayo kanye nokuhluma komnotho kutholakele ukuthi kube nomthelela ongabalulekile omubi phezu kwezinga lentuthuko yezimali e-Afrika. Ngokomgomo lokhu kuchaza ukuthi i-Afrika idinga ukuthi igweme ukwencika kakhulu ukusebenzisa uhlelo lokuthuthukiswa komnotho njengomgudu lapho kungathuthukiswa komnotho. / Financial Accounting / M. Com. (Business Management)

The impetus for regional integration draws its rationale from the standard international trade theory, which states that free trade is beneficial to all. Free trade among two or more countries or preferential trade will improve the welfare of the member countries as long as the arrangement leads to a net trade creation in the Vinerian sense. The history of regional economic integration in Southern Africa (SADC) reveals that it has not yet achieved the economic benefits that are attributable to developing regions, namely: higher levels of welfare exemplified by low poverty levels, economic development and industrialisation. Regional economic integration in Southern Africa is constrained by high tariff and non-tariff barriers, archaic infrastructures and multiple memberships among different regional economic communities. A SADC-wide customs union can be successful, provided that countries are allowed to join, when their economies have adjusted and the South African Customs Union (SACU) is used as a nucleus. / Economics / M. A. (Economics)

This dissertation examines the causal relationship between inward foreign direct investment (FDI) and economic growth (GDP) in SADC countries. The study investigates, within a panel data context, whether causation is short-term, long-term or both; and explores whether the causal relationship between the two variables differs according to income level. The study covered a panel of 15 SADC countries over the period 1980-2012. In order to assess whether the causal relationship between FDI inflows and economic growth is dependent on the level of income, the study divided the SADC countries into two groups, namely, the low-income and the middleincome countries. The study used the recently developed panel data analysis methods to examine this causal relationship. It adopted a three stage approach, which consists of panel unit root, panel cointegration and Granger causality to examine the dynamic causal relationship between the two variables. Panel unit root results show that both variables in the two SADC country groups were integrated of order one. Panel cointegration tests showed that the variables for low-income country group were not cointegrated, while the variables for the middle-income countries were cointegrated. Since the low-income country group panels were not cointegrated, Grangercausality tests were conducted within a VAR framework, while causality tests for the middleincome country group were conducted within an ECM framework. Panel Granger causality results for the low-income countries showed no evidence of causality in either direction. However, for the middle-income countries’ panel, there was evidence of a unidirectional causal flow from GDP to FDI in both the long- and short- run. The study concludes that the FDI-led growth hypothesis does not apply to SADC countries. The results imply that the recent high economic growth rates recorded in the SADC region, especially middle-income countries, have been attracting FDI. In other words, it is economic growth that drives FDI inflows into the SADC region, and not vice versa. These findings have profound policy implications for the SADC region at large and individual countries. / Economics / MCOM (Economics)

This dissertation examines the causal relationship between inward foreign direct investment (FDI) and economic growth (GDP) in SADC countries. The study investigates, within a panel data context, whether causation is short-term, long-term or both; and explores whether the causal relationship between the two variables differs according to income level. The study covered a panel of 15 SADC countries over the period 1980-2012. In order to assess whether the causal relationship between FDI inflows and economic growth is dependent on the level of income, the study divided the SADC countries into two groups, namely, the low-income and the middleincome countries. The study used the recently developed panel data analysis methods to examine this causal relationship. It adopted a three stage approach, which consists of panel unit root, panel cointegration and Granger causality to examine the dynamic causal relationship between the two variables. Panel unit root results show that both variables in the two SADC country groups were integrated of order one. Panel cointegration tests showed that the variables for low-income country group were not cointegrated, while the variables for the middle-income countries were cointegrated. Since the low-income country group panels were not cointegrated, Grangercausality tests were conducted within a VAR framework, while causality tests for the middleincome country group were conducted within an ECM framework. Panel Granger causality results for the low-income countries showed no evidence of causality in either direction. However, for the middle-income countries’ panel, there was evidence of a unidirectional causal flow from GDP to FDI in both the long- and short- run. The study concludes that the FDI-led growth hypothesis does not apply to SADC countries. The results imply that the recent high economic growth rates recorded in the SADC region, especially middle-income countries, have been attracting FDI. In other words, it is economic growth that drives FDI inflows into the SADC region, and not vice versa. These findings have profound policy implications for the SADC region at large and individual countries. / Economics / M. Com. (Economics)