Economic Implications of Business Dynamics for KE-Associated Economic Growth and Inclusive Development in African Countries

Simplice Asongu, Voxi Heinrich Amavilah and Antonio Andres

No 14/023, Working Papers of the African Governance and Development Institute. from African Governance and Development Institute.

Abstract: This paper develops an empirically-relevant framework (a) to examine whether or not the African business environment hinders or promotes the knowledge economy (KE), (b) to determine how the KE which emerges from such an environment affects economic growth, and (c) how growth in turn relates to the ‘inclusive development’ of 53 African countries during the 1996-2010 time period. The framework provides a modest guide to policymaking about, and further research into, such relationships. We implement the framework by building a three-stage model and rationalizing it as five interrelated hypotheses. To allow greater concentration on the issues that are themselves already complex, our model is very simple, but clear. For example, we make neither an attempt to evaluate causality nor to test for it, even though we suspect the links to be multi-directional – opportunity costs are everywhere. Instead we focus on fundamental relationships between the dynamics of starting business and doing business as expressed in the state of KE, and through it to the inclusive development via the economic growth of those countries. Estimation results indicate that the dynamics of starting and doing business explain strongly a large part of variations in KE. The link between KE and economic growth exists, but it is weak, and we provide plausible reasons for such a result. Despite the weak association between KE and economic growth, KE-influenced growth plays a very important role in inclusive development. In fact, growth of this kind has stronger effects on inclusive development and by implication on poverty reduction, than some of conventional controls in this study such as FDI, foreign aid, and even private investment. There is clearly room for further research to improve the results, but just as clearly practical policy is best served by not neglecting the relationships examined in this paper.

Keywords: Business Dynamics; Knowledge Economy; Development; Africa (search for similar items in EconPapers)
JEL-codes: L59 O10 O20 O30 O55 (search for similar items in EconPapers)
Pages: 45
Date: 2014-12
New Economics Papers: this item is included in nep-afr, nep-gro and nep-knm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.afridev.org/RePEc/agd/agd-wpaper/Econom ... frican-Countries.pdf Revised version, 2014 (application/pdf)

Related works:
Working Paper: Economic Implications of Business Dynamics for KE-Associated Economic Growth and Inclusive Development in African Countries (2014)
Working Paper: Economic Implications of Business Dynamics for KE-Associated Economic Growth and Inclusive Development in African Countries (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:agd:wpaper:14/023

Access Statistics for this paper

More papers in Working Papers of the African Governance and Development Institute. from African Governance and Development Institute. Contact information at EDIRC.
Bibliographic data for series maintained by Asongu Simplice ().