Formal institutions and the development of entrepreneurial activity – the contingent role of corruption in emerging economies

© 2020, Emerald Publishing Limited. Purpose: The paper aims to analyse the interplay between formal and informal institutions' and their impact on entrepreneurship rates in emerging economies. Design/methodology/approach: This study expands previous research in examining the moderating effect of control of corruption on the relationship between formal institutions and the development of the entrepreneurial activity. The study utilizes longitudinal analyses of a dataset from 41 emerging economies over 11 years (2006–2016). Findings: Findings provided robust support for the study's hypotheses. The results suggested lower levels of corruption positively moderate the effects of a country's number of procedures and education and training on the rates of entrepreneurial activity, while negatively moderating the effects of firm-level technology absorption on the rates of entrepreneurial activity. Research limitations/implications: The study has considered only one particular aspect of high-growth entrepreneurship, which is newly registered firms with limited liability. Although newly registered firms are recognized as one of the critical drivers of entrepreneurial activity. Future research should seek to examine other aspects of growth-oriented entrepreneurship such as activities involving a high level of innovation, corporate entrepreneurship or technology developments. Practical implications: This study advanced the existing theories in the field of entrepreneurship and institutional economics as it merged the two theories as a driving framework in the design of the study in the context of emerging economies. Social implications: The study tested a theoretical model by expanding the number of emerging economies in the study and found comparable findings that explain factors that may influence the likelihood of individuals entering entrepreneurship. Originality/value: This article adds to the current literature as it highlights the importance of the interplay of formal and informal institutions in determining their impact on entrepreneurship rates in emerging economies. This is of particular importance to policy-makers, and the business world as the empirical results of this study show the benefits of control of corruption in boosting entrepreneurial rates in these economies, which strive for economic diversification in their developmental endeavours

The Real Exchange Rate and Growth in Zimbabwe: Does the Currency Regime Matter?

Zimbabwe faces growth and external competitiveness challenges, as indicated by its low trend growth and investment, declining share in the world exports, high current account deficits, and external debt. The stock-flow approach to the equilibrium exchange rate reveals that the real exchange rate experienced periods of sizeable overvaluation, both prior to the 2008 economic collapse and under the current multicurrency regime. While overvaluation hampers GDP growth, as well as growth and employment in export sectors, we have not found that undervaluation would raise it. Replacing the multicurrency regime anchored in the US$ by the South African rand as the sole transaction currency would help reduce overvaluation and stimulate exports and growth. Under any currency regime, Zimbabwe needs to adhere to sound macroeconomic policies, avoid overspending on public wages, and create environment conducive for investment.http://deepblue.lib.umich.edu/bitstream/2027.42/132981/1/wp1081.pd

Taxation and political stability

The present study is, in particular, an attempt to test the relationship between tax level and political stability by using some economic control variables and to see the relationship among government effectiveness, corruption, and GDP. For the purpose, we used the GMM (1991) and GMM system (1998), using a country-level panel data from 112 countries for the period 1997 to 2010. The main results show that political stability is not the key for the tax policy, under the control of political regime durability the taxes as percent in GDP having consistent sinusoidal tendency, by cubic type

African Jobless Growth Morphology: Vulnerabilities and Policy Responses

As by product of economic growth, jobs are indeed transformational. In other words, efficiency increases as workers get better at what they do (as more productive jobs appear and less productive one disappear). In fact societies flourish as jobs bring together people from different ethnic and social backgrounds while providing alternatives to conflict. Unfortunately, in many African countries, unemployment rates are low and growth is seldom jobless. Regrettably, most of the poor work long hours and cannot make ends meet while the violation of basic human rights is not uncommon. Again, youth unemployment and unmet job expectations are alarming. Consequently, this paper provides a framework that cuts across sectors and shows that the best policy responses vary across African countries (depending on their levels of development, endowments, demography and institutions). Thus, at all stages of development, forcing economic production to spread evenly across areas is both elusive and expensive. Policy makers should therefore identify and execute strategies that balance development outcomes across areas by means of domestic integration instruments. However, in places where integration is hardest, the policy response should be comprehensively total: institutions that unite, infrastructure that connects, interventions that target, incentives that motivate as well as information and communication technologies that enables or drives