Examining the Roles of Institutional Quality and Financial Openness in Enhancing Economic Performance: Evidence from BRICS Countries

Purpose: The aim is to examine the roles of institutional quality and financial openness on the economic performance of BRICS, using annual series that covered the period from 1996 to 2020. Methods: Principal component analysis (PCA) was used to select the institutional quality variables, while analysis of the study was conducted under the panel data random effect model. Findings indicate that FDI inflows and capital account openness positively impacted on GDP per capita significantly; however the impact of FDI outflows on GDP per capita, though positive, was not significant. Moreover, control of corruption and government effectiveness both had positive and significant impact on GDP per capita, while trade openness impacted GDP per capita negatively, though the result was not significant. Findings: The outcome of the study reveals that the economy of the BRICS improved by removing restrictions on capital controls which retard capital inflows, but liberalization of trade had adverse effect on growth in the bloc. Equally revealed in the study is that effective government which reduces corrupt tendencies lead to improved economic performance. The study therefore recommends the removal of all bottlenecks that hinder FDI inflows and the building of strong institutions in BRICS. Practical Implications: With respect to the institutional variables employed in the study, findings revealed that when governance is effective, it encourages improvement in the economy. Effectiveness in governance encourages reduction in corruption which is the bane of underdevelopment in many developing countries. Originality/Value: The panel random effect results showed that of the three financial openness indicators employed,  FDI inflows and capital account openness significantly impacted on GDP per capita positively, while the impact of FDI outflows was positive but negligible

IMPACT OF AFRICAN FREE TRADE POLICY (AGREEMENT) ON THE SOCIO-ECONOMIC DEVELOPMENT OF NIGERIA

The signing of the agreement that established the African Continental Free Trade Area (AfCFTA) in the year 2019 is believed to be an African-based growth strategy that is self-reliant and is expected to be the world’s largest free trade area after the World Trade Organization (WTO). The agreement is an attestation to the fact that African countries cannot continue to rely solely on the global trading system and global economy of the world economic powers, probably because they are increasingly becoming unpredictable. However, there is an assumption that the aggregate consumer and business spending on the continent could rise if AfCFTA is implemented successfully. This assumption therefore calls for a research like this to evaluate the likely economic impacts of the free trade agreement on different African countries particularly Nigeria which is the giant of Africa and the focus of this study. To achieve the objectives of the study, descriptive statistical approach was utilized to examine how the AfCFTA could contribute particularly on poverty reduction and Nigeria has been struggling for many decades to reduce poverty. These variables were considered: household income, illiteracy level, unemployment level and access to health care. The results of the analyses revealed that the AfCFTA could be slightly beneficial to Nigeria as it would improve the efficiency of the factors of production and product markets thereby enhancing household income generation, reducing the level of illiteracy, unemployment and increasing access to good health, efficient resource allocation and improved industry competitiveness which was expected to help Nigeria record significant reduction in poverty level and increase in economic development. In the light of these findings, the study recommends that government should then design proactive strategies that would reap the full benefits of AfCFTA such as engaging the private sector in identifying receptive and risk surrounding their sectors and paying more attention to the development of the service sector etc. The study has potential limitations such as unavailability of recent data. To tackle this limitation, the study adopted the 2019 survey data on pillars of measuring human development index by World Bank to address the quality of the findings, and research question. JEL: F10, H13, O10 Article visualizations

Does Terms of Trade Matter for Economic Growth? A Focus on Natural Resource-Rich Sub-Saharan African Countries

The contention that deteriorating terms of trade exists in countries that rely heavily on the exploitation and export of natural resources motivated us in this study. We therefore sought to investigate the impact of terms of trade on economic growth in natural resource-rich sub-Saharan African countries. We carried out the study using annual series that span a period of 1990-2019 under the framework of panel Random and Fixed effects. Our findings indicate that a long run relationship exists between GDP and the explanatory variables used in the study. Results also show that, while cross-section random effects indicates that terms of trade positively impacts on GDP, period fixed effects shows that terms of trade negatively impacts on GDP even though it is not significant. Results of our study also show that in all the models, labour force total and FDI have positive impact on GDP, while trade openness impacts on GDP negatively. We therefore recommend that the SSA natural resource-rich countries should diversify their economies away from the traditional natural resources base. Also human capital should be improved through sound education and training, while all the bottlenecks that constrain the inflow of foreign direct investment should be dismantled