TITLE:
Transmission Mechanisms through Which Institutions Mediate the Process of Globalization to Influence Poverty Levels
AUTHORS:
Kossi Ayenagbo
KEYWORDS:
Sub-Saharan Africa, Institutions, Globalization, Poverty, GMM
JOURNAL NAME:
Modern Economy,
Vol.12 No.4,
April
23,
2021
ABSTRACT: The Sub-Saharan region (SSR) has a rapid population growth,
challenges of food security and political adjustments which have been making
efforts to cope with global partner expectations. This study analyses the
development and status of institutions which have been established in the SSA
to affect the demands of globalization and
poverty reduction for the countries of Sub-Saharan Africa over the
period 2010-2018 using a panel data set. The GMM model used in this study
estimated that trade liberalization has increased poverty in the SSR. The
results analysis showed that the effect of increasing trade liberalization on
poverty decreases with the quality of institutions. The coefficient linked to
the interactive variable was found to be negative and significant at the 10%
threshold, showing that when the quality of governance is good, the effect of
increasing the openness rate on poverty decreases by 0.2146%. The estimation of
the simultaneous equation model by SUR method also revealed that the quality of
institutions, particularly the index of regulation of business activities, was
positively affecting trade liberalization, which in turn led to poverty
reduction.