TITLE:
Business Environment and Inclusive Growth Nexus: Evidence from African Countries
AUTHORS:
Rafiou Raphaël Bétila
KEYWORDS:
Business Environment, Ease of Doing Business, Inclusive Growth, Africa
JOURNAL NAME:
Open Journal of Business and Management,
Vol.11 No.1,
January
31,
2023
ABSTRACT: It is increasingly
recognized that economic growth alone is not enough to guarantee the well-being
of all. This is why the current debates on sustainable development are
highlighting the need to promote inclusive growth in the world’s countries in
general, and in developing countries in particular. And one way to achieve
inclusive growth would be an improved business environment through better
business regulations. This paper aims to analyze the relationship between
business environment and inclusive growth in a sample of African countries over
the period 2010-2018. The business environment is measured by the World Bank’s Ease of Doing Business index. Inclusive growth is measured by two proxies: 1) GDP per person employed and 2) an inclusive growth index constructed using Principal Component
Analysis (PCA) method. In addition, we analyzed the above relationship in a
static and dynamic framework. In the static
framework, the business environment-inclusive growth relationship was analyzed by estimating a Panel
Corrected Standard Error (PCSE) model
as the baseline model and several other estimation models such as random-effects, fixed-effect Driscoll-Kraay, and
pooled Ordinary Least Squares (pooled
OLS). As for the dynamic framework, the study used the Generalized
Method of Moments in system (System-GMM) estimation technique. The results show
a positive and significant effect of business environment on inclusive growth.
This result remains robust to the different estimation techniques used on the
one hand and regardless of the measure of inclusive growth used on the other
hand and suggests that a regulatory environment
conducive to business activities is one way for African countries to achieve inclusive growth. From this result, policy
recommendations have been formulated accordingly.