THE EFFECTIVENESS OF THE BEST-PRACTICES APPROACH TO GETTING INSTITUTIONS RIGHT IN AFRICAN COUNTRIES

Author: Neysa Braimah Faculty Mentors: David Stifel and Rexford Ahene Department: Economics and Policy Studies Institution: Lafayette College Institutional Address: 730 High Street, Easton, PA 18042 USA

In this study, I assess if the best practices approach is a viable model that can spur growth in African countries. Recently, the international community has been working with developing countries to reform economic institutions in order to induce growth in the private sector. The dominant model that has emerged from this collaboration is the best practices approach, which broadly refers to the set of standards that countries ought to work towards in order to achieve a desired growth outcome. The World Bank’s Doing Business report is an example of this best practices model. This report measures the ease of doing business in countries based on how well they meet a set of standards that reflect a good business environment. However, some economists have argued that the Doing Business approach is ineffective due to its inability to capture the varying complexities associated with institutions in different economies. I investigate these claims further in two ways. I first do a qualitative analysis of Rwanda and South Africa, two countries that have achieved sustained economic growth using strategies other than the best practices approach. I subsequently do a quantitative analysis by estimating a panel data regression model for 53 African countries using data from the World Bank’s Doing Business survey and the Penn World Tables from 2010 to 2014. Using this empirical model, I specifically analyze if changes in GDP per capita growth are affected by the ease of doing business index. This study will provide insights on the effectiveness of the one size fits all models that are proposed by the international community in getting institutions right and in propelling economic growth in African countries


Additional Abstract Information

Presenter: Neysa Braimah

Institution: Lafayette College

Type: Oral

Subject: Economics

Status: Approved


Time and Location

Session: Oral 4
Date/Time: Thu 3:40pm-4:00pm
Location: Fogelman Classroom Building 131
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