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Journal of Economic Structures

The Official Journal of the Pan-Pacific Association of Input-Output Studies (PAPAIOS)

Table 4 Institutional governance, capital flight and industrialisation

From: Governance, capital flight and industrialisation in Africa

 

Dependent variable: industrialisation

Rule of law

Corruption-control

Institutional governance

Industrialisation (− 1)

0.822***

0.960***

0.772***

0.872***

0.794***

0.911***

(0.000)

(0.000)

(0.000)

(0.000)

(0.000)

(0.000)

Constant

8.551

2.123

18.086*

8.090**

3.393

6.160***

(0.159)

(0.441)

(0.065)

(0.030)

(0.432)

(0.002)

Rule of law (RL)

7.499***

2.802

–

–

–

–

(0.072)

(0.237)

    

Corruption-Control (CC)

–

–

18.161**

5.989

–

–

  

(0.047)

(0.132)

  

Institutional governance (Instgov)

–

–

–

–

3.028

4.174***

    

(0.144)

(0.001)

Capital flight (− 1)(CapFlight)

− 0.618

− 0.204

− 1.511*

− 0.552

− 0.217

− 0.426**

(0.273)

(0.498)

(0.098)

(0.138)

(0.556)

(0.025)

RL × CapFlight

− 0.762*

− 0.415

–

–

–

–

(0.066)

(0.111)

    

CC × CapFlight

–

–

− 1.807**

− 0.676

–

–

  

(0.045)

(0.100)

  

Instgov × CapFlight

–

–

–

–

− 0.309

− 0.495***

    

(0.127)

(0.000)

Trade

0.004

0.009

− 0.001

0.008*

0.023**

0.003

(0.586)

(0.186)

(0.904)

(0.072)

(0.030)

(0.435)

Domestic investment

− 0.032*

− 0.010

− 0.018

− 0.031***

− 0.030

− 0.014**

(0.058)

(0.148)

(0.358)

(0.000)

(0.102)

(0.034)

Population

–

− 0.008**

–

− 0.011***

–

− 0.012***

 

(0.012)

 

(0.005)

 

(0.000)

Bank efficiency

–

− 0.037***

–

− 0.037***

–

− 0.033***

 

(0.000)

 

(0.000)

 

(0.000)

Private credit

–

0.100***

–

0.074***

–

0.101***

 

(0.000)

 

(0.000)

 

(0.000)

Net effects of capital flight

na

na

− 3.916

na

na

− 0.423

AR(1)

(0.272)

(0.080)

(0.268)

(0.085)

(0.271)

(0.086)

AR(2)

(0.298)

(0.241)

(0.291)

(0.430)

(0.298)

(0.230)

Sargan OIR

(0.000)

(0.000)

(0.000)

(0.000)

(0.000)

(0.000)

Hansen OIR

(0.354)

(0.644)

(0.396)

(0.674)

(0.540)

(0.591)

DHT for instruments

 (a) Instruments in levels

  H excluding group

(0.536)

(0.522)

(0.644)

(0.766)

(0.711)

(0.852)

  Dif (null, H = exogenous)

(0.267)

(0.615)

(0.263)

(0.495)

(0.374)

(0.345)

 (b) IV (years, eq (diff))

  H excluding group

(0.357)

(0.452)

(0.398)

(0.489)

(0.550)

(0.409)

  Dif (null, H = exogenous)

(0.353)

(1.000)

(0.364)

(1.000)

(0.381)

(1.000)

Fisher

132.67***

3538.10***

124.32***

2259.14***

203.33***

1690.12***

Instruments

26

38

26

38

26

38

Countries

35

35

35

35

35

35

Observations

323

307

322

306

322

306

  1. *,**,***significance levels of 10%, 5% and 1%, respectively. DHT: Difference in Hansen Test for Exogeneity of Instruments’ Subsets. Dif: Difference. OIR: Over-identifying Restrictions Test.  The italicised values have a twofold meaning: (1) The significance of estimated coefficients and the Fisher statistics. (2) The failure to reject the null hypotheses of (a) no autocorrelation in the AR(1) and AR(2) tests and (b) the validity of the instruments in the Sargan and Hansen OIR tests. The mean values of the rule of law, corruption-control and institutional governance are respectively − 0.716, − 0.598 and − 0.006. It is important to note that whereas the sample consists of 36 African countries, 35 countries may appear in the regression output because of issues in degrees of freedom associated with some variables used in the conditioning information set. na not applicable because at least one estimated coefficient needed for the computation of net effects is not significant
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