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Inequality, poverty and quality of institutions: which freedom channels of globalization matter for Africa?

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  • Asongu, Simplice A

Abstract

Are formal institutions instrumental in the effect globalization mechanisms have on the human face? If so, through which freedoms channels are poverty and inequality mitigated? With the instrumentality of formal institutions: (1) de jure financial liberalization (KAOPEN) has a positive income-redistribution impact while the de facto measure (FDI) does not; (2) political liberalization has a disequalizing effect and; (3) economic freedom has a positive (negative) effect on inequality (poverty). Hence, economic freedom does not stop the wealthy from growing wealthier, but at the same time provides for conditions that mitigate poverty. The findings broadly show that, despite the substantially documented negative incidences of some channels of globalization on poverty (and inequality), formal institutions have the capacity to device policies that will give capital openness, trade and economic liberalizations a human face. Social implications and policy options are discussed.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 46929.

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Date of creation: 14 Jan 2013
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Handle: RePEc:pra:mprapa:46929

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Keywords: Globalization; Inequality; Poverty; Formal institutions; Africa;

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Cited by:
  1. Asongu Simplice, 2014. "On the substitution of institutions and finance in investment," Working Papers 14/005, African Governance and Development Institute..

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