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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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  1. Asongu Simplice, 2011. "Law, Democracy and the Quality of Government in Africa," Working Papers 11/018, African Governance and Development Institute..
  2. Federico Varese, 1997. "The Transition to the Market and Corruption in Post-socialist Russia," Political Studies, Political Studies Association, vol. 45(3), pages 579-596.
  3. Peter Blair Henry, 2006. "Capital account liberalization: theory, evidence, and speculation," Working Paper Series 2007-32, Federal Reserve Bank of San Francisco.
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  15. Simplice A., Asongu, 2011. "Investment and inequality in Africa: which financial channels are good for the poor?," MPRA Paper 34990, University Library of Munich, Germany.
  16. Enowbi Batuo, Michael & Kupukile, Mlambo, 2009. "How Can Economic and Political Liberalisation Improve Financial Development in African Countries?," MPRA Paper 20651, University Library of Munich, Germany.
  17. Philip Arestis & Panicos O. Demetriades & Bassam Fattouh & Kostas Mouratidis, 2002. "The Impact of Financial Liberalisation Policies on Financial Development Evidence from Developing Economies," Discussion Papers in Economics 02/1, Department of Economics, University of Leicester.
  18. Simplice A Asongu, 2013. "How has politico-economic liberalization affected financial allocation efficiency? Fresh African evidence," Economics Bulletin, AccessEcon, vol. 33(1), pages 663-676.
  19. Sindzingre, Alice, 2005. "Explaining Threshold Effects of Globalization on Poverty: An Institutional Perspective," Working Paper Series RP2005/53, World Institute for Development Economic Research (UNU-WIDER).
  20. Asongu Simplice, 2011. "Finance and Inequality: Exploring Pro-Poor Investment Channels in Africa," Working Papers 11/016, African Governance and Development Institute..
  21. Peter Henry, 2007. "Capital Account Liberalization: Theory, Evidence, and Speculation," Discussion Papers 07-004, Stanford Institute for Economic Policy Research.
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