IDEAS home Printed from https://ideas.repec.org/a/eee/jrpoli/v77y2022ics0301420722002057.html
   My bibliography  Save this article

Fostering domestic resources mobilization in sub-Saharan Africa: Linking natural resources and ICT infrastructure to the size of informal economy

Author

Listed:
  • Kpognon, Koffi D.

Abstract

This study investigates the effect of natural resources rents and information and communications technology (ICT) infrastructure on the size of the informal economy in Sub-Saharan African countries. It does so by using different measures of the informal economy, resources rents, and ICT and employs pooled OLS and IV-2SLS estimators to estimate two-way fixed effects models. The study covers 42 countries and spans the period 1991–2015. The results reveal that while natural resources rents increase the size of the informal economy, ICT has a mixed direct effect on the informal economy. More interestingly, the results reveal that resources rents reduce the size of the informal economy in countries with higher accessibility to ICT. African states need to ensure transparent management of natural resources revenues but also use these revenues to increase public spending to support growth and diversification to create more jobs in the formal sector. They should also invest more in ICT infrastructure to help mobilize domestic resources.

Suggested Citation

  • Kpognon, Koffi D., 2022. "Fostering domestic resources mobilization in sub-Saharan Africa: Linking natural resources and ICT infrastructure to the size of informal economy," Resources Policy, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:jrpoli:v:77:y:2022:i:c:s0301420722002057
    DOI: 10.1016/j.resourpol.2022.102757
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301420722002057
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.resourpol.2022.102757?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Vanessa S. Tchamyou & Simplice A. Asongu, 2017. "Information Sharing and Financial Sector Development in Africa," Journal of African Business, Taylor & Francis Journals, vol. 18(1), pages 24-49, January.
    2. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Institutions and the Resource Curse," Economic Journal, Royal Economic Society, vol. 116(508), pages 1-20, January.
    3. Kleibergen, Frank & Paap, Richard, 2006. "Generalized reduced rank tests using the singular value decomposition," Journal of Econometrics, Elsevier, vol. 133(1), pages 97-126, July.
    4. Asongu, Simplice A. & Nwachukwu, Jacinta C., 2016. "The Mobile Phone in the Diffusion of Knowledge for Institutional Quality in Sub-Saharan Africa," World Development, Elsevier, vol. 86(C), pages 133-147.
    5. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
    6. Capasso, Salvatore & Jappelli, Tullio, 2013. "Financial development and the underground economy," Journal of Development Economics, Elsevier, vol. 101(C), pages 167-178.
    7. Asongu, Simplice A. & Le Roux, Sara & Biekpe, Nicholas, 2017. "Environmental degradation, ICT and inclusive development in Sub-Saharan Africa," Energy Policy, Elsevier, vol. 111(C), pages 353-361.
    8. Munemo, Jonathan, 2022. "Export entrepreneurship promotion: The role of regulation-induced time delays and institutions," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 262-275.
    9. Lars P. Feld & Friedrich Schneider, 2010. "Survey on the Shadow Economy and Undeclared Earnings in OECD Countries," German Economic Review, Verein für Socialpolitik, vol. 11(2), pages 109-149, May.
    10. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Cursed by Resources or Institutions?," The World Economy, Wiley Blackwell, vol. 29(8), pages 1117-1131, August.
    11. Tanzi, Vito, 1999. "Uses and Abuses of Estimates of the Underground Economy," Economic Journal, Royal Economic Society, vol. 109(456), pages 338-347, June.
    12. Gylfason, Thorvaldur, 2001. "Natural resources, education, and economic development," European Economic Review, Elsevier, vol. 45(4-6), pages 847-859, May.
    13. Leandro Medina & Friedrich Schneider, 2017. "Shadow Economies around the World: New Results for 158 Countries over 1991-2015," CESifo Working Paper Series 6430, CESifo.
    14. Désirée Teobaldelli & Friedrich Schneider, 2013. "The influence of direct democracy on the shadow economy," Public Choice, Springer, vol. 157(3), pages 543-567, December.
    15. Henri Njangang & Luc Ndeffo Nembot & Joseph Pasky Ngameni, 2020. "Does financial development reduce the size of the informal economy in sub‐Saharan African countries?," African Development Review, African Development Bank, vol. 32(3), pages 375-391, September.
    16. Ebeke, Christian & Omgba, Luc Désiré & Laajaj, Rachid, 2015. "Oil, governance and the (mis)allocation of talent in developing countries," Journal of Development Economics, Elsevier, vol. 114(C), pages 126-141.
    17. Aziz N. Berdiev & James W. Saunoris & Friedrich Schneider, 2018. "Give Me Liberty, or I Will Produce Underground: Effects of Economic Freedom on the Shadow Economy," Southern Economic Journal, John Wiley & Sons, vol. 85(2), pages 537-562, October.
    18. Berdiev & Cullen Pasquesi-Hill & Saunoris, 2015. "Exploring the dynamics of the shadow economy across US states," Applied Economics, Taylor & Francis Journals, vol. 47(56), pages 6136-6147, December.
    19. Lars P. Feld & Friedrich Schneider, 2010. "Survey on the Shadow Economy and Undeclared Earnings in OECD Countries," German Economic Review, Verein für Socialpolitik, vol. 11(2), pages 109-149, May.
    20. Thorvaldur Gylfason & Gylfi Zoega, 2006. "Natural Resources and Economic Growth: The Role of Investment," The World Economy, Wiley Blackwell, vol. 29(8), pages 1091-1115, August.
    21. Eilat, Yair & Zinnes, Clifford, 2002. "The Shadow Economy in Transition Countries: Friend or Foe? A Policy Perspective," World Development, Elsevier, vol. 30(7), pages 1233-1254, July.
    22. Thorvaldur Gylfason, 2006. "Natural Resources and Economic Growth: From Dependence to Diversification," Springer Books, in: Harry G. Broadman & Tiiu Paas & Paul J.J. Welfens (ed.), Economic Liberalization and Integration Policy, pages 201-231, Springer.
    23. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
    24. Elbahnasawy, Nasr G., 2021. "Can e-government limit the scope of the informal economy?," World Development, Elsevier, vol. 139(C).
    25. Ceyhun Elgin & Oguz Oztunali, 2012. "Shadow Economies around the World: Model Based Estimates," Working Papers 2012/05, Bogazici University, Department of Economics.
    26. Friedrich Schneider & Dominik Enste, 1999. "Shadow Economies Around the World - Size, Causes, and Consequences," CESifo Working Paper Series 196, CESifo.
    27. Elgin, Ceyhun & Oyvat, Cem, 2013. "Lurking in the cities: Urbanization and the informal economy," Structural Change and Economic Dynamics, Elsevier, vol. 27(C), pages 36-47.
    28. Mazhar, Ummad & Méon, Pierre-Guillaume, 2017. "Taxing the unobservable: The impact of the shadow economy on inflation and taxation," World Development, Elsevier, vol. 90(C), pages 89-103.
    29. Ceyhun Elgin & Oguz Oztunali, 2014. "Institutions, Informal Economy, and Economic Development," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 50(4), pages 145-162.
    30. Elbahnasawy, Nasr G. & Ellis, Michael A. & Adom, Assandé Désiré, 2016. "Political Instability and the Informal Economy," World Development, Elsevier, vol. 85(C), pages 31-42.
    31. Farhadi, Minoo & Islam, Md. Rabiul & Moslehi, Solmaz, 2015. "Economic Freedom and Productivity Growth in Resource-rich Economies," World Development, Elsevier, vol. 72(C), pages 109-126.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ran, Qiying & Yang, Xiaodong & Yan, Hongchuan & Xu, Yang & Cao, Jianhong, 2023. "Natural resource consumption and industrial green transformation: Does the digital economy matter?," Resources Policy, Elsevier, vol. 81(C).
    2. Faryal, & Faisal, Faisal & Amin, Muhammad Yusuf & Haq, Zahoor Ul & Rahman, Sami Ur & Ali, Adnan, 2023. "Natural resources revenues, shadow economy and financial institutions depth: The way forward," Resources Policy, Elsevier, vol. 85(PB).
    3. Ajide, Kazeem Bello & Ridwan, Lanre Ibrahim, 2023. "Does natural resource wealth hinder or promote activity of the shadow markets in africa?," Resources Policy, Elsevier, vol. 85(PA).
    4. Khan, Zeeshan & Hossain, Mohammad Razib & Badeeb, Ramez Abubakr & Zhang, Changyong, 2023. "Aggregate and disaggregate impact of natural resources on economic performance: Role of green growth and human capital," Resources Policy, Elsevier, vol. 80(C).
    5. Kpognon, Koffi D., 2022. "Effect of Natural Resources on the Size of Informal Economy in sub-Saharan Africa: An Empirical Investigation," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 1-14.
    6. Xiao, Anran & Xu, Zeshui & Qin, Yong & Lv, Shengnan & Skare, Marinko, 2023. "The impact of natural resources on technology innovation from cross-country panel data: A comparative analysis and policy-level insights," Resources Policy, Elsevier, vol. 85(PB).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kpognon, Koffi D., 2022. "Effect of Natural Resources on the Size of Informal Economy in sub-Saharan Africa: An Empirical Investigation," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 1-14.
    2. Emmanuel Umoru Haruna & Usman Alhassan, 2022. "Does digitalization limit the proliferation of the shadow economy in African countries? An in‐depth panel analysis," African Development Review, African Development Bank, vol. 34(S1), pages 34-62, July.
    3. Elbahnasawy, Nasr G., 2021. "Can e-government limit the scope of the informal economy?," World Development, Elsevier, vol. 139(C).
    4. Owolabi, Adegboyega O. & Berdiev, Aziz N. & Saunoris, James W., 2022. "Is the shadow economy procyclical or countercyclical over the business cycle? International evidence," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 257-270.
    5. Chletsos, Michael & Sintos, Andreas, 2021. "Hide and seek: IMF intervention and the shadow economy," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 292-319.
    6. Dagmara Nikulin & Ewa Lechman, 2021. "Shadow Economy in Poland: Results of the Survey," SpringerBriefs in Economics, in: Shadow Economy in Poland, chapter 0, pages 49-65, Springer.
    7. Aziz N. Berdiev & James W. Saunoris & Friedrich Schneider, 2020. "Poverty and the shadow economy: The role of governmental institutions," The World Economy, Wiley Blackwell, vol. 43(4), pages 921-947, April.
    8. Schneider Friedrich & Buehn Andreas, 2017. "Shadow Economy: Estimation Methods, Problems, Results and Open questions," Open Economics, De Gruyter, vol. 1(1), pages 1-29, March.
    9. Nguyen, Canh Phuc, 2022. "Does economic complexity matter for the shadow economy?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 210-227.
    10. Nedra Baklouti & Younes Boujelbene, 2020. "A simultaneous equation model of economic growth and shadow economy: Is there a difference between the developed and developing countries?," Economic Change and Restructuring, Springer, vol. 53(1), pages 151-170, February.
    11. Friedrich Schneider, 2013. "Size and Progression of the Shadow Economies of Turkey and Other OECD Countries from 2003 to 2013; Some New Facts," Ekonomi-tek - International Economics Journal, Turkish Economic Association, vol. 2(2), pages 83-116, May.
    12. Gheorghe H. Popescu & Adriana Ana Maria Davidescu & Catalin Huidumac, 2018. "Researching the Main Causes of the Romanian Shadow Economy at the Micro and Macro Levels: Implications for Sustainable Development," Sustainability, MDPI, vol. 10(10), pages 1-37, September.
    13. Aziz N. Berdiev & James W. Saunoris & Friedrich Schneider, 2018. "Give Me Liberty, or I Will Produce Underground: Effects of Economic Freedom on the Shadow Economy," Southern Economic Journal, John Wiley & Sons, vol. 85(2), pages 537-562, October.
    14. Hailin Chen & Friedrich Schneider & Qunli Sun, 2020. "Measuring the size of the shadow economy in 30 provinces of China over 1995–2016: The MIMIC approach," Pacific Economic Review, Wiley Blackwell, vol. 25(3), pages 427-453, August.
    15. Cong Minh Huynh & Tan Loi Nguyen, 2020. "Fiscal policy and shadow economy in Asian developing countries: does corruption matter?," Empirical Economics, Springer, vol. 59(4), pages 1745-1761, October.
    16. Aziz N. Berdiev & James W. Saunoris, 2019. "On the Relationship Between Income Inequality and the Shadow Economy," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(2), pages 224-249, April.
    17. Paraskevi Koufopoulou & Colin C. Williams & Athanassios Vozikis & Kyriakos Souliotis & Antonios Samprakos, 2021. "Estimating Shadow Economy Size in Greece 2000 - 2018: A Flexible MIMIC Approach," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 71(3-4), pages 23-47, July-Dece.
    18. repec:ces:ifodic:v:14:y:2017:i:4:p:19267788 is not listed on IDEAS
    19. Schneider, Friedrich & Khan, Shabeer & Baharom Abdul Hamid & Khan, Abidullah, 2019. "Does the tax undermine the effect of remittances on shadow economy?," Economics Discussion Papers 2019-67, Kiel Institute for the World Economy (IfW Kiel).
    20. Giombini, Germana & Teobaldelli, Désirée & Schneider, Friedrich, 2018. "Interaction effect of tax evasion and legal system inefficiency on firms' financial constraints," International Review of Economics & Finance, Elsevier, vol. 55(C), pages 1-20.
    21. Medda, Tiziana & Palmisano, Flaviana & Sacchi, Agnese, 2022. "Informal we stand? The role of social progress around the world," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 660-675.

    More about this item

    Keywords

    Natural resources; ICT; Informal sector; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jrpoli:v:77:y:2022:i:c:s0301420722002057. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30467 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.