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

Author

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  • Simplice A. Asongu

    (African Governance and Development Institute, P.O. Box 18 SOA/ 1365 Yaoundé, Cameroon)

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.

Suggested Citation

  • Simplice A. Asongu, 2013. "Inequality, poverty and quality of institutions: which freedom channels of globalization matter for Africa?," European Economic Letters, European Economics Letters Group, vol. 2(1), pages 24-31.
    • Handle: RePEc:ris:eueclt:0010
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    Cited by:

    1. Simplice A Asongu, 2014. "On the substitution of institutions and finance in investment," Economics Bulletin, AccessEcon, vol. 34(3), pages 1557-1574.
    2. Simplice A. Asongu, 2013. "How do institutions matter in the income-equalizing effect of mobile phone penetration?," European Economic Letters, European Economics Letters Group, vol. 2(2), pages 56-61.

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    Keywords

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    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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