ABSTRACT: The BS hypothesis suggests that developing countries tend to experience a higher relative price of non-tradable goods compared to developed countries due to higher productivity in their tradable goods sectors, leading to consequent higher wages across the economy. Subsequently, there are surges in the price of non-tradables due to higher production costs. The Kernel of the (BS) effect is the relationship between productivity and real exchange rate. Generally, it holds for developed countries, but it is inconsistently valid for individual developing countries. This study, therefore, empirically reinvestigates the validity of the BS effect in the context of selected 91 developing and less-developed economies. First, a battery of seven panel unit root tests are conducted to ascertain panel data nonstationary. Second, Pedroni's heterogenous panel co-integration procedure is implemented for long-run relationship. Third, to draw inferences on the BS effect, the dynamic panel Generalized Method of Moments (GMM) with the variables in first-differences is invoked. The sample size includes ninety-one selected developing and less-developed countries due to the availability of the relevant annual data spanning from 1991 to 2017. The empirical results reveal panel data-nonstationary and cointegrating relationship between the variables. The dynamic panel GMM estimates tend to support the BS hypothesis. This implies constant real exchange rate exerting no influences on the real economy. However, some countries included in the panel may likely experience, otherwise. This might be due to the differences in economic structures, and levels of economic development, amid some other fundamental reasons such as lagging behind modern technological progress. The policy particularly to boost productivity in the traded sector may likely cause random deviations in real exchange rate that in turn may have real economic effects. This means that a developing country's currency may appear undervalued when using exchange rates compared to the purchasing power parity (PPP) due to its higher productivity in tradable goods. This can impact economic policies related to exchange rate management and inflation targeting.
ABSTRACT: Blockchain technology presents a paradigm shift for the financial sector with its decentralized, transparent, and immutable ledger system. In Nigeria, a significant gap persists between the technology's potential to enhance efficiency, security, and inclusion and its sluggish, cautious adoption by traditional financial institutions, necessitating empirical investigation into its perceived impact and the barriers to integration. This study utilized a descriptive survey research design to quantitatively assess the perceptions of Nigerian financial sector professionals. Data were collected from 235 purposively selected bankers and fintech experts using a structured questionnaire. The instrument demonstrated strong validity and reliability. Data analysis involved descriptive statistics and inferential techniques, including Pearson's Product-Moment Correlation to test relationships between blockchain adoption and key dependent variables, and multiple regression analysis to determine the predictive power of specific blockchain features on operational cost reduction. The methodology effectively captured industry sentiment as a vital gauge of future adoption potential. The results revealed strong, positive, and statistically significant correlations between blockchain adoption and the disruption of traditional banking models (r=0.611, p<0.01), the enhancement of financial inclusion (r=0.574, p<0.01), and the improvement of transaction security and privacy (r=0.652, p<0.01). Respondents strongly agreed that blockchain simplifies loan processing, eliminates cross-border payment intermediaries, and provides superior, tamper-proof encryption. Regression analysis confirmed that blockchain attributes, particularly transparency and automation, significantly predict cost reduction in banking operations, accounting for 47.7% of the variance (Adjusted R2). A critical finding, however, is the "implementation gap," where high perceived potential contrasts with lower agreement on observed institutional benefits, indicating that practical integration lags behind theoretical promise due to existing barriers. To bridge the implementation gap, the study recommends that Nigerian policymakers and regulators, led by the Central Bank of Nigeria (CBN), prioritize the development of a comprehensive, clear, and risk-based regulatory framework for blockchain applications. This must be supported by substantial investment in foundational digital infrastructure and nationwide capacity-building and public awareness campaigns. These coordinated actions are essential to foster a conducive environment for the responsible and widespread adoption of blockchain, thereby unlocking a more efficient, inclusive, and secure financial system.
ABSTRACT: The Eastern African countries have in the last years vigorously invested in public infrastructure to accelerate growth. However, in the empirical literature on Eastern Africa, the extent to which these investments have influenced the observed growth trajectories at the aggregate and sectoral levels remains uncertain. The current study bridges this gap. With a focus on nine Eastern African countries (i.e. Burundi, Comoros, Ethiopia, Kenya, Rwanda, Seychelles, Sudan, Tanzania, and Uganda), the study estimates a variety of aggregate and sectoral growth models using data for the period 2003-2019, and the Feasible Generalized Least Squares (FGLS) technique. This technique was selected based on the Breusch–Pagan Cross-sectional dependence LM test, and the presence of serial correlation, confirmed by the Wooldridge test, and heteroskedasticity, as per the Wald test results. Data was sourced from the World Bank World Development Indicator, and Africa Development Bank African Infrastructure Index. The study shows that infrastructure development is important for total output. At the sectoral level, the effect is observed strongest in the industrial sector, followed by the services and the agricultural sectors. While the impact of electricity infrastructure was greatest in the services sector followed by the agricultural and industrial sectors, a further disaggregation of electricity reveals that access to electricity exhibits the greatest benefit for the industrial sector followed by the services sector and agriculture sector. The water supply and sanitation infrastructure was found to display its greatest impact on the industrial sector, followed by the agricultural sector, and the services sector. Only the services sector appeared to benefit from transport infrastructure, albeit weakly. Additionally, financial development and investment drive domestic output, whereas trade liberalization and real exchange rate appreciation adversely affect it. First, well-integrated policies targeted at improving infrastructure, and particularly ICT, electricity and water supply and sanitation, should be adopted to propel growth in the agriculture, industry, and service sectors. Programs such as Water, Sanitation and Hygiene services, the United Nations' Water Action Decade', should be supported. Second, policy makers in Eastern Africa ought to focus not only on expanding electricity-generating capacity but also access while taking steps to curb electricity transmission and distribution losses.
ABSTRACT: The COVID-19 pandemic triggered unprecedented economic disruption, prompting governments to expand public spending to mitigate losses. However, in contexts of high corruption, these resources risk diversion, reducing their intended impact. This study analysed the impacts of corruption on public spending in times of economic crisis, such as the COVID-19 pandemic. An endogenous growth model was developed, incorporating public spending's role in infrastructure and corruption's predatory effects. The model predicts an inverted U-shaped relationship between spending and firm growth, with corruption lowering the curve's peak. Empirical analysis used World Bank Enterprise Surveys and macroeconomic indicators for over 35,000 firms in multiple countries during the pandemic. Variables included firm-level government support, credit access, tax exemptions, remote work adoption, and macro indicators like corruption control and government effectiveness. Estimation employed OLS, IV, and GMM to address endogeneity, with robustness checks validating instruments. Results capture the interaction between governance quality, spending efficiency, and corruption. Theoretical and empirical results confirm a non-linear, inverted U-shaped link between public spending and firm sales growth during COVID-19. Moderate spending initially boosts productivity and sales via better infrastructure; beyond an optimal point, expected future taxation dampens investment and growth. Corruption reduces this optimal point, flattening the curve and lowering spending efficiency. Economies with stronger governance and less corruption benefit more from public investment, particularly under pandemic restrictions. Firm-level results show that government support, remote work, and permanent hiring positively affect sales. Meanwhile, new credit access, tax exemptions, and wage subsidies often correlate negatively. Public health spending is positive for growth, but total health spending, due to private concentration, shows negative associations. Governance quality significantly amplifies public spending's effectiveness. Findings highlight the need for anti-corruption measures to maximize the impact of public spending, especially during crises. Efficient governance enhances infrastructure gains, fosters firm resilience, and sustains growth under fiscal constraints. Policymakers should optimize spending levels, avoiding excessive taxation risks, while prioritizing transparent allocation and effective delivery. Strengthening institutional quality can mitigate corruption's negative effects, ensuring that scarce resources, particularly during emergencies, are directed toward productive uses that bolster firm performance and economic recovery. Institutional reforms thus complement fiscal strategies for sustainable post-crisis development.
ABSTRACT: Organizational change in African state-owned enterprises frequently fails due to rigid governance structures, institutional mistrust, and employee resistance. While reform efforts emphasize technical solutions, the role of fairness perceptions remains underexplored. Understanding how procedural justice shapes employee responses is critical to improving change acceptance and enhancing the effectiveness of public-sector reforms in developing economies. This study develops and empirically tests a structural equation model grounded in procedural justice and social exchange theories. A cross-sectional survey design was employed, collecting data from 1,500 employees of the Nigerian National Petroleum Company across departments, tenure levels, and educational backgrounds. Key constructs include perceived organizational support, fear of change consequences, self-confidence in learning and development, trust in management, and perceived need for change, with procedural justice modeled as a mediating mechanism. Data were analyzed using confirmatory factor analysis to establish reliability and validity, followed by structural equation modeling and bootstrapped mediation analysis to test hypothesized relationships and ensure robustness. The results indicate that perceived need for change is the strongest predictor of employee acceptance of organizational transformation, followed by self-confidence in learning, perceived organizational support, and trust in management. Procedural justice has both a direct and indirect effect, significantly mediating the relationships between most employee perceptions and change acceptance, although its mediating role is not supported in the case of self-confidence. The model explains substantial variance in both procedural justice and reactions to change. Moderation analysis shows that employee tenure strengthens the relationship between perceived need for change and acceptance, while higher education enhances the influence of trust on procedural justice. Robustness checks confirm the stability of findings across alternative specifications and estimation techniques. The findings underscore the importance of embedding procedural justice principles such as transparency, consistency, and participatory decision-making into public-sector reform processes. Policymakers and managers should prioritize fairness-driven engagement, clearly communicate the necessity of change, and address employee concerns through inclusive strategies. Tailoring reform initiatives to workforce characteristics, including tenure and educational level, can improve change acceptance, strengthen institutional trust, and enhance the overall effectiveness of organizational transformation in developing economies.
