Trade, Artificial Intelligence, Green Growth, and Sustainability Frontiers
Paper Session
Saturday, Jan. 6, 2024 10:15 AM - 12:15 PM (CST)
-
Chairs:
Mina Baliamoune-Lutz, University of North Florida - Eman Moustafa, Afreximbank
Firms’ Access to Finance, Export Trade Channels, and Exports in Africa
Abstract
The paper examines the effects of export trade channels and access to finance on exports in Africa. We employ mixed effect regression and the dynamic system Generalized Method of Moments (GMM) for a panel dataset of 46 African economies over the period, 2006 - 2020. First, it contributes to the literature by employing subjective measures of export channels and show how different measures of access to finance affect them. Second, it examines the direct and independent effect of access to finance and export channels on exports (export intensity and export status). Finally, the study interacts export channels with access to finance to examine their impacts on exports (export intensity and export status). We find that access to finance is more effective in promoting direct export trade channels and hybrid export trade channels compared to indirect export trade channels. We show that small and medium enterprise’s (SMEs’) access to bank finance leads to an increase in the level of exports. We also find that direct and hybrid export channels increase the level of exports, while indirect export channels result in a decline in the level of exports. We provide evidence to support that access to finance complements the overall effect of export trade channels on the level of exports, hence, an increase in the use of specific export trade channels increases the level of exports when SMEs have access to bank finance.Artificial intelligence: The Panacea for Sub-Saharan African Manufacturing Industries
Abstract
Africa has missed its industrialization era. Stiglitz (2018) found that Sub-Saharan Africa(SSA) manufacturing as a share of value added to gross domestic product decreased from 14.7
percent in 1975 to 10.1 percent in 2010. Page (2014) believes factors such as bad industrial
policy development and bad luck related to trade shocks and economic crises of the 1970s and
1980s have failed Africa’s industrialization. However, most developed countries have economic
growth due to industrialization and large consumers. With a population of 1.21 billion (World
Bank IBRD-IDA, 2022), the SSA has large consumers with abundant resources, and applying
Artificial Intelligence (AI) may revitalize and develop its manufacturing industries. AI may be
the panacea for SSA industrialization and economic prosperity. AI through machine learning
algorithms will prevent economic shocks and boost industrial policies. The AI topic is novel and
access to data for analytical or empirical reviews is impossible for this paper. The paper
examines the potentialities of AI applications on the African manufacturing industries'
development and the spillover effects on the SSA's socio-economic development. AI
applications in innovating SSA’s manufacturing industries will create jobs, enhance urban
development, solve major SSA social issues such as improving healthcare services, eradicating
famine, and improving national security, and contribute to energy and power growth. The paper
also explores significant challenges like lower education, absence of data availability and
management, the problem of access to electricity, and lower investments in research and
development for AI development in SSA, and some solutions to overcome the handicaps.
The Impact of Worker Remittances on Stability of the Franc CFA Regime
Abstract
The empirical evidence of the impact of remittances on the equilibrium real exchange rate of fixed exchange regime countries, like the CFA Franc Zone remains inconclusive. To the extent that remittance inflows have the most important macroeconomic effect on recipient country’s equilibrium real exchange rate; and to the extent that remittances to CFA countries continue to grow; the question as to the impact of remittance inflows on the stability of the CFA Franc regime remain an urgent empirical issue. This paper employs panel data for 12 countries (2000 – 2022), a dynamic specification equation along with the generalized method of moments technique to investigate the fundamental determinants of fluctuations in the real exchange rate (RER) and estimate the magnitude of misalignment.Regressing the real exchange rate determinants along with worker remittances in a pair wise method against the RER misalignment suggests evidence of remittances causing the Dutch Disease problem in CFA Franc Zone countries but the resulting impact on the equilibrium real exchange rate found are marginal. We also find that aid does not have Dutch Disease effects in CFA Franc economies, consistent with numerous prior studies but we found that policies implemented following covid-19 contributed significantly to the misalignment of the real exchange rate. Finally, our findings also reveal strong persistent effects of misalignments in the CFA Franc Zone economies, which could be partly attributed to the notably slow speed of adjustment of the equilibrium real exchange rate to its long-run equilibrium in these economies, especially following shocks like the 2008-2009 financial crisis and the recent covid-19 pandemic. The implications of these findings are firstly that, policymakers in CFA Franc Zone economies need not worry about the impact of remittances, expected to continue to grow, on the goal of achieving sustainable external trade balance and maintaining a stable fixed exchange regime. Secondly, further research needs to try to uncover the mechanics driving the persistent effects of misalignments of the equilibrium real exchange rate in CFA Franc economies, as an understanding of those drivers could contribute to stability of the fixed regime, in a world of increasing domestic and external shocks.
Do the JSE Firms Manage Earnings Differently During High- and Low-Sentiment States?
Abstract
Accounting choices involve decisions that are subject to the influence of prevailing sentiment in the capital market. This paper offers evidence on how market sentiment in optimistic (high) and pessimistic (low) states influences earnings management behaviour in South Africa. Based on the selected sample on the McGregor BFA database (2010–2019), the sentiment index was computed using the difference in price-earnings ratio (DIFFPE) according to Conrad, Cornell and Landsman (2002), and the earnings management metric was computed using the discretionary accruals of the standard and modified Jones according to Jones (1991) and Dechow, Sloan and Sweeney (1995), respectively. The results, based on the panel corrected standard error (PCSE), suggest that sentiment reflects a negative (positive) impact on earnings management in the pessimistic (optimistic) market state. Moreover, the evidence replicates stronger sentiment impacts during high- relative to low-sentiment states. In line with predictions, high sentiment causes greater earnings distortions and therefore increases earnings management, making JSE managers report less value-relevant earnings. The result is sensitive to time-varying correlated controls and alternative measures of earnings management. Given a higher explanatory power, models with high-sentiment states outperform their counterparts with low-sentiment states for the alternative defined models. The finding reinforces the need for investors and other participants in the South African capital market to be more thorough of earnings reported by the firms since managers, in response to prevailing sentiment, may manage earnings through accruals to inflate profits and manipulate investment and market decisions.Keywords: Investor Sentiment, Earnings Management, High Sentiment, Low Sentiment, PCSE
Water for All; All for Water: Assessment of the Effectiveness of Water Governance, a Case Study of Kenya
Abstract
The paper examines the effects of export trade channels and access to finance on exports in Africa. We employ mixed effect regression and the dynamic system Generalized Method of Moments (GMM) for a panel dataset of 46 African economies over the period, 2006 - 2020. First, it contributes to the literature by employing subjective measures of export channels and show how different measures of access to finance affect them. Second, it examines the direct and independent effect of access to finance and export channels on exports (export intensity and export status). Finally, the study interacts export channels with access to finance to examine their impacts on exports (export intensity and export status). We find that access to finance is more effective in promoting direct export trade channels and hybrid export trade channels compared to indirect export trade channels. We show that small and medium enterprise’s (SMEs’) access to bank finance leads to an increase in the level of exports. We also find that direct and hybrid export channels increase the level of exports, while indirect export channels result in a decline in the level of exports. We provide evidence to support that access to finance complements the overall effect of export trade channels on the level of exports, hence, an increase in the use of specific export trade channels increases the level of exports when SMEs have access to bank finance.Discussant(s)
Joseph Olorunfemi Akande
,
Walter Sisulu University
Julius Agbor
,
Vanguard University and Nkafu Policy Institute
Jean-Claude Maswana
,
Ritsumeikan University
Amira El-Shal
,
Cairo University
Daniel Ofori-Sasu
,
University of Ghana
Rafia Tanou Mijiyawa
,
USI-ADMIRE
JEL Classifications
- F5 - International Relations, National Security, and International Political Economy
- E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook