Globalization, Peace & Stability, Governance, and Knowledge Economy

African Governance and Development Institute WP/14/012

45 Pages Posted: 11 Sep 2014

See all articles by Voxi Heinrich S. Amavilah

Voxi Heinrich S. Amavilah

REEPS

Simplice Asongu

African Governance and Development Institute

Antonio Andrés

Universidad Camilo José Cela

Date Written: August 8, 2014

Abstract

A previous analysis of the impact of formal institutions on the knowledge economy of 22 Middle-Eastern and Sub-Sahara African countries during the 1996-2010 time period concluded that formal institutions were necessary, but inadequate, determinants of the knowledge economy. To extend that study, this paper claims that globalization induces peace and stability, which affects governance and through governance the knowledge economy. The claim addresses one weakness of previous research that did not consider the effects on the knowledge economy of globalization. We model the proposition as a three-stage process in four hypotheses, and estimate each hypothesis using robust estimators that are capable of dealing with the usual statistical problems without sacrificing economic relevance and significance. The results indicate that globalization has varying effects on peace and stability, and peace and stability affect governance differently depending on what kind of globalization induces it. For instance, the effects on governance induced by globalization defined as trade are stronger than those resulting from globalization taken to be foreign direct investment. Hence, we conclude that foreign direct investment is not a powerful mechanism for stimulating and sustaining the knowledge economy in our sample of countries. However, since globalization-induced peace and stability have both positive and negative effects on governance simultaneously, we also conclude that while the prospect for knowledge economy in African countries is dim, it is still realistic and attainable as long as these countries continue to engage in the kind of globalization that does indeed induce peace and stability. We further conclude that there is a need for a sharper focus on economic and institutional governance than on general governance as one possible extension of this paper.

Keywords: Globalisation; Peace and Stability; Governance; Knowledge Economy

JEL Classification: I20; I28; K42; O10; O55

Suggested Citation

Amavilah, Voxi Heinrich S. and Asongu, Simplice and Andrés, Antonio, Globalization, Peace & Stability, Governance, and Knowledge Economy (August 8, 2014). African Governance and Development Institute WP/14/012. Available at SSRN: https://ssrn.com/abstract=2493469 or http://dx.doi.org/10.2139/ssrn.2493469

Voxi Heinrich S. Amavilah (Contact Author)

REEPS ( email )

P.O. Box 38061
Phoenix, AZ 85069-8061
United States

Simplice Asongu

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Antonio Andrés

Universidad Camilo José Cela ( email )

Castillo de Alarcón, 49 Urb
Villafranca del Castillo
Madrid
Spain

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