GLOBALISATION AND HUMAN WELFARE IN SUB-SAHARAN AFRICA (1980-2012).

Abstract

The world has become more linked owing to the increased intensity of globalisation across regions. Sub-Saharan Africa (SSA) has become relatively more integrated into the world economy as shown by increasing degree of trade openness (from 55.4% in 1980 – 1984 to 65.3% in 2000 – 2012) and foreign direct investment (from 0.3% in 1980 – 1984 to 2.7% in 2000 – 2012). Over the same period, the quality of life of people in SSA, in terms of access to basic necessities improved marginally (from 49.0% in 1980 – 1984 to 53% 2000 – 2012 for water; 61.0% in 1980 – 1984 to 62.0% in 2000 – 2012 for health care services). Most studies on globalisation revolve around trade openness and foreign direct investment using monetary measures of human welfare. The effects of globalisation on access to basic necessities such as water, sanitation, health care services have however, received little attention. This study therefore investigated the impact of globalisation on human welfare in SSA countries.

This study adopted the endogenous growth theory. Four channels of transmission of impact of globalisation were considered: trade openness, financial and capital flows (foreign direct investment and portfolio investment), labour mobility and access to telephone. Data for 16 countries (selected from four sub-regional groups: two less globalised and two more globalised countries from each sub-region) were sourced from the World Development Indicators for the period. Human welfare was proxied by human development index (HDI-composite of three indicators, namely, life expectancy at birth, mean year of schooling and income per-head), infant mortality rate and the access of people to basic necessities: water, health care services and sanitation. Governance, measured in terms of governance index, was considered as a control variable that stimulates globalisation and human welfare. The feasible Generalised Least Square (GLS) estimator was utilized to estimate the fixed and random effects panel regression models. Hausman test was used to determine the efficient estimator between fixed and random effects. All the estimated coefficients were evaluated at the 0.05 level of significance.

Trade exerted positive and significant impact on HDI (0.04), life expectancy (0.04), access to water (0.08) and access to health services (0.07). A 10.0% increase in trade improved HDI by 0.4%, enhanced access to water and access to sanitation by 0.8% and 0.7% respectively. Foreign direct investment significantly increased HDI (0.59), infant mortality rate (-2.19), life expectancy (0.32), mean year of schooling (0.01), access to water (0.68), access to sanitation(0.27) and access to health services (0.54). Access to telephone positively and significantly impacted on HDI (0.04), life expectancy (0.02), infant mortality rate (-0.03), access to water (0.02), access to sanitation (0.03) and access to health services (0.05). Labour migration significantly enhanced HDI (0.04), access to sanitation (0.12) and access to health services (0.07). Governance index significantly lowered HDI (-0.04), access to water (-0.09) and access to health services (-0.02).

Globalisation through its various channels, had a positive effect on human welfare indicators in sub-saharan Africa. There is however a need to improve on the quality of governance in the region to enhance the welfare of the people through global interactions.

Keywords: Globalisation, Quality of governance, Human welfare, Sub-Saharan Africa. Word count: 497