1. Economic Growth or Good Governance: What is More Important to Reduce Poverty and Insecurity in Sub-Saharan Africa? AMM QUAMRUZZAMAN, MCGILL UNIVERSITY PRESENTATION PREPARED FOR THE CSA CONGRESS 2015, OTTAWA JUNE 5, 2015

2. Background  The first of the eight MDGs – halve the proportion of people living below the income of less than $1 a day by 2015.  47% of the people in SSA live below $1.25 a day and more than two thirds live on less than $2 a day.  Measured in terms of income alone, SSA is the only region where poverty has increased since 1990.  SSA is also one of the most vulnerable regions in the world in terms of citizen insecurity measured using homicide rate. 2

3. Background  Poverty and insecurity are arguably the two most pressing development challenges facing sub-Saharan Africa.  Policy response 1: national policies, supported by western donors, with a focus on promoting good governance.  Policy response 2: economic policies with a primary focus on promoting sustainable economic growth.  This paper evaluates the relative importance of good governance and economic growth in reducing poverty and insecurity in SSA. 3

4. Data and Methods  Drawbacks of income-based poverty measures and homicide rate-based insecurity measures.  Afrobarometer Lived Poverty Index and Insecurity Index.  Afrobarometer governance indicators, WGI and WDI.  Cross-sectional data – 30 countries, longitudinal data – 16 countries over the period 2002-2013.  Individual-level and country-level hierarchical data structure: mixed method (xtmixed command of Stata 13). 4

5. Variables and Measurement  LPI: How frequently people ‘involuntarily’ go without basic necessities such as enough food, clean water, medicine or medical treatment, cooking fuel, and a cash income.  0 = never, 1 = just once or twice, 2 = several times, 3 = many times, and 4= always during the course of a year.  Combined these responses using exploratory factor analysis (EFA) and using the principal factor to obtain the LPI scores, with higher scores corresponding to greater extent of lived poverty. 5

6. Variables and Measurement…  LII: Following the same EFA method, combined the responses to how frequently people feared crime in the neighborhood, were physically attacked by someone, and something was stolen from their house during a year.  Economic growth: Annual percentage growth rate of GDP per capita in constant 2005 US dollars.  Also 4 dummies for income levels based on GDP per capita, PPP adjusted, in 2011 int’l dollars: $12000, with < $4000 as ref. 6

7. Variables and Measurement…  Good governance: Bribe, government performance, lack of rule of law, satisfaction with democracy, service provisioning  WGIs – rule of law, control of corruption, government effectiveness (-2.5 to 2.5); FH – extent of democracy (0-10).  Control variables: education, employment status, area of residence, if left party in power, log of refugee population by country of asylum, and ethnolinguistic fractionalization.  Regions (Western and Eastern Africa, with Southern Africa as the reference category) and survey years (for panel data). 7

8. Results (using Afrobarometer indicators) 8 Cross-sectional analysis Longitudinal analysis VariablePovertyInsecurity PovertyInsecurity Economic growth-0.045***0.006 -0.027***-0.008 Level of income: $4001-8000-0.334** 0.110 -0.021-0.083* Level of income: $8001-12000-0.591**-0.493**0.277**-0.303*** Level of income: $12000 up-0.616***0.0150.550***-0.137 Bribe/corruption0.081***0.141***0.083***0.159*** Lack of rule of law0.060***0.047*** 0.052***0.046*** Government performance-0.081***-0.071*** -0.083***-0.052*** Satisfaction with democracy-0.125***-0.061**-0.108***-0.025 Service provisioning-0.144***-0.015-0.144***0.007

9. Results (using WGIs) 9 Cross-sectional analysis Longitudinal analysis VariablePovertyInsecurity PovertyInsecurity Extent of democracy-0.075**-0.041** -0.148*0.036 Control of corruption-0.424***-0.058 -0.258-0.029 Rule of law-0.350***-0.066 -0.326-0.182 Government effectiveness-0.444***-0.127* -0.350*-0.282

10. Conclusion  Economic growth has significant effects on poverty reduction but not on insecurity reduction.  Good governance has more potential to reduce both poverty and insecurity in SSA.  Economic growth needs to sustain to have a significant effect on poverty reduction.  Strong institutions are a prerequisite for a sustainable economic growth, to raise the capacity of the poor, and to ensure security.  Economic growth needs to be transformative and redistributive (to create more jobs and income equality, for effective service delivery). 10