Governance and the Manufacturing Sector Growth among the BRICS Nations
Abstract
The objective of this study was to examine the relationship between selected governance factors and growth rates in the manufacturing sector's output among the member states of BRICS. This study examined the institutionalized growth theory and explored four governance factors: government effectiveness, regulatory quality, control of corruption, and voice and accountability. The study also considered factors associated with both exogenous and endogenous growth theories. The estimation process involves applying the first difference generalized method of moments (D-GMM) on a linear dynamic panel model. The data spans from 2010 to 2021. The findings of this study suggest that among the BRICS nations, government effectiveness is the most significant predictor of growth in the manufacturing sector, out of the four governance factors that were examined. The factors of voice and accountability, control of corruption, and regulatory quality did not demonstrate the capacity to exert influence on variations in the growth of the manufacturing sector within the BRICS countries. Unlike prior studies, our research incorporates a range of established growth theories in constructing the empirical model. Additionally, we employ an instrumental variable approach for dynamic panel data analysis. We utilize robust standard errors to address potential issues of endogeneity and model misspecification. Therefore, BRICS countries should devote a sizeable portion of their resources to building solid mechanisms that make it easier for the implementation, oversight, and thorough reporting of government activities inside their manufacturing sector. This strategy could increase governmental effectiveness, which would encourage overall manufacturing sector growth.
Downloads
References
Aldrighi, D. M. & Colistete, R. P. (2015). From globalization to internationalization to Brazilian companies. Cambridge Journal of Economics, 39(5), 1359-1376.
Aldrighi, D. M. & Colistete, R. P. (2015). Trade liberalization and industrialization paths: Brazil (1889-2010) in light of the BRICs. Nova Economia, 25(1), 143-174. doi: 10.1590/0103-6351/1414.
Aradhna, A. (2014). Democratization and Economic Growth: Evidence from Brazil, India, and South Africa. Journal of Democracy & Governance, Rural Development Institute (RDI) Journal, 1(1), 113-121.
Arellano, M. & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The review of economic studies, 58(2), 277-297.
Baltagi, B. H. (2008). Forecasting with panel data. Journal of Forecasting, 27(2), 153-173.
BBC News. (2021). China’s economy grows 18.3% in post-Covid comeback, 16 April, viewed 12 January 2022, from https://www.bbc.com/news/business-56768663.
BRICS Information Portal. (2020a). BRICS countries to step up economic, trade cooperation, viewed 22 November 2020, from http://infobrics.org/post/32302.
Chandra, A. & Sengupta, R. (2019). Competitiveness determinants and policy outlook for the manufacturing sector in BRICS economies. Competitiveness Review, 29(5-6), 466-495. doi: 10.1108/CR-11-2018-0097.
Chen, J. (2020). Brazil, Russia, India, China and South Africa (BRICS), viewed 19 March 2021, from https://www.investopedia.com/terms/b/brics.asp.
Chen, L., Luo, J. & Li, H. (2019). The impact of government factors on manufacturing sector growth: Evidence from BRICS countries. Journal of Business Research, 106, 312-318.
Das, S. & Kalita, S. (2018). Manufacturing sector growth: A comparative analysis of BRICS countries. Journal of Asian Economics, 47, 1-11.
Dzisi, J. E. & Appiah, O. (2020). Political governance, corruption and manufacturing sector growth: evidence from Brazil. Cogent Business & Management, 7(1), 1838652. doi: 10.1080/23311975.2020.1838652.
Goyal, A., Dash, D. P. & Sahoo, S. K. (2018). Determinants of Manufacturing Sector Performance in BRICS Economies: A Dynamic Panel Threshold Approach. International Journal of Development Issues, 17(3), 209-227. doi: 10.1108/IJDI-11-2016-0082.
Guriev, S. & Tsyvinski, A. (2018). Russian manufacturing in the 21st century: Crisis and recovery. Journal of Comparative Economics, 46, 241-257.
Haraguchi, N. & Rezonja, G. (2015). Structural Change in the BRICS’s Manufacturing Industries. Structural Change and Industrial Development in the BRICS, 29.
Herman, E. (2020). Labor productivity and wages in the Romanian manufacturing sector. Procedia Manufacturing, 46, 313-321.
Islam, N., Reza, M. S. & Khan, M. M. (2018). Determinants of Manufacturing Sector Growth in BRICS countries: A Panel Data Analysis. Journal of Business and Economics Review, 3(1), 37-46.
Kaufmann, D., Kraay, A. & Mastruzzi, M. (2010). The worldwide governance indicators: Revised data 2010-2011. World Bank Policy Research Working Paper, 5430.
Keping, Y. (2018). Governance and good governance: A new framework for political analysis, Fudan Journal of the Humanities and Social Sciences, 11, 1–8.
Lima, F. & Navarro, M. (2017). The manufacturing sector in BRICS countries: Recent trends and prospects. Journal of Business Research, 70, 298-304.
Lopes, F. & Power, M. (2019). Brazil's political crisis: The impeachment of Dilma Rousseff and the rise of Jair Bolsonaro. Journal of Latin American Studies, 51, 211-236.
Lopez-Claros, A., Dahl, A. L. & Groff, M. (2020). A history of global governance, viewed 29 March 2020, from https://www.cambridge.org/core/books/global-governance-and-the-emergence-of-global-institutions-for-the-21st-century/history-of-global-governance/48AFB3734CB455C14C0F5AC0A483C002.
Morrissey, M. B. & Ruxton, G. D. (2018). Multiple regression is not multiple regressions: the meaning of multiple regression and the non-problem of collinearity.
Moyo, C. & Jeke, L. (2019). Manufacturing sector and economic growth: A panel study of selected African countries. J. Bus. Econ. Review, 4(3), 114-130.
Naudé, W., Rossouw, S. & Matthee, M. (2013). The colonial origins of comparative development: An empirical investigation: COMMENT. Economic and Political Weekly, 48(7), 13-16.
Naudé, W., Szirmai, A. & Lavopa, A. (2013). Industrialization Pathways in the 21st Century: New Challenges and Emerging Paradigms. Oxford Development Studies, 41(2), 125-152. doi: 10.1080/13600818.2013.788950.
Nolutshungu, S. (2021). South Africa's political transition: From apartheid to democracy. Journal of Democracy, 32, 125-137.
Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5, Part 2), S71-S102.
Saba, C. S. & Ngepah, N. (2023). Empirics of convergence in industrialization and their determinants: global evidence. Discover Sustainability, 4(1), 25.
Saraswat, P. & Kaur, S. (2019). Impact of Goods and Services Tax (GST) on manufacturing sector in India. Vikalpa, 44, 23-36.
Su, D. & Yao, Y. (2017). Manufacturing as the key engine of economic growth for middle-income economies. Journal of the Asia Pacific Economy, 22(1), 47-70.
Tran, Z. V., Ivashchenko, A. & Brooks, L. (2019). Sacroiliac joint fusion methodology-minimally invasive compared to screw-type surgeries: a systematic review and meta-analysis. Pain Physician, 22(1), 29.
UN. (2023). United Nations Department of Economic and Social Affairs, Population Division, World Population Prospects: The 2023 Revision. New York: UN.
United Nations. (2023). Development of the Manufacturing Sector. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/WP23_ManufacturingSector_v27.pdf
Yadav, S. & Jain, R. (2017). Governance Matters for Manufacturing Sector Growth: A Comparative Analysis of BRICS Countries. International Journal of Humanities and Social Science Research, 3(10), 16-27.
Zhang, J. (2020). China's economic transformation: From investment-led growth to consumption-led one. China Economic Review, 52, 101491.
Zhang, L., Xiao, T. & Xia, Y. (2019). Determinants of Manufacturing Enterprises' Energy Consumption Efficiency in BRICS Countries: A Panel Data Analysis. Sustainability, 11(6), 1555. doi: 10.3390/su11061555.
Zhang, Q. & Li, M. (2018). Government Policies and Manufacturing Sector Growth in China: An Empirical Investigation. International Journal of Economic Perspectives, 12(4), 1517-1528.
Copyright (c) 2023 Musiita Benjamin, Dickson Turyareeba, Kenneth Mugambe, Anthony Wamala, Leward Jeke, Ben Boyi
This work is licensed under a Creative Commons Attribution 4.0 International License.
Author (s) should affirm that the material has not been published previously. It has not been submitted and it is not under consideration by any other journal. At the same time author (s) need to execute a publication permission agreement to assume the responsibility of the submitted content and any omissions and errors therein. After submission of a revised paper in the light of suggestions of the reviewers, editorial team edits and formats manuscripts to bring uniformity and standardization in published material.
This work will be licensed under Creative Commons Attribution 4.0 International (CC BY 4.0) and under condition of the license, users are free to read, copy, remix, transform, redistribute, download, print, search or link to the full texts of articles and even build upon their work as long as they credit the author for the original work. Moreover, as per journal policy author (s) hold and retain copyrights without any restrictions.
