IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/121243.html
   My bibliography  Save this paper

Frontier Technology Readiness, Democracy, and Income Inequality in Africa

Author

Listed:
  • Ofori, Isaac K.

Abstract

The proliferation of frontier technologies in the Global South has increased over the past decade. Despite this development, evidence-based policy recommendations regarding their socioeconomic impacts within the context of Africa are scarce. This study addresses this gap by employing macro data from 39 African countries to investigate the impact of frontier technology adoption (FTR) on income inequality. Additionally, the study explores whether democracy serves as a moderator of FTR, influencing a more equitable income distribution. Furthermore, this study assesses the inequality impacts of FTR across various policy thresholds of democracy. Results from the dynamic system GMM estimator reveal that: (i) FTR increases income inequality, (ii) democracy, particularly electoral and participatory democracy, mitigates income inequality, and (iii) FTR reduces income inequality only at a higher threshold of democracy (0.5 or better). This leads to the conclusion that, without inclusive democracy, FTR may impede Africa's social progress agenda by widening the income disparity gap.

Suggested Citation

  • Ofori, Isaac K., 2024. "Frontier Technology Readiness, Democracy, and Income Inequality in Africa," MPRA Paper 121243, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:121243
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/121243/1/MPRA_paper_121243.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Michael Ross, 2006. "Is Democracy Good for the Poor?," American Journal of Political Science, John Wiley & Sons, vol. 50(4), pages 860-874, October.
    2. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2003. "Instrumental variables and GMM: Estimation and testing," Stata Journal, StataCorp LP, vol. 3(1), pages 1-31, March.
    3. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    4. Jørn Rattsø & Hildegunn E. Stokke, 2013. "Trade, Skill Biased Technical Change and Wage Inequality in South Africa," Review of International Economics, Wiley Blackwell, vol. 21(3), pages 419-431, August.
    5. Aghion, Philippe & Howitt, Peter & Violante, Giovanni L, 2002. "General Purpose Technology and Wage Inequality," Journal of Economic Growth, Springer, vol. 7(4), pages 315-345, December.
    6. Lucas Chancel & Thomas Piketty, 2021. "Global Income Inequality, 1820–2020: the Persistence and Mutation of Extreme Inequality [Global Inequality of Hourly Income, 1980–2020]," Journal of the European Economic Association, European Economic Association, vol. 19(6), pages 3025-3062.
    7. Song, Yuegang & Paramati, Sudharshan Reddy & Ummalla, Mallesh & Zakari, Abdulrasheed & Kummitha, Harshavardhan Reddy, 2021. "The effect of remittances and FDI inflows on income distribution in developing economies," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 255-267.
    8. Philippe Aghion & Ufuk Akcigit & Antonin Bergeaud & Richard Blundell & David Hemous, 2019. "Innovation and Top Income Inequality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(1), pages 1-45.
    9. Matteo Cervellati & Alireza Naghavi & Farid Toubal, 2018. "Trade liberalization, democratization, and technology adoption," Journal of Economic Growth, Springer, vol. 23(2), pages 145-173, June.
    10. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 465-490.
    11. Ding, Shijun & Meriluoto, Laura & Reed, W. Robert & Tao, Dayun & Wu, Haitao, 2011. "The impact of agricultural technology adoption on income inequality in rural China: Evidence from southern Yunnan Province," China Economic Review, Elsevier, vol. 22(3), pages 344-356, September.
    12. Marcelo Santos & Tiago Neves Sequeira & Alexandra Ferreira-Lopes, 2017. "Income Inequality and Technological Adoption," Journal of Economic Issues, Taylor & Francis Journals, vol. 51(4), pages 979-1000, October.
    13. Charles I. Jones & Jihee Kim, 2018. "A Schumpeterian Model of Top Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 126(5), pages 1785-1826.
    14. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    15. Neil Lee & Andrés Rodríguez-Pose, 2013. "Innovation and spatial inequality in Europe and USA," Journal of Economic Geography, Oxford University Press, vol. 13(1), pages 1-22, January.
    16. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    17. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2009. "The Effects of Entry on Incumbent Innovation and Productivity," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 20-32, February.
    18. Daron Acemoglu & Simon Johnson & James A. Robinson, 2012. "The Colonial Origins of Comparative Development: An Empirical Investigation: Reply," American Economic Review, American Economic Association, vol. 102(6), pages 3077-3110, October.
    19. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    20. Pickett, Kate E. & Wilkinson, Richard G., 2015. "Income inequality and health: A causal review," Social Science & Medicine, Elsevier, vol. 128(C), pages 316-326.
    21. Domini, Giacomo & Grazzi, Marco & Moschella, Daniele & Treibich, Tania, 2022. "For whom the bell tolls: The firm-level effects of automation on wage and gender inequality," Research Policy, Elsevier, vol. 51(7).
    22. Carl Henrik Knutsen, 2011. "Democracy, Dictatorship and Protection of Property Rights," Journal of Development Studies, Taylor & Francis Journals, vol. 47(1), pages 164-182.
    23. Gwartney, James & Lawson, Robert, 2003. "The concept and measurement of economic freedom," European Journal of Political Economy, Elsevier, vol. 19(3), pages 405-430, September.
    24. Law, Siong Hook & Naseem, N.A.M. & Lau, Wei Theng & Trinugroho, Irwan, 2020. "Can innovation improve income inequality? Evidence from panel data," Economic Systems, Elsevier, vol. 44(4).
    25. Louise Fox & Ana Maria Oviedo, 2013. "Institutions and Job Growth in African Manufacturing: Does Employment Protection Regulation Matter?," Journal of African Economies, Centre for the Study of African Economies, vol. 22(4), pages 616-650, August.
    26. Boyan Jovanovic, 2009. "The Technology Cycle and Inequality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(2), pages 707-729.
    27. Ho, Chun-Yu & Huang, Shaoqing & Shi, Hao & Wu, Jun, 2018. "Financial deepening and innovation: The role of political institutions," World Development, Elsevier, vol. 109(C), pages 1-13.
    28. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    29. Robert Deacon, 2009. "Public good provision under dictatorship and democracy," Public Choice, Springer, vol. 139(1), pages 241-262, April.
    30. Hooks, D. & Davis, Z. & Agrawal, V. & Li, Z., 2022. "Exploring factors influencing technology adoption rate at the macro level: A predictive model," Technology in Society, Elsevier, vol. 68(C).
    31. Antonelli, Cristiano & Gehringer, Agnieszka, 2017. "Technological change, rent and income inequalities: A Schumpeterian approach," Technological Forecasting and Social Change, Elsevier, vol. 115(C), pages 85-98.
    32. Arne Bigsten, 2018. "Determinants of the Evolution of Inequality in Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 27(1), pages 127-148.
    33. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
    34. Seth W. Norton, 1998. "Poverty, Property Rights, and Human Well-Being: A Cross-National Study," Cato Journal, Cato Journal, Cato Institute, vol. 18(2), pages 233-245, Fall.
    35. Van Bon Nguyen, 2021. "The difference in the FDI inflows – Income inequality relationship between developed and developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 30(8), pages 1123-1137, November.
    36. Pan, Xiameng & Sun, Chang, 2024. "Internal migration, remittances and economic development," Journal of International Economics, Elsevier, vol. 147(C).
    37. Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2016. "Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing," Economic Journal, Royal Economic Society, vol. 126(591), pages 317-357, March.
    38. Mao Wu & Ying Ma & Yu Gao & Zhanhui Ji, 2024. "The impact of digital economy on income inequality from the perspective of technological progress-biased transformation: evidence from China," Empirical Economics, Springer, vol. 67(2), pages 567-607, August.
    39. Ichraf Ouechtati, 2023. "Financial Inclusion, Institutional Quality, and Inequality: an Empirical Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 620-644, June.
    40. Moheddine Younsi & Hasna Khemili & Marwa Bechtini, 2019. "Does foreign aid help alleviate income inequality? New evidence from African countries," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 46(4), pages 549-561, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ofori, Isaac K., 2024. "Frontier Technology Readiness, Democracy, and Income Inequality in Africa," EconStor Preprints 298788, ZBW - Leibniz Information Centre for Economics.
    2. Thanos Fragkandreas, 2022. "Three Decades of Research on Innovation and Inequality: Causal Scenarios, Explanatory Factors, and Suggestions," Working Papers 60, Birkbeck Centre for Innovation Management Research, revised Feb 2022.
    3. Aghion, Philippe & Akcigit, Ufuk & Howitt, Peter, 2014. "What Do We Learn From Schumpeterian Growth Theory?," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 0, pages 515-563, Elsevier.
    4. Parantap Basu & Yoseph Getachew, 2020. "Redistributive innovation policy, inequality, and efficiency," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 532-554, June.
    5. Ofori, Isaac K. & Gbolonyo, Emmanuel Y. & Ojong, Nathanael, 2022. "Foreign Direct Investment and Inclusive Green Growth in Africa: Energy Efficiency Contingencies and Thresholds," MPRA Paper 115379, University Library of Munich, Germany, revised 09 Nov 2022.
    6. Gömleksiz, Mustafa & Özsahin, Serife, . "The Regional Dynamics of Economic Growth: Evidence from GMM Estimation in Turkey," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 26(1).
    7. Philippe Aghion & Ufuk Akcigit & Antonin Bergeaud & Richard Blundell & David Hemous, 2019. "Innovation and Top Income Inequality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(1), pages 1-45.
    8. Ouedraogo, Idrissa & Ngoa Tabi, Henri & Atangana Ondoa, Henri & Jiya, Alex Nester, 2022. "Institutional quality and human capital development in Africa," Economic Systems, Elsevier, vol. 46(1).
    9. Ofori, Isaac K. & Gbolonyo, Emmanuel Y. & Ojong, Nathanael, 2023. "Foreign direct investment and inclusive green growth in Africa: Energy efficiency contingencies and thresholds," Energy Economics, Elsevier, vol. 117(C).
    10. Antonelli, Cristiano & Tubiana, Matteo, 2023. "The rate and direction of technological change and wealth and income inequalities in advanced countries," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    11. Isaac K. Ofori & Emmanuel Y. Gbolonyo & Nathanael Ojong, 2022. "Foreign Direct Investment and Inclusive Green Growth in Africa: Energy Efficiency Contingencies and Thresholds," Working Papers 22/089, European Xtramile Centre of African Studies (EXCAS).
    12. Brouwer, E. & van der Wiel, H.P., 2010. "Competition and Innovation : Pushing Productivity Up or Down?," Discussion Paper 2010-52, Tilburg University, Center for Economic Research.
    13. Johanna Vogel, 2015. "The two faces of R&D and human capital: Evidence from Western European regions," Papers in Regional Science, Wiley Blackwell, vol. 94(3), pages 525-551, August.
    14. Isaac K. Ofori & Emmanuel Y. Gbolonyo & Nathanael Ojong, 2022. "Foreign Direct Investment and Inclusive Green Growth in Africa: Energy Efficiency Contingencies and Thresholds," Working Papers of the African Governance and Development Institute. 22/089, African Governance and Development Institute..
    15. Azman-Saini, W.N.W. & Baharumshah, Ahmad Zubaidi & Law, Siong Hook, 2010. "Foreign direct investment, economic freedom and economic growth: International evidence," Economic Modelling, Elsevier, vol. 27(5), pages 1079-1089, September.
    16. Yeung, Hak & Huber, Jürgen, 2024. "Has China's belt and road initiative positively impacted the economic complexity of host countries? Empirical evidence," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 246-258.
    17. Jakob B. Madsen & Md. Rabiul Islam & James B. Ang, 2010. "Catching up to the technology frontier: the dichotomy between innovation and imitation," Canadian Journal of Economics, Canadian Economics Association, vol. 43(4), pages 1389-1411, November.
    18. Nguyen, Canh Phuc & Doytch, Nadia, 2022. "The impact of ICT patents on economic growth: An international evidence," Telecommunications Policy, Elsevier, vol. 46(5).
    19. Lawrence Adu Asamoah & Francesco Figari & Andrea Vezzulli, 2021. "Spillover effects of innovation and entrepreneurial activity on income inequality in developing countries: A spatial panel approach," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(5), pages 1661-1686, October.
    20. Ofori, Isaac K & Gbolonyo, Emmanuel Y. & Ojong, Nathanael, 2022. "Foreign Direct Investment and Inclusive Green Growth in Africa: Energy Efficiency Contingencies and Thresholds," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 1-58.

    More about this item

    Keywords

    Africa; Frontier Technology Readiness; Democracy; Income Inequality.;
    All these keywords.

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:121243. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.