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A Sequence to Reverse Poverty: Institutions, State Capacity and Human Empowerment

Sansia Blackmore () and Renee Van Eyden ()
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Sansia Blackmore: African Tax Institute, University of Pretoria, South Africa
Renee Van Eyden: Department of Economics, University of Pretoria, Pretoria, 0002, South Africa

No 202080, Working Papers from University of Pretoria, Department of Economics

Abstract: This paper explores the fundamental or deep causes of poverty persistence, which remains a central challenge of the modern world. In theory, rising political participation in a democracy operationalises checks on state predation and cultivates development-enabling state capacity. This did not materialise in post-colonial sub- Saharan Africa. The theoretical foundation of this premise is further brought into question by the development achievements of strong, capable non-democracies like Singapore and Hong Kong. This study uses a dynamic panel-data model specification and General Methods of Moments for a sample of 105 countries over the period 1981 to 2015 to explore a probabilistic development hypothesis that fuses broad institutionalism with modernisation and human empowerment. In this model, regime-independent state capacity is relied on to trigger the transformational impetus associated with rising existential security, autonomy and individual agency. Ensuing shifts in societal value orientations towards emancipative mindsets then drive the progression towards prosperity and liberty. The results show that the poor-country deficit in human empowerment, represented by mind-broadening education and emancipative values, dwarfs the shortcomings in all other drivers of prosperity, including exports and investment. The findings rule against geography and democracy as fundamental causes of poverty or prosperity.

Keywords: Poverty Reversal; Institutions; State Capacity; Human Empowerment (search for similar items in EconPapers)
JEL-codes: O43 I25 P16 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2020-09
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