Person: Ndikumana, Léonce
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Andrew Glyn Professor of Economics, Department of Economics, College of Social and Behavioral Sciences
Last Name
Ndikumana
First Name
Léonce
Discipline
Economics
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Introduction
After suffering political persecution as a prisoner of conscience in his native Burundi, Léonce Ndikumana now devotes his research and scholarship to improving the lives of some of the planet’s most impoverished people. His work focuses on macroeconomic policy in Africa, the subject of several of his books and fifty-plus articles.
Ndikumana’s latest work, on capital flight from Africa, has had a major impact on policy debate. It shows that the continent has suffered more than $1 trillion in capital flight since 1970, making it an international net creditor, not a net debtor.
After receiving tenure at UMass Amherst in 2002, Ndikumana was appointed chief of macroeconomic analysis at the United Nations Economic Commission for Africa and subsequently became director of development economics research at the African Development Bank. He returned to this campus in 2011 to serve as Andrew Glyn Professor of Economics and direct the African Policy Program at the Political Economy Research Institute.
Ndikumana’s latest work, on capital flight from Africa, has had a major impact on policy debate. It shows that the continent has suffered more than $1 trillion in capital flight since 1970, making it an international net creditor, not a net debtor.
After receiving tenure at UMass Amherst in 2002, Ndikumana was appointed chief of macroeconomic analysis at the United Nations Economic Commission for Africa and subsequently became director of development economics research at the African Development Bank. He returned to this campus in 2011 to serve as Andrew Glyn Professor of Economics and direct the African Policy Program at the Political Economy Research Institute.
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Publication Capital Flight, Foreign Direct Investment and Natural Resources in Africa(2019-01-01) Ndikumana, Léonce; Sarr, MareThis paper provides theoretical and empirical insights into the puzzling simultaneous rise in foreign direct investment inflows in Africa and capital flight from the continent over the past decades. Indeed, paradoxically, even as African countries have become more attractive to foreign private capital, they have continued to experience capital exodus in the context of improved economic performance, especially since the turn of the century. This paper explores three questions. First, does foreign direct investment fuel capital flight as has been established in the case of external borrowing? In other words, is there an FDI-fueled capital flight phenomenon akin to debt-fueled capital flight? Second, is natural resource endowment a possible channel for the capital flight-FDI link, given that resource-rich countries tend to be both preferred destinations of FDI and prominent sources of capital flight? Third, does the quality of institutions mitigate the impact of natural resources on capital flight? The paper develops a theoretical model that conceptualizes these linkages and sets the stage for an econometric investigation of these questions. The results from econometric analysis based on a sample of 30 African countries over the period 1970-2015 show that FDI flows are positively related to capital flight, suggesting a possible FDI-fueled capital flight phenomenon. However, there is no evidence for an FDI overhang effect; past stock of FDI has no impact on capital flight. High natural resource rents are associated with high capital flight and the quality of institutions does not mitigate this link. The paper offers some policy insights derived from the empirical results.Publication Does Health Aid Reduce Infant and Child Mortality from Diarrhea in Sub-Saharan Africa?(2018-09-06) Pickbourn, Lynda; Ndikumana, LéonceAchieving sustained improvements in health outcomes remains a challenge for sub-Saharan Africa, where diarrhea remains a leading cause of death in children under the age of five. This paper examines the impact of foreign aid to the health sector on diarrhea mortality in children under five in 47 sub -Saharan African countries, using panel data on the sectoral allocation of official development assistance in conjunction with country -level data on health outcomes. After controlling for fixed effects and the potential endogeneity of health aid, we find that increased health aid and increased public health expenditure are associated with lower diarrhea mortality in children under five. In addition, health aid increases government spending on health, suggesting that the overall impact of health aid on diarrheal death rates could exceed the direct effect. Furthermore, increased access to improved sources of water and sanitation are important in reducing child mortality from diarrhea.Publication Does Project-Level Foreign Aid Increase Access to Improved Water Sources? Evidence from Household Panel Data in Uganda(2021-11-01) Pickbourn, Lynda Joyce; Caraher, Raymond; Ndikumana, LéonceThis paper combines geocoded subnational data on the location of water, sanitation and hygiene (WASH) aid projects in Uganda with nationally representative household-level panel survey data to evaluate the impact of WASH aid on access to water and on the burden of water collection. Specifically, it examines whether proximity to aid-funded WASH projects improves household access to improved water sources and reduces the time burden of water collection. Our results suggest that while aid-funded WASH projects increase household access to improved sources of water, households may also see the time burden of water collection increase, as they may need to travel longer distances and also experience longer wait times due to congestion at water service points. This is an indication that the supply of improved water sources is still insufficient relative to demand as measured by the population density.Publication Impact of Development aid on infant mortality: Micro-level evidence from Côte d’Ivoire(2019-01-01) Wayoro, Didier; Ndikumana, LéonceThe empirical literature has failed to reach consensus on the impact of aid on development outcomes based on aggregate cross-country analysis. This study follows the current trend in the literature on the effectiveness of aid to examine the impact of local-level aid on health outcomes. We combine data on World Bank’s geo-located aid projects with three rounds of Demographic Health Surveys from Côte d’Ivoire and use difference-in-difference estimation techniques to explore the effects of aid on infant mortality. We find that proximity to development aid projects is associated with reduced infant mortality. Our results are robust to mother fixed-effects estimations as well as water and sanitation projects. The evidence suggests that access to prenatal and postnatal health care are possible mechanisms through which aid may affect infant mortality.Publication Unit Labor Costs and Manufacturing Sector Performance in Africa(2020-01-01) Naidoo, Karmen; Ndikumana, LéonceSeveral studies have highlighted that African manufacturing wages are higher than comparator countries at similar levels of development, which contributes to the continent’s lower levels of manufacturing competitiveness. This paper derives unit labor costs – average wages relative to productivity – for two-digit manufacturing sectors across a wide range of developed and developing countries over the 1990-2015 period. We benchmark the unit labor costs to China and estimate the impact of relative unit labor costs on manufacturing sector value added, employment, investment and exports. We find that relative unit labor costs have a smaller effect on manufacturing performance in Africa relative to other developing regions. Further, we find that for Africa, the level and growth of labor productivity have a quantitatively stronger and more robust effect on manufacturing performance than the level and growth of real wages. The results have important implications for industrial policy in African countries.Publication Is There a Case for National Development Banks in Africa? Conceptual Rationale and Empirical Evidence(2021-05-01) Ndikumana, Léonce; Naidoo, Karmen; Perez, FranciscoNational development banks remain an important part of modern financial systems in developed as well as developing countries. The attention to the role of national development banks was reinvigorated in the aftermath of the 2008 global financial crisis, and their potential role in promoting access to finance and providing counter-cyclical financing is better appreciated today than in the structural adjustment era of the 1980s and 1990s. In this context, this study examines the landscape of national development banks in Africa and provides empirical evidence of their role in complementing commercial banks to meet the financing needs of the real sector using bank- level data from selected countries and the BankFocus database. The empirical results show that while national development banks do not lend more relative to commercial banks, they tend to focus more on medium-term and long-term lending as prescribed by their mandate. Interestingly, medium-term and long-term lending is associated with lower non-performing loan ratios as well as higher returns on assets. The results are similar for public banks. The evidence suggests that empowering national development banks with enhanced lending capacity and operational autonomy would significantly help alleviate the shortage of medium-term and long-term credit in African economies. The paper includes suggested avenues for further research.