Impact of business environment on poverty reduction Gessye Ginelle Safou-Mat American University School of International Service

Research Question & Research hypothesis Research Question & Research hypothesis Research Question/s Impact of the state of the business environment on poverty reduction. Research hypothesis/ hypotheses Ha: Controlling for literacy rate, ease of doing business ranking is negatively correlated with human development index.

Background Info or Lit. Review Theory and findings form paper #1: United Nations Research Institute on Social Development (UNRISD o Theory: link between business and poverty reduction o Findings :Complex relationship, Poverty can badly affect businesses and business can affect poverty either positively or negatively Theory and findings form paper #2: World Bank Doing Business and Tawose o Theory: Enterprises effective vehicles to industrial development, employment, income generation and poverty reduction o Findings :Ease of doing business is positively correlated to more jobs. Theoretical and/or empirical gap/s in the existing literature o Theoretical gap/s: Are more businesses causing poverty or is poverty restraining business development ( foreign investment) in a country? o Empirical gap/s: no extensive research available on this topic, does ease of doing business really help reduce poverty?

Data Unit of analysis/study : country Source of the data: World Bank Doing Business 2012, UNDP 2010 HDI Index, World Bank data literacy rate 2010 Reliability of the data: large number of observations (178 countries max and 96 min), p value = 0.000<0.05, however data taken from different years (2010 for HDI and LIT and 2012 for EDB), still reliable as business environment and HDI do not change overnight. Dependent variable/s o Y is Human Development Index (HDI) o Unit of measurement and LOM of Y variable : expressed from 0 to 1, 1 being the perfect Human Development Index and 0 representing the worse country in terms of HDI. LOM is Interval Ratio Independent Variable o X1 is Ease of Doing Business (EDB); Units is ranking, number 1 representing the best ranking and LOM of EDB is Ordinal o X2 is Literacy rate (LIT); Units is percentage from 0 to 1 and LOM of LIT variable is Interval Ratio o X3 is GDP; Units is income in terms of dollars and LOM of is Interval Ratio

Descriptive Statistics Table or/and Graphics Central tendency of dependent/independent variables: o The mean/median (for I-R LOM dependent variable) represent the typical/central score. The mean is highly sensitive to extreme scores whilst the median is not or the mode (for Nominal or Ordinal LOM variables) represents the most common score. o My dependent variable HDI has normal uni-modal distribution The central tendency for HDI is not very much credible as there is clearly a different mode, mean and median. Dispersion of dependent/independent variables: o HDI: Little dispersion, Standard Deviation is equal to 0.17 o EDB: Large dispersion, range is equal to 188 o LIT: Little dispersion, Standard Deviation is equal to 5.12 o GDP:Very Large dispersion, Standard Deviation is equal to Do you have missing data: Yes, EDB for 2010 unavailable. Regression for HDI, EDB, LIT and GDP together finds only 94 countries available when individually HDI has 175 countries, EDB 178, LIT 96 and GDP 174 countries. Visualize the distribution (central tendency and dispersion) of your dependent/independent variables

DESCRIPTIVE STATISTICS StatsHDI 2010 EDBLITGDPUnpl N Mean SD P iqr Min Max Cv

Bivariate analysis - I-R LOM dependent variable HDI 2010Research hypothesis EDBPearson’s r=-0.78 (0.000), N=175 Reject the H0. HDI and EDB are strongly negatively correlated LITPearson’s r=0.82 (0.000), N=96 Reject the H0. HDI and LIT are strongly positively correlated lGDPPearson’s r=0.93 (0.000), N=172 Reject the H0. HDI and GDP are strongly positively correlated UNPLPearson’s r=0.14 (0.000), N=90 Reject the H0. HDI and UNPL are weakly positively correlated

Regression Analysis, OLS (Probit marginal Effects) Estimates, The Dependent Variable is …. Model 1Model 2 Model 3 X1 (Sign., p) 0.11 (.00) 0.11 (.00) X (.04) (.04) X3.01 (.09 ) N Adj. R Interpretations: i)Does the association, i.e. is your coefficient statistically significant? Look this value. Is it <.05? ii) If the association/correlation exists (sig <.05), what is the direction of the association/correlation, i.e.. What is the sign of the coefficient? iii) interpret the value of each and every statistically significant coefficient. For example, if the dependent and independent variables are not in log-level, and if b1=0.11, we can interpret this coefficients in the following way “one unit change in the independent variable X1 leads to 0.11 units changes in the dependent variables Y.” You can not interpret values of coefficients that are not significant since they are statistical zeros. iv) Make sure you interpret adj. R square statistics.

Model 1Model 2Model 3Model 4 Edb (0.00) (0.00) (0.00) (0.31) Lit (0.00) (0.00) (0.00) Lgdp (0.00) (0.00) Unpl (0.11) N Adj. R Regression Analysis, OLS Estimates, The dependent variable is Human Development Index Regression Analysis, OLS Estimates, The dependent variable is Human Development Index (Sign., p)

Findings & Policy Implications of the research Findings: Did you accept your research hypothesis? o Finding #1 o Finding #2 What are the policy implications of your findings?