The Moderating Role of Governance in the Globalisation-Life Expectancy Nexus: Implications for Socioeconomic Development

Abstract

Abstract Research Purpose: One of the most recent global aims is to increase life expectancy since healthy people are seen as human capital that may boost the economy. The study investigates the role of governance in the globalisation-life expectancy nexus using 39 African countries between 1996 and 2019. Design/Methodology/Approach: The study uses a Panel-Spatial Correlation Consistent augmented with the Least Square Dummy Variables (PSCC-LSDV) approach. The study uses a dynamic two-step system, the Generalised Method of Moments (GMM), as a robust model to solve the endogeneity problem. Findings The results from the PSCC-LSDV approach reveal that globalisation increases life expectancy in the selected African countries.The approach is more efficient since it can be used with cross-sectional dependent variables when other techniques like fixed and random effects methods may be ineffective. Likewise, the result from the GMM estimator is consistent with the PSCC-LSDV approach. The effect of globalisation on the life expectancy nexus without the inclusion of governance is positive. Meanwhile, the moderating (interactive) effect of governance on the relationship between globalisation and life expectancy is negative, indicating that globalisation and governance are substitutes for each other. This means that globalisation positively influences life expectancy, but the governance conditions in Africa weaken this positive effect. Originality/ Value/ Practical Implications Previous studies have shown that globalisation can have a negative, a positive or an insignificant effect on life expectancy in different countries. This discrepancy may arise from the use of different methods, different variables being measured, or different countries. None of these studies, to our knowledge, look at the moderating effect of governance on the globalisation-life expectancy nexus. Furthermore, unlike this study, most studies that look into the role of governance in the relationship between globalisation and life expectancy do not employ an aggregate index. The moderating role of governance from the two approaches confirms that governance interacts with globalisation to weaken the positive impact of globalisation on life expectancy. Put differently, the existence of poor governance in the African region drains the positive effect of globalisation on life expectancy in Africa. However, we expect life expectancy in African countries to improve in the face of good governance.