nep-afr New Economics Papers
on Africa
Issue of 2004‒12‒12
sixteen papers chosen by
Suzanne McCoskey
US Naval Academy

  1. Dualism and cross-country growth regressions By John Temple; Ludger Woessmann
  2. Patent Protection As A Stimulant for Risky Innovation. Could TRIPS be Counterproductive? By Andreas Panagopoulos
  3. The Role of the State in Economic Development By Guido Tabellini
  4. Price dispersion:  The role of distance, borders and location By Mario Crucini; Chris Telmer; Marios Zachariadis
  5. From social exclusion to lifelong learning in Southern Africa By Hensbroek, P.B. van; Schoenmakers, H.
  6. Modeling the Defense-Growth Nexus in a Post-Conflict Country - A Piecewise Linear Approach By Gerhard Reitschuler; Ludger J. Löning
  7. Financial Globalization, Growth and Volatility in Developing Countries By Eswar S. Prasad; Kenneth S. Rogoff; Shang-Jin Wei; M. Ayhan Kose
  8. Fighting against Malaria: Prevent Wars while Waiting for the "Miraculous" Vaccine By José Garcia Montalvo; Marta Reynal
  10. The Anarchy of Numbers: Aid, Development, and Cross-country Empirics By David Roodman
  11. An Index of Donor Performance By David Roodman
  12. Slavery, Institutional Development, and Long-Run Growth in Africa, 1400--2000 By Nathan Nunn
  13. Taxing Alcohol in Africa: Reflections from International Experience By Richard M. Bird; Sally Wallace
  14. To what extent are African education policies pro-poor ? By Jean-Claude Berthélemy
  15. Bilateralism and multilateralism in official development assistance policies By Jean-Claude Berthélemy
  16. "Institutional profiles" : presentation and analysis of an original database of the institutional characteristics of developing, in transition and developed countries By Pierre Berthelier; Alain Desdoigts; Jacques Ould Aoudia

  1. By: John Temple; Ludger Woessmann
    Abstract: This paper examines whether growth regressions should incorporate dualism and structural change. If there is a differential across sectors in the marginal product of labour, changes in the structure of employment can raise aggregate total factor productivity. The paper develops empirical growth models that allow for this effect in a more flexible way than previous work. Estimates of the models imply sizeable marginal product differentials, and reveal that the reallocation of labour can explain a significant fraction of the international variation in TFP growth.
    Keywords: growth, dualism, structural change
    JEL: O10 O40
    Date: 2004–09
  2. By: Andreas Panagopoulos
    Abstract: This paper introduces the idea that strong patent protection can lead innovators to rest on their laurels, into a simple tournament based framework. Concentrating on optimal patent protection, the one that maximizes production, the model shows that there is a positive relationship between the ability of the economy (firm) to innovate and how strong patent protection should be. This line of thinking runs counter to the uniÞed intellectual property regime, as introduced by TRIPS.
    Keywords: Intellectual property, sequential innovation, tournaments.
    JEL: K0 O11
    Date: 2004–11
  3. By: Guido Tabellini
    Date: 2004–12–02
  4. By: Mario Crucini; Chris Telmer; Marios Zachariadis
    Abstract: We study deviations from the Law-of-One-Price using microeconomic data on the retail prices of approximately 220 individual goods and services across 122 cities located in 79 countries over the period from 1990 to 2000.
    Date: 2003–12
  5. By: Hensbroek, P.B. van; Schoenmakers, H. (Groningen University)
    Date: 2004
  6. By: Gerhard Reitschuler; Ludger J. Löning
    Abstract: The defense-growth nexus is investigated empirically using longitudinal data for Guatemala and allowing the effect of defense spending on growth to be nonlinear. Using recently developed econometric methods involving threshold regressions, evidence of a level-dependent effect of military expenditure on GDP growth is found: a positive and significant externality effect of defense spending prevails for relatively low levels of defense spending and becomes negative, albeit insignificant, for higher levels.
    Keywords: Guatemala, defense expenditures, nonlinearity, economic growth, externality effect
    JEL: E13 C22 H56
    Date: 2004–02–01
  7. By: Eswar S. Prasad; Kenneth S. Rogoff; Shang-Jin Wei; M. Ayhan Kose
    Abstract: This paper provides a comprehensive assessment of empirical evidence about the impact of financial globalization on growth and volatility in developing countries. The results suggest that it is difficult to establish a robust causal relationship between financial integration and economic growth. Furthermore, there is little evidence that developing countries have been consistently successful in using financial integration to stabilize fluctuations in consumption growth. However, we do find that financial globalization can be beneficial under the right circumstances. Empirically, good institutions and quality of governance are crucial in helping developing countries derive the benefits of globalization. Similarly, macroeconomic stability appears to be an important prerequisite for ensuring that financial globalization is beneficial for developing countries. Finally, countries that employ relatively flexible exchange rate regimes and succeed in maintaining fiscal discipline are more likely to enjoy the potential growth and stabilization benefits of financial globalization.
    JEL: F15 F36 F41 F43
    Date: 2004–12
  8. By: José Garcia Montalvo; Marta Reynal
    Abstract: The World Health Organization estimates that 300 million clinical cases of malaria occur annually and also observed that during the 80’s and part of the 90’s its incidence increased noticably. There are basically two factors behind the incidence of malaria: 'geographical destiny' and socio-economic conditions. In this paper we explore the influence of civil wars and war refugees on the incidence of malaria in the refugee-receiving countries, using a large panel data. The panel structure helps to separate 'geographical destiny' from social conditions. The results of the estimation show that for each 1,000 refugees there are between 2,000 and 2,700 cases of malaria in the refugee receiving country. The average economic impact of those refugees taken in a sample of African countries reaches 3.6 % of the income of 1995.
    Keywords: Civil wars, forced migration, economic impact
    JEL: I18 I31 O15
    Date: 2001–09
  9. By: Marcelo Braga Nonnemberg; Mario Jorge Cardoso de Mendonça
    Abstract: The objective of this study is to shed light on the determinants of foreign direct investiment (FDI) in developing countries. In order to undertake it, we performe a econometric model based in panel data analysis for 38 developing countries (including transition economies) for the 1975-2000 period. Among the major conclusions we have that the FDI is correlated to level of schooling, economy's degree of openness, risk and variables related to macroeconomic performance like inflation, risk and average rate of economic growth. The results also show that the FDI has been closely associated with stock market performance. Lastly, a causality test between FDI and GDP is performed. There is evidence of the existence of causality in sense that GDP leading to FDI, but not vice versa.
    JEL: F21 F43 F41
    Date: 2004
  10. By: David Roodman (Center for Global Development)
    Abstract: Recent literature contains many stories of how foreign aid affects economic growth. All the stories hinge on the statistical significance in cross-country regressions of a quadratic term involving aid. Among the stories are that aid raises growth (on average) 1) in countries where economic policies are good; 2) in countries where policies are good and a civil war recently ended; 3) in all countries, but with diminishing returns; 4) in countries outside the tropics; 5) in countries with difficult economic environments, characterized by declining or volatile terms of trade, natural disasters, or low population; or 6) when aid increases in countries experiencing negative export price shocks. The diversity of results prima facie suggests that many are fragile. Easterly et al. (2004) find the aid-policy story (Burnside and Dollar, 2000) to be fragile in the face of an expansion of the data set in years and countries. The present study expands that analysis by applying more tests, and to more studies. Each test involves altering just one aspect of the regressions. All 19 tests are derived from sources of variation that are minimally arbitrary. Twelve derive from specification differences between studies, what Leamer (1983) calls “whimsy.” Three derive from doubts about the appropriateness of the definition of one variable in one study. The remaining four derive from the passage of time, which allows sample expansion. This design allows an examination of the role of “whimsy” in the results that are tested while minimizing “whimsy” in the testing itself. Among the stories examined, the aid-policy link proves weakest, while the aid-tropics link is most robust.
    Keywords: foreign aid, economic growth, robustness testing
    JEL: O P
    Date: 2004–12–06
  11. By: David Roodman (Center for Global Development)
    Abstract: The Commitment to Development Index of the Center for Global Development rates 21 rich countries on the “development-friendliness” of their policies. It is revised and updated annually. In the 2004 edition, the component on foreign assistance combines quantitative and qualitative measures of official aid, and of fiscal policies that support private charitable giving. The quantitative measure uses a net transfers con- cept, as distinct from the net flows concept in the net Official Development Assistance measure of the Development Assistance Committee, which does not net out interest received. The qualitative factors are three: a penalty for tying aid; a discounting system that favors aid to poorer, better-governed recipients; and a penalty for “project proliferation.” The selectivity weighting approach avoids some conceptual problems inherent in the Dollar and Levin (2004) elasticity- based method. The proliferation pen-alty derives from a calibrated model of aid transaction cost developed in Roodman (forthcoming). The charitable giving measure is based on an estimate of the share of observed private giving to developing countries that is attributable to a) lower overall taxes (income effect) and b) specific tax incentives for giving (price effect). Despite the adjustments, overall results are dominated by differences in quantity of official aid given. This is because while there is a seven-fold range in net concessional transfers/GDP among the score countries, variation in overall aid quality across donors appears far lower, and private giving is generally small. Denmark, the Netherlands, Norway, and Sweden score highest while the largest donors in absolute terms, the United States and Japan, score in the bottom third. Standings by the 2004 methodology have been relatively stable since 1995.
    Keywords: foreign aid, selectivity, performance measurement
    JEL: O P
    Date: 2004–12–06
  12. By: Nathan Nunn (University of Toronto)
    Abstract: Can Africa's current state of under-development be partially attributed to the large trade in slaves that occurred during the Atlantic, Saharan, Red Sea and Indian Ocean slave trades? To answer this question, I combine shipping data with historical records that report slave ethnicities and construct measures of the number of slaves exported from each country in Africa between 1400 and 1913. I find the number of slaves exported from a country to be an important determinant of economic performance in the second half of the 20th century. To correct for potential biases arising from measurement error and unobservable country characteristics, I instrument slave exports using measures of the distance from each country to the major slave markets around the world. I also find that the importance of the slave trade for contemporary development is a result of its detrimental impact on the formation of domestic institutions, such as the security of private property, the quality of the judicial system, and the overall rule of law. This is the channel through which the slave trade continues to matter today.
    Keywords: Slave trade; Institutions; Africa; Growth
    JEL: F1 F2
    Date: 2004–11–26
  13. By: Richard M. Bird (International Tax Program, Rotman School of Management, University of Toronto); Sally Wallace (Andrew Young School of Policy Studies, Georgia State University)
    Abstract: Governments exist, in part, to cope with the weaknesses of their citizens and subsist, to some extent, on the basis of those same weaknesses. In many countries, alcoholic beverages have long played a critical role on both sides of this equation. Over-indulgence in drink is a factor in crime, injury, and illness. It is also a potentially lucrative source of tax revenue. From a public policy perspective, alcohol thus has two faces: viewed from one side, it is a villain giving rise to social problems and consequently the need for public expenditure; viewed from the other, however, it is a hero riding to the rescue with copious fiscal returns. This ambivalence has, over the years, led to many hypotheses with respect to how much and how to tax alcohol and not a little hypocrisy in the public discussion of this question. Our aim in this paper is to contribute neither to the hypothesizing nor to the hypocrisy but simply to summarize what appears to be the current state of the art of taxing alcohol around the world. We attempt to draw from international experience some implications for sub-Saharan African governments that are wrestling with the apparently eternal conundrums and trade-offs that confound alcohol tax policy everywhere.
    Keywords: Alcohol, taxations, alcohol tax policy, international, Africa, sub-Saharan
    Date: 2003–06
  14. By: Jean-Claude Berthélemy (TEAM)
    Abstract: This paper discusses the distributive nature of education policies in developing countries, with a specific emphasis on sub-Saharan Africa. We show that human capital is particularly unequally distributed in sub-Saharan African countries and in Middle-East and North Africa and South Asian regions as well, after taking into account the inevitable (arthmetical) correlation which exists between the aggregate level of human capital and its concentration. We provide further evidence, based on sub-Saharan Africa schooling structure data, that these countries pay, relatively speaking, little attention to primary education, to the benefit of secondary education. We interpret this bias as the result of specific institutional characteristics of sub-Saharan Africa, which are deeply-rooted in its history (in particular its post-colonial legacy), its demography and its geography.
    Keywords: Education, distributive policy, institutions, Africa
    JEL: D31 I28 O15
    Date: 2004–01
  15. By: Jean-Claude Berthélemy (TEAM)
    Abstract: I examine in detail the motives of bilateral aid allocation decisions, as they are revealed by data on bilateral aid commitments. I identify both self-interest and recipient needs and merits motives in aid allocation. Self-interest motives are related to economic and political ties between donors and recipients. Such variables can be used to define a "bilateralism effect" in aid allocation decisions. Unsurprisingly, aid allocation net of the bilateralism effect is highly correlated with multilateral aid pattern. Perhaps more surprisingly, the bilateralism effect is adverse to the Sub-Saharan African region, in spite of its strong post-colonial ties with European donors, because trade linkages play actually a greater role than political ties. A consequence of the major role played by trade linkages is that the bilateralism effect is not necessarily adverse to aid selectivity, given that major trading partners are also on average open and relatively well performing economies.
    Keywords: International aid allocation
    JEL: F35 C23 C24
    Date: 2004–11
  16. By: Pierre Berthelier (Direction de la Prévision); Alain Desdoigts (EUREQua et LEG, Université de Bourgogne); Jacques Ould Aoudia (Direction de la Prévision)
    Abstract: The disparity between the development paths followed by the economies of a limited number of countries, known as "emerging", and the bulk of the other developing countries has shown the limitations of previous development strategies. As a consequence, at the beginning of the 1990s, the question of institutions has been propelled to the top of the economic agenda. The empirical literature has now solidly documented and validated the general relationship between institutions and development. With this as a starting point, attention is now being concentrated on the actual nature of the institutional mechanisms at work, the inter-relationships between them and their combined impact on development. Whereas previous analysis of development had mainly drawn on the instruments derived from national accounts, there are not as yet internationally standardised observation instruments for tackling the questions now being raised. A few institutional indicators were created since the end of the 1990s but these cover only a limited part of the institutional domain. This document attempts to fill the gap, putting forward an original database covering a broad and detailed field of institutional characteristics for 51 countries (developing, in transition and developed countries). The basic data were collected using a questionnaire completed in 2001 by the economic missions of the French Ministry of the Economy, Finance and Industry in the selected countries, enabling us to cover 80% of the world's GDP and population. In this document, we set out the method used for the construction of our indicators. We then compare them with other existing indicators, noting the existence of convergence for elements that are common to the respective inquiries. On the basis of our indicators we confirm the causal relationship between institutions and levels of development. We then go on to explore the database using a non-inferential (data analysis) approach. We identify an "institutional core" consisting of four major institutional characteristics (governance, security of transactions, innovation and regulations), leading us to draw up an initial typology of institutional profiles : "Authoritarian-paternalistic", "mild liberal", "pure liberal" and "informal". This typology is then supplemented by a combination of both institutional and economic variables, highlighting the main thrusts providing the framework for the database : welfare and reform. The Classification obtained aggregates countries by relevant sub-groups. This approach, which was initiated by the Ministry for economic policy purposes, has since been opened up, first, to the academic world, by bringing together a scientific committee composed of development economists in order to monitor the progress of the work described here, and second by making it possible for Research Centres to use the database.
    Keywords: Institutions, development, indicators, database
    JEL: C8 C13 O10 O17 O57 Z13
    Date: 2004–01

This nep-afr issue is ©2004 by Suzanne McCoskey. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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