nep-afr New Economics Papers
on Africa
Issue of 2004‒12‒20
nine papers chosen by
Suzanne McCoskey
US Naval Academy

  1. The Gift of the Dying: The Tragedy of AIDS and the Welfare of Future African Generations By Alwyn Young
  2. On the Causal Links between FDI and Growth in Developing Countries By Henrik Hansen; John Rand
  3. Econometric Models and Causality Relationships Between Manufacturing and Non-Manufacturing Production in MOROCCO, TUNISIA and other Northern African Countries, 1950-2000 By Guisan, Maria-Carmen; Exposito, Pilar
  4. Has Monetary Policy Become More Efficient? A Cross Country Analysis By Stephen G. Cecchetti; Alfonso Flores-Lagunes; Stefan Krause
  5. Globalization and the Returns to Speaking English in South Africa By James Levinsohn
  6. Own interest and foreign need: Are bilateral investment treaty programmes similar to aid allocation? By Eric Neumayer
  7. Is “Trade” Openness Valid for Nigeria’s Long-Run Growth: A Cointegration Approach? By Ogujiuba Kanayo; Oji Okechukwu; Adeniyi Adenuga
  8. A Comparison of Multi-step GDP Forecasts for South Africa By Guillaume Chevillon
  9. The Size of the Shadow Economies of 145 Countries all over the World: First Results over the Period 1999 to 2003 By Schneider, Friedrich

  1. By: Alwyn Young
    Abstract: This paper simulates the impact of the AIDS epidemic on future living standards in South Africa. I emphasize two competing effects. On the one hand, the epidemic is likely to have a detrimental impact on the human capital accumulation of orphaned children. On the other hand, widespread community infection lowers fertility, both directly, through a reduction in the willingness to engage in unprotected sexual activity, and indirectly, by increasing the scarcity of labour and the value of a woman's time. I find that even with the most pessimistic assumptions concerning reductions in educational attainment, the fertility effect dominates. The AIDS epidemic, on net, enhances the future per capita consumption possibilities of the South African economy.
    JEL: O1
    Date: 2004–12
  2. By: Henrik Hansen (Institute of Economics, University of Copenhagen); John Rand (Institute of Economics, University of Copenhagen)
    Abstract: We analyse the Granger-causal relationships between foreign direct investment (FDI) and GDP in a sample of 31 developing countries covering the period 1970-2000. Using estimators for heterogeneous panel data we find bi-directional causality between the FDI/GDP ratio and the level of GDP. FDI is found to have a lasting impact on the level of GDP, while GDP has no long run impact on the FDI/GDP ratio. In that sense FDI causes growth. Furthermore, in a model for GDP and FDI as a fraction of gross capital formation (GCF) we also find long run effects of shifts in the mean level of FDI/GCF. We interpret this finding as evidence in favour of the hypotheses that FDI has an impact on GDP via knowledge transfers and adoption of new technology.
    Keywords: economic growth; foreign direct investment; Granger causality; panel data
    JEL: O4 F21 C33
    Date: 2004–12
  3. By: Guisan, Maria-Carmen; Exposito, Pilar
    Abstract: This article presents a general view of economic development in the countries of Magreb, analyzing the impact of manufacturing and imports on economoic growth and cycles, by means of cross correlations, Grangers´s causality analysis and dynamic models: for each country and for a panel of 4 Northern African countries. The analysis shows that these countries have low levels of trade among them and that they could improve their economic development with more industrial production and trade, both among themselves and with other areas as the Mediterranean countries of European Union. The EU agreements with Magreb are focused to foster free trade between North and South Mediterranean. Although this policy could be positive for development is not enough and EU should in our view have a more positive role to foster economic and educational cooperation with those countries in order to increase their income per inhabitant and their levels of employment. The alternative to the lack of cooperation policies could be the increase of disparities with EU and emigration pressures from Northern Africa towards most prosperous countries.
    Keywords: Northern Africa, Development of Magreb, Causality and Economic Development, Manufacturing in Africa, Tunisia, Morocco.
    JEL: C51 L6 O1 O11 O14 O15 O55
    Date: 2004
  4. By: Stephen G. Cecchetti; Alfonso Flores-Lagunes; Stefan Krause
    Abstract: Over the past twenty years, macroeconomic performance has improved in industrialized and developing countries alike. In a broad cross-section of countries inflation volatility has fallen markedly while output variability has either fallen or risen only slightly. This increased stability can be attributed to either: 1) more efficient policy-making by the monetary authority, 2) a reduction in the variability of the aggregate supply shocks, or 3) changes in the structure of the economy. In this paper we develop a method for measuring changes in performance, and allocate the source of performance changes to these two factors. Our technique involves estimating movements toward an inflation and output variability efficiency frontier, and shifts in the frontier itself. We study the change from the 1980s to the 1990s in the macroeconomic performance of 24 countries and find that, for most of the analyzed countries, more efficient policy has been the driving force behind improved macroeconomic performance.
    JEL: E52 E58
    Date: 2004–12
  5. By: James Levinsohn
    Abstract: This paper takes a novel approach to trying to disentangle the impact of globalization on wages by focusing on changes in the return to speaking English, the international language of commerce, in South Africa as that country re-integrated with the global economy after 1993. The paper finds that he return to speaking English increased overall and that within racial groups the return increased primarily for Whites but not for Blacks.
    JEL: F0
    Date: 2004–12
  6. By: Eric Neumayer
    Abstract: Bilateral investment treaties (BITs) have become the most important legal mechanism for the encouragement of foreign direct investment (FDI) in developing countries. Yet practically no systematic evidence exists on what motivates capital-exporting developed countries to sign BITs earlier with some developing countries than with others, if at all. The theoretical framework from the aid allocation literature suggests that developed countries pursue a mixture of own interest and foreign need. It also suggests differences between the big developed countries and a group of smaller ones known as like-minded countries. We find evidence that both economic and political interests determine the scheduling of BITs. However, with one exception, foreign need as measured by per capita income is also a factor. These results suggest that BIT programmes can be explained employing the same framework successfully applied to the allocation of aid. At the same time, own interest seems to be substantively more important than developing country need when it comes to BITs and the like-minded countries make no exception.
    JEL: F3 F4
    Date: 2004–12–15
  7. By: Ogujiuba Kanayo (African Institute for Applied Economics); Oji Okechukwu (African Institute for Applied Economics); Adeniyi Adenuga (Central Bank of Nigeria)
    Abstract: As a prelude to tariff reduction, the government is currently assessing the implications of significantly reducing tariffs due, in part, to its 2001 agreement with Ghana to quickly implement the ECOWAS Trade Liberalization Scheme. The obvious questions are: Should Nigeria liberalize to all countries on all products or opt for a discriminatory approach through unilateral trade agreements? Where do we think Nigeria should be open, and on what issues should they be closed? What should Nigeria’s trade policy be in the face of globalization’s negative effects and increasing protectionism of developed countries? The paper reviews key issues regarding an appropriate design of trade policy reforms in Nigeria and its validity for Nigeria’s long-run growth using the cointegration approach. The VAR approach was preferred because it overcomes the limitation and ambiguity associated with the regression results (Enders, 1995). Moreover, recent Monte Carlo evidence strongly favors the Johansen Maximum Likelihood method (JML) approach over the Engle-Granger’s (Dejong, 1992) in this regard. Econometric results show that there is no significant relationship between openness and economic growth, and that unbridled openness could have deleterious implications for growth of local industries, the real sector and government revenue.
    Keywords: Trade Liberalization, Trade openness, Tariff reforms and Economic growth.
    JEL: F14 F43
    Date: 2004–12–10
  8. By: Guillaume Chevillon (Observatoire Français des Conjonctures Économiques)
    Date: 2004
  9. By: Schneider, Friedrich (University of Linz and IZA Bonn)
    Abstract: Using the DYMIMIC approach, estimates of the shadow economy in 145 developing, transition, developed OECD countries, South Pacific islands and still communist countries are presented. The average size of the shadow economy (in percent of official GDP) over 2002/2003 in developing countries is 39.1%, in transition countries 40.1%, in OECD countries 16.3%, South Pacific islands 33.4% and 4 remaining Communist countries 21.8%. An increasing burden of taxation, high unemployment and low official GDP growth are the driving forces of the shadow economy.
    Keywords: shadow economy, tax burden, government regulation, DYMIMIC method
    JEL: O17 O5 D78 H2 H11 H26
    Date: 2004–12

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