nep-afr New Economics Papers
on Africa
Issue of 2005‒05‒23
four papers chosen by
Suzanne McCoskey
US Naval Academy

  1. Human capital and economic development By Robert Tamura
  2. Do free trade agreements actually increase members’ international trade? By Scott L. Baier; Jeffrey H. Bergstrand
  3. Experiments and Economic Development: Lessons from Field Labs in the Developing World By Juan Camilo Cardenas; Jeffrey P. Carpenter
  4. South Africa’s International Competitiveness: A Product Level Analysis By Mitchell Kellman; Trevor Roxo; Yochanan Shachmurove

  1. By: Robert Tamura
    Abstract: This paper reports the results of experiments designed to examine whether a taste for fairness affects people’s preferred tax structure. Building on the Fehr and Schmidt (1999) model, we devise a simple test for the presence of social preferences in voting for alternative tax structures. The experimental results show that individuals demonstrate concern for their own payoff and inequality aversion in choosing among alternative tax structures. However, concern for redistribution decreases when it leads to increasing deadweight losses. Our findings have important implications for the design of optimal tax theory.
    Date: 2004
  2. By: Scott L. Baier; Jeffrey H. Bergstrand
    Abstract: For more than forty years, the gravity equation has been a workhorse for cross-country empirical analyses of international trade flows and, in particular, the effects of free trade agreements (FTAs) on trade flows. However, the gravity equation is subject to the same econometric critique as earlier cross-industry studies of U.S. tariff and nontariff barriers and U.S. multilateral imports: Trade policy is not an exogenous variable. The authors address econometrically the endogeneity of FTAs using instrumental-variable (IV) techniques, control-function (CF) techniques, and panel-data techniques; IV and CF approaches do not adjust for endogeneity well, but a panel-data approach does. Accounting econometrically for the FTA variable’s endogeneity yields striking empirical results: The effect of FTAs on trade flows is quintupled.
    Date: 2005
  3. By: Juan Camilo Cardenas; Jeffrey P. Carpenter
    Abstract: Along with the traditional primitives of economic development (material preferences, technology, and endowments), there is a growing interest in exploring how psychological and sociological factores (e.g., bounded rationality, norms, or social preferences) also influence economic decisions, the evolution of institutions, and outcomes. Simultaneously, a vast literature has arisen arguing that economic experiments are important tools in identifying and quantifying the role of institutions, socialnorms and preferences on behavior and outcomes. Reflecting on our experience conducting experiments in the field over more than five years, we survey the growing literature at the intersection of these two research areas. Our review has four components. In the introduction we set the stage identifying a set of behavioral factors that seem to be central for understanding growth and economic development./ We then divide the existing literature in two piles: standard experiments conducted in the field and on how to econometrically identify sociological factors in experimental data. We conclude by suggesting topics for future research.
    Keywords: experimental economics, behavioral economics, institutions, social preferences, poverty, development
    JEL: C9 O1
    Date: 2005–05
  4. By: Mitchell Kellman (Department of Economics, The City College of City University of New York); Trevor Roxo (Department of Business Management, University of Transkei, South Africa); Yochanan Shachmurove (Department of Economics, University of Pennsylvania)
    Abstract: As South Africa emerges from its Apartheid period, the evolution of its international trade is vital to the growth of the economy. This paper evaluates South Africa’s trade performance in three essential markets, namely United States, Europe and Japan. It examines the nation’s flexibility in the face of fluctuations in relative exchange rates in its markets. Using the Constant Market Share (CMS) model of international trade and the “Rising Stars” model, the particular areas of industrial structure in which South Africa is positioned to succeed are identified on the market as well as the product levels.
    Keywords: Apartheid; South Africa; Southern African Development Community (SADC); United States, Japan, European Union; International Competitiveness; Entrepreneurship; Exchange Rate Responsiveness; Constant Market Share (CMS) model
    JEL: F1 F4
    Date: 2003–07–01

This nep-afr issue is ©2005 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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