nep-afr New Economics Papers
on Africa
Issue of 2005‒09‒29
twelve papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. Can Africa Reduce Poverty by Half by 2015? The Case for a Pro-Poor Growth Strategy By Bigsten, Arne; Shimeles, Abebe
  2. The Curse of Aid By Simeon Djankov; José Garcia Montalvo; Marta Reynal-Querol
  3. Prices, unit values and local measurement units in rural surveys: an econometric approach with an application to poverty measurement in Ethiopia By Bart Capéau; Stefan Dercon
  4. Can macroeconomic policy stimulate private investment in South Africa? New insights from aggregate and manufacturing sector-level evidence By Léonce Ndikumana
  5. Productivity Growth and the Exchange Rate Regime: The Role of Financial Development By Philippe Aghion; Philippe Bacchetta; Romain Rancière; Kenneth Rogoff
  6. Globalization, Divergence and Stagnation By Gino Gancia
  7. Economic reform in the Agricultural sector of Nigeria: Merits and Demeits By Obayelu Abiodun Elijah; Okoruwa V.O
  8. Land Reforms and Economic Development By Gersbach, Hans; Siemers, Lars
  9. Debt Relief and Adjustment Effort in a Multi Period Model By Tengstam, Sven
  10. Informal sector versus informal contracts in Nairobi, Kenya By Philippe Bocquier
  11. Make Trade not War? By Martin, Philippe; Mayer, Thierry; Thoenig, Mathias
  12. The Donor Problem By Klaus Abbink; Matthew Ellman

  1. By: Bigsten, Arne (Department of Economics, School of Economics and Commercial Law, Göteborg University); Shimeles, Abebe (Department of Economics, School of Economics and Commercial Law, Göteborg University)
    Abstract: This study uses simulations to explore the possibility of halving the percentage of people living in extreme poverty in Africa by 2015. A pro-poor growth-scenario and a constant-inequality scenario are compared. It is shown that initial levels of inequality and mean per capita income determine the cumulative growth and inequalityreduction required to achieve the target. The trade-off between growth and inequality varies greatly among countries and their policy-choices are thus quite different. In some cases small changes in income-distribution can have a large effect on poverty, while in others a strong focus on growth is the only viable option. <p>
    Keywords: Poverty; pro-poor growth; millennium development goals; Africa
    JEL: I32 O15
    Date: 2005–08–23
  2. By: Simeon Djankov; José Garcia Montalvo; Marta Reynal-Querol
    Abstract: Foreign aid provides a windfall of resources to recipient countries and may result in the same rent seeking behavior as documented in the “curse of natural resources” literature. In this paper we discuss this effect and document its magnitude. Using data for 108 recipient countries in the period 1960 to 1999, we find that foreign aid has a negative impact on democracy. In particular, if the foreign aid over GDP that a country receives over a period of five years reaches the 75th percentile in the sample, then a 10-point index of democracy is reduced between 0.6 and one point, a large effect. For comparison, we also measure the effect of oil rents on political institutions. The fall in democracy if oil revenues reach the 75th percentile is smaller, (0.02). Aid is a bigger curse than oil.
    Keywords: Foreign aid, democracy, conditionality
    JEL: O11 O19 O16
    Date: 2005–04
  3. By: Bart Capéau; Stefan Dercon
    Abstract: For many research problems in developing countries, some information on prices faced by households is required for the analysis, for example if subsistence consumption is a substantial part of consumption. These prices are not readily available from household surveys, nor is it straightforward to observe them. Furthermore, quantities consumed and produced are often in local units presenting further problems for the analysis. We provide an econometric approach to estimate prices and quantity conversion factors from household expenditure data. We use panel data from rural Ethiopia to illustrate the approach and to investigate the potential exogenous quality bias in the estimation of the prices. In an application, we show that the conclusions about poverty changes over time are significantly affected by using less appropriate strategies to convert local units and to value subsistence consumption. We find that mean unit values result in the overestimation of prices due to outliers and other sources of measurement error. Exogenous consumer price sources, often collected at larger markets outside the village, tend to be slightly lower than our estimates.
    Keywords: household surveys, unit values, subsistence consumption, local measurement units, poverty
    JEL: D4 I3 R2
    Date: 2004
  4. By: Léonce Ndikumana (University of Massachusetts Amherst)
    Abstract: This study explores the determinants of investment using both aggregated industry-level data and disaggretated data on 27 sub-sectors of the manufacturing sector for the period 1970-2001. According to the results in this study, the government has potentially powerful means at its disposal to stimulate private investment. In particular, a domestic demand stimulus and public investment expansion will produce large gains in private investment. While the direct effects of lowering the interest rate appear to be quantitatively small, indirect effects operating notably through domestic demand and cheaper credit are likely to be large. The evidence in this study also indicates that it is important to minimize exchange rate instability to encourage investment. JEL Categories: E22; E52; E62
    Keywords: South Africa; private investment; public investment; monetary policy; fiscal policy
    Date: 2005–09
  5. By: Philippe Aghion; Philippe Bacchetta; Romain Rancière; Kenneth Rogoff
    Abstract: This paper offers empirical evidence that a country's choice of exchange rate regime can have a signifficant impact on its medium-term rate of productivity growth. Moreover, the impact depends critically on the country's level of financial development, its degree of market regulation, and its distance from the global technology frontier. We illustrate how each of these channels may operate in a simple stylized growth model in which real exchange rate uncertainty exacerbates the negative investment e¤ects of domestic credit market constraints. The empirical analysis is based on an 83 country data set spanning the years 1960-2000. Our approach delivers results that are in striking contrast to the vast existing empirical exchange rate literature, which largely finds the effects of exchange rate volatility on real activity to be relatively small and insignificant.
    Keywords: Productivity growth; exchange rate
    JEL: O42 F30 F31 F43
    Date: 2005–05
  6. By: Gino Gancia
    Abstract: In a world where poor countries provide weak protection for intellectual property rights, market integration shifts technical change in favor of rich nations. Through this channel, free trade may amplify international income differences. At the same time, integration with countries where intellectual property rights are weakly protected can slow down the world growth rate. A crucial implication of these results is that protection of intellectual property is most beneficial in open countries. This prediction, which is novel in the literature, finds support in the data on a panel of 53 countries observed in the years 1965-1990.
    Keywords: Economic Growth, North-South Trade, Intellectual Property Rights, Cross-Country Income Differences
    JEL: F14 F43 O33 O34 O41
    Date: 2003–05
  7. By: Obayelu Abiodun Elijah (University of Ibadan, Ibadan Oyo State Nigeria); Okoruwa V.O (University of Ibadan Ibadan Oyo state, Nigeria)
    Abstract: The main objective of this working paper was to look at the economic reforms and there impacts in the Nigeria agricultural sector using some indicators such as the Gross domestic Products, prices of agricultural product,prices of agricultural inputs,effects on poverty, effects on both imports and export effect on quality of agricultural products etc.This was however done through extensive review of various forms of economic reform the sectors since the pre colonial era and comparing there effects both negative and positives on all the stakeholders: the farmers, consumers as well as the government and the economy as a whole.The result shows that The Nigerial economic reforms in the agricultural sector is the best option only if nigeria government is honest in the execution of the reform exercise. This will in know doubtenable the country to compete favourably with other countries of the world interm of provision of food to her citizenry as well as generation of foreign exchange in boosting the economy
    Keywords: Economic reform, agricultural sector, Nigeria, merits and demerits
    JEL: O P
    Date: 2005–09–14
  8. By: Gersbach, Hans; Siemers, Lars
    Abstract: We demonstrate that there is a nexus between land transfers and human capital formation. A sequence of land redistributions enables the beneficiaries to educate their children and thus to escape from poverty and to overcome child labour. We find that open access to land markets should be prohibited for beneficiaries for some time. Moreover, a temporary state of inequality among the poor is unavoidable. Finally, a successful land reform allows for the transition of a society from an agriculture-based state of poverty to a human capital-based developed economy.
    Keywords: land market access; land reforms; migration; poverty; transition
    JEL: I28 I38 O11 O15 Q15
    Date: 2005–08
  9. By: Tengstam, Sven (Department of Economics, School of Economics and Commercial Law, Göteborg University)
    Abstract: This paper shows that if the period following the granting of debt relief is taken into account, debt relief increases adjustment effort(investment), irrespective of whether there is an initial debt overhang or not. <p>
    Keywords: HIPC; Debt relief; Debt overhang; Investment; Incentives
    JEL: F34 H63 O11 O16
    Date: 2005–09–12
  10. By: Philippe Bocquier (DIAL, IRD, Paris)
    Abstract: (english) From official records, it would appear that the labour market significantly shifted from the formal to the informal sector in Kenya. However, a careful examination of different data sources for Nairobi show that in the 1990s there has been no direct transfer of employment from the formal sector to supposedly flourishing informal enterprises, but rather an increasing number of employees informally contracted by formal enterprises to the expense of social and legal protection of employees. Seven out of eight jobs in Nairobi still depend on the formal sector, through either formal or informal contracts. Although migrants form more than three quarters of the active population in Nairobi, migration has not had a specific impact on the labour market structure and evolution. However, Nairobi became less attractive to active male migrants during the 1990s as unemployment and lack of opportunity in the formal sector deterred candidates from in-migrating. The Nairobi labour market also became more discriminative against women, whose chance to enter and to remain in the labour market reduced considerably. In the 1990s the combination of higher unemployment, lower female participation rate and reduced migration of males in active ages resulted in higher dependency on the workforce and in doubling the absolute poverty in Nairobi. _________________________________ (français) D’après les sources officielles, il pourrait sembler que le marché du travail au Kenya a basculé sensiblement du secteur formel vers le secteur informel. Cependant, un examen attentif des différentes sources de données sur Nairobi montre que dans les années 1990 il n’y a pas eu de transfert direct des emplois du secteur formel vers les entreprises informelles supposées en pleine expansion. Au contraire, un nombre croissant d’employés est informellement contracté par les entreprises formelles au détriment de la protection sociale et légale de ces employés. Sept emplois sur huit à Nairobi dépendent du secteur formel, au travers de contrats formels ou informels. Bien que les migrants forment les trois quarts de la population active à Nairobi, la migration n’a pas eu un impact spécifique sur la structure et l’évolution du marché de l’emploi. Cependant, Nairobi attire dans les années 1990 moins de jeunes hommes actifs, du fait que le chômage et le manque d’opportunités dans le secteur formel a dissuadé les candidats à l’immigration. Le marché de l’emploi à Nairobi est aussi devenu plus discriminatoire envers les femmes, dont les chances d’entrer et de se maintenir sur le marché de l’emploi se sont réduites considérablement. Dans les années 1990, la combinaison d’un chômage en hausse, d’un taux d’activité féminine plus bas et d’un ralentissement de la migration masculine aux âges actifs a eu pour résultat une augmentation du taux de dépendance et un doublement de la pauvreté absolue à Nairobi.
    Keywords: labour market, migration, unemployment, informal sector, gender discrimination, Nairobi,Kenya,marché du travail, migration, chômage, secteur informel, discrimination de genre
    JEL: J16 J21 J42 J61
    Date: 2005–09
  11. By: Martin, Philippe; Mayer, Thierry; Thoenig, Mathias
    Abstract: This paper analyses theoretically and empirically the relationship between trade and war. We show that the intuition that trade promotes peace is only partially true even in a model where trade is beneficial to all, war reduces trade and leaders take into account the costs of war. When war can occur because of the presence of asymmetric information, the probability of escalation is indeed lower for countries that trade more bilaterally because of the opportunity cost associated with the loss of trade gains. However, countries more open to global trade have a higher probability of war because multilateral trade openness decreases bilateral dependence to any given country. Using a theoretically-based econometric model, we test our predictions on a large dataset of military conflicts in the period 1948-2001. We find strong evidence for the contrasting effects of bilateral and multilateral trade. Our empirical results also confirm our theoretical prediction that multilateral trade openness increases more the probability of war between proximate countries. This may explain why military conflicts have become more localized and less global over time.
    Keywords: globalization; trade; war
    JEL: F12 F15
    Date: 2005–09
  12. By: Klaus Abbink; Matthew Ellman
    Abstract: Donors often rely on local intermediaries to deliver benefits to target beneficiaries. Each selected recipient observes if the intermediary under-delivers to them, so they serve as natural monitors. However, they may withhold complaints when feeling unentitled or grateful to the intermediary for selecting them. Furthermore, the intermediary may distort selection (e.g. by picking richer recipients who feel less entitled) to reduce complaints. We design an experimental game representing the donor’s problem. In one treatment, the intermediary selects recipients. In the other, selection is random - as by an uninformed donor. In our data, random selection dominates delegation of the selection task to the intermediary. Selection distortions are similar, but intermediaries embezzle more when they have selection power and (correctly) expect fewer complaints.
    Keywords: Development, Entitlement, Experiments, Fairness, Intermediaries, Monitoring, Targeting, Punishment.
    JEL: C90 D63 O12
    Date: 2004–10

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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