nep-afr New Economics Papers
on Africa
Issue of 2005‒10‒22
33 papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. The Implications of South African Economic Growth for the Rest of Africa By Vivek B. Arora; Athanasios Vamvakidis
  2. Sources of Growth in Sub-Saharan Africa By Emmanuel Brou Aka; Bernardin Akitoby; Dhaneshwar Ghura; Amor Tahari
  3. Domestic Debt Markets in Sub-Saharan Africa By Jakob Christensen
  4. Aid and Growth: What Does the Cross-Country Evidence Really Show? By Raghuram Rajan; Arvind Subramanian
  5. What Undermines Aid's Impact on Growth? By Raghuram Rajan; Arvind Subramanian
  6. Fertilizer Demand in Sub-Saharan Africa: Realizing the Potential By V.A. Kelly
  7. Does Foreign Aid Reduce Poverty? Empirical Evidence from Nongovernmental and Bilateral Aid By Boriana Yontcheva; Nadia Masud
  8. Are There Negative Returns to Aid? A Comment By Mwanza Nkusu
  9. The Macroeconomic Challenges of Scaling Up Aid to Africa By Yongzheng Yang; Sanjeev Gupta; Robert Powell
  10. Growth Empirics under Model Uncertainty: Is Africa Different? By Charalambos G. Tsangarides
  11. Growth in the Middle East and North Africa By Dalia Hakura
  12. The Aid Effectiveness Literature. The Sad Result of 40 Years of Research By Hristos Doucouliagos; Martin Paldam
  13. Trade Integration in the East African Community: An Assessment for Kenya By Meredith A. McIntyre
  14. Trade Liberalization, Exchange Rate Changes, and Tax Revenue in Sub-Saharan Africa By Terence D. Agbeyegbe; Janet Gale Stotsky; Asegedech WoldeMariam
  15. The Composition of Capital Flows: Is South Africa Different? By Norbert Funke; Faisal Ahmed; Rabah Arezki
  16. Aid and the Dutch Disease in Low-Income Countries: Informed Diagnoses for Prudent Prognoses By Mwanza Nkusu
  17. Microfinance in Africa: Experience and Lessons from Selected African Countries By Rodolphe Blavy; Murat  Yülek; Anupam Basu
  18. Banking in Sub-Saharan Africa: What Went Wrong? By François Leroux; Roland Daumont; Françoise Le Gall
  19. On the Pattern of Currency Blocs in Africa By Etienne B. Yehoue
  20. Financing Uganda's Poverty Reduction Strategy: Is Aid Causing More Pain Than Gain? By Mwanza Nkusu
  21. Implicit Transfers in IMF Lending, 1973-2003 By Priyadarshani Joshi; Jeromin Zettelmeyer
  22. Regional Trade Arrangements in Africa: Past Performance and the Way Forward By Yongzheng Yang; Sanjeev Gupta
  23. Bank Behavior in Developing Countries: Evidence from East Africa By Richard Podpiera; Martin Cihák
  24. Aid Effectiveness on Growth. A Meta Study By Hristos Doucouliagos; Martin Paldam
  25. Does development aid help poor countries catch up? By Herbertsson, Tryggvi Thor; Martin Paldam
  26. Alternative Approaches for Promoting Fertilizer Use in Africa, with Emphasis on the Role of Subsidies By E.W. Crawford; T.S. Jayne; V.A. Kelly
  27. Access to Bank Credit in Sub-Saharan Africa: Key Issues and Reform Strategies By Emilio Sacerdoti
  28. Political Instability and Growth: The Central African Republic By Benoît Mercereau; Dhaneshwar Ghura
  29. Grants Versus Loans By Hulya Ulku; Tito Cordella
  30. Pity the Finance Minister: Issues in Managing a Substantial Scaling-Up of Aid Flows By Peter S. Heller
  31. Tanzania's Growth Process and Success in Reducing Poverty By Volker Treichel
  32. Sources of Growth in the Democratic Republic of the Congo: A Cointegration Approach By Matthias Cinyabuguma; Bernardin Akitoby
  33. The impact of demographic dynamics on economic development, poverty and inequality in Mozambique By Stephan Klasen; Silke Woltermann

  1. By: Vivek B. Arora; Athanasios Vamvakidis
    Abstract: This paper measures the extent to which South African economic growth is an engine of growth in sub-Saharan Africa. Results based on panel data estimation for 47 African countries over four decades suggest that South African growth has a substantial positive impact on growth in the rest of Africa, even after controlling for other growth determinants. The estimates are robust to the effects of global and regional shocks, changes in model specification, and sample period.
    Keywords: Economic growth , Sub-Saharan Africa , Stabilization programs , Trade , Economic models ,
    Date: 2005–03–28
  2. By: Emmanuel Brou Aka; Bernardin Akitoby; Dhaneshwar Ghura; Amor Tahari
    Abstract: Analysis of 1960-2002 data shows that average real GDP growth in sub-Saharan Africa was low and decelerated continuously before starting to recover in the second part of the 1990s. Growth was driven primarily by factor accumulation with little role for total factor productivity (TFP) growth. The recent pickup in economic growth was accompanied by an increase in TFP growth, namely in the group of countries whose IMF-supported programs were judged to be on track. Average annual growth in the region, at 3½ percent during 1997-2002, is less than half of the estimated growth needed to halve the fraction of population living below $1 per day between 1990 and 2015, one of the Millennium Development Goals.
    Keywords: Economic growth , Sub-Saharan Africa ,
    Date: 2004–10–04
  3. By: Jakob Christensen
    Abstract: This study discusses the role of domestic debt markets in sub-Saharan Africa (SSA) based on a new dataset covering 27 SSA countries during the 20-year period 1980-2000. The study finds that domestic debt markets in these countries are generally small, highly short-term in nature, and often have a narrow investor base. Domestic interest payments present a significant burden to the budget, despite much smaller domestic than foreign indebtedness. The use of domestic debt is also found to have significantly crowded out private sector lending. Finally, the study identifies significant differences between the size, cost, and maturity structure of domestic debt markets in HIPCs and non-HIPCs.
    Keywords: Domestic debt , Sub-Saharan Africa , Heavily indebted poor countries ,
    Date: 2004–03–25
  4. By: Raghuram Rajan; Arvind Subramanian
    Abstract: We examine the effects of aid on growth-- in cross-sectional and panel data--after correcting for the bias that aid typically goes to poorer countries, or to countries after poor performance. Even after this correction, we find little robust evidence of a positive (or negative) relationship between aid inflows into a country and its economic growth. We also find no evidence that aid works better in better policy or geographical environments, or that certain forms of aid work better than others. Our findings, which relate to the past, do not imply that aid cannot be beneficial in the future. But they do suggest that for aid to be effective in the future, the aid apparatus will have to be rethought. Our findings raise the question: what aspects of aid offset what ought to be the indisputable growth enhancing effects of resource transfers? Thus, our findings support efforts under way at national and international levels to understand and improve aid effectiveness.
    Date: 2005–06–30
  5. By: Raghuram Rajan; Arvind Subramanian
    Abstract: We examine one of the most important and intriguing puzzles in economics: why it is so hard to find a robust effect of aid on the long-term growth of poor countries, even those with good policies. We look for a possible offset to the beneficial effects of aid, using a methodology that exploits both cross-country and within-country variation. We find that aid inflows have systematic adverse effects on a country's competitiveness, as reflected in a decline in the share of labor intensive and tradable industries in the manufacturing sector. We find evidence suggesting that these effects stem from the real exchange rate overvaluation caused by aid inflows. By contrast, private-to-private flows like remittances do not seem to create these adverse effects. We offer an explanation why and conclude with a discussion of the policy implications of these findings.
    Date: 2005–06–30
  6. By: V.A. Kelly (Department of Agricultural Economics, Michigan State University)
    Abstract: The growing contrast between the very limited use of fertilizer in Sub-Saharan Africa (only 9 kg of nutrients per hectare) and the role played by fertilizer in other regions of the world (100-135 kg/ha in Asia, where 50% of yield growth is attributed to fertilizer) has stimulated debate about the role of fertilizer in Africa and what types of policies and programs are needed to realize its potential benefits. The objective of this paper is to provide a comprehensive overview of the current state of knowledge and the key debates concerning fertilizer demand in Sub-Saharan Africa (SSA). Technical, economic, and policy issues are addressed. The underlying assumption is that SSA needs to increase fertilizer consumption to meet agricultural growth, poverty reduction, and environmental objectives. This will require policies and programs that encourage economically sound and technically efficient fertilizer use, not simply increased use.
    Keywords: food security, food policy, fertilizer demand
    JEL: Q18
    Date: 2005
  7. By: Boriana Yontcheva; Nadia Masud
    Abstract: This paper assesses the effectiveness of foreign aid in reducing poverty through its impact on human development indicators. We use a dataset of both bilateral aid and NGO aid flows. Our results show that NGO aid reduces infant mortality and does so more effectively than official bilateral aid. The impact on illiteracy is less significant. We also test whether foreign aid reduces government efforts in achieving developmental goals and find mixed evidence of a substitution effect.
    Keywords: Bilateral aid , Multilateral aid , Official Development assistance , Poverty reduction , Economic models ,
    Date: 2005–06–01
  8. By: Mwanza Nkusu
    Abstract: Amid controversies surrounding aid effectiveness, an increasing number of empirical studies find support for the idea that aid can spur growth and that the aid-growth relationship is nonlinear. Lensink and White propose a model to illustrate the possible existence of what has been labeled an "aid Laffer curve." This short paper highlights the model's weaknesses and suggests that the model does not fulfill the purpose of illustrating the possible existence of negative returns to aid.
    Keywords: Development assistance , Economic growth , Poverty ,
    Date: 2004–11–24
  9. By: Yongzheng Yang; Sanjeev Gupta; Robert Powell
    Abstract: This paper surveys the economic literature on the scaling-up of aid to Africa. It provides a checklist of issues that need to be considered when preparing a long term macroeconomic projection for a country involving the assumption of a significant increase in aid. Such scaling-up scenarios are most likely to be developed in the context of a country's efforts to achieve the Millennium Development Goals (MDGs) with the support of the international donor community. The paper stresses that when preparing a scaling-up scenario it is critical to have a detailed understanding of the likely use of additional aid flows.
    Keywords: Development assistance , Africa , Exchange rates , Monetary policy , Fiscal policy , Governance ,
    Date: 2005–09–21
  10. By: Charalambos G. Tsangarides
    Abstract: This paper attempts to identify robust patterns of cross-country growth behavior in the world as a whole and Africa. It employs a novel methodology that incorporates a dynamic panel estimator, and Bayesian Model Averaging to explicitly account for model uncertainty. The findings indicate that: (i) in addition to initial conditions, various economic factors such as higher investment, lower inflation, lower government consumption, better fiscal stance, improved political environment, exogenous terms-of-trade shocks, and fixed geographical factors are robustly correlated with growth; (ii) what is good for growth around the world is, in principle, also good for growth in Africa; and (iii) political and institutional variables are particularly important in explaining African growth.
    Keywords: Economic growth , Africa , Economic models ,
    Date: 2005–02–03
  11. By: Dalia Hakura
    Abstract: This paper analyzes the weak growth performance in the Middle East and North Africa (MENA) region during 1980-2000 using an empirical model of long-run growth. The relative importance of the factors affecting growth is shown to vary across 16 MENA countries. In GCC countries, where oil revenues are significant, large governments appear to have been a key factor stifling private-sector growth and impeding diversification. In other MENA countries poor institutional quality has held back growth. Political instability is also shown to have played a role. While the MENA region's growth differential with east Asia is explained well in the 1980s, this is less so in the 1990s.
    Keywords: Economic growth , Middle East , Africa , Oil revenues ,
    Date: 2004–04–20
  12. By: Hristos Doucouliagos; Martin Paldam (Department of Economics, University of Aarhus, Denmark)
    Abstract: The AEL consists of empirical macro studies of the effects of development aid. At the end of 2004 it had reached 97 studies of three families, which we have summarized in one study each using meta-analysis. Studies of the effect on investments show that they rise by 1/3 of the aid – the rest is crowded out by a fall in savings. Studies of the effect on growth show an insignificant positive effect. Studies of the effect on growth, conditional on something else, have till now shown weak results. The Dutch Disease effect of aid has been ignored. The best aggregate estimate is that since its start in the early 1960s aid has increased the standard of living in the poor countries by 20%.
    Keywords: Aid effectiveness, meta study, accumulation, growth
    JEL: B2 E21 E22 F35
    Date: 2005–07–21
  13. By: Meredith A. McIntyre
    Abstract: The paper analyses the potential trade impact of the forthcoming East African Community (EAC) customs union. It examines the trade linkages among the member countries of the EAC and the extent to which the introduction of the EAC common external tariff will liberalize their trade regimes. To gauge the potential trade impact of the formation of the customs union, simulations are conducted for Kenya. The empirical results indicate that the customs union will have a beneficial effect on Kenya's trade. The paper does not draw any conclusions on the potential welfare impact of the customs union. Finally, factors other than enhanced trade might influence Kenyan policymakers to pursue regional integration, and these include regional cooperation in "behind the border" reforms and the provision of public goods.
    Keywords: Customs duties , Kenya , Africa , Trade , Economic models ,
    Date: 2005–08–01
  14. By: Terence D. Agbeyegbe; Janet Gale Stotsky; Asegedech WoldeMariam
    Abstract: Empirical evidence on the relationship between trade liberalization, exchange rates, and tax revenue is mixed. This paper examines these linkages anew. Using a panel of 22 countries in Sub-Saharan Africa, over 1980-1996, we perform Generalized Method of Moment regressions to test this relationship. We find evidence that the relationship between trade liberalization and tax revenue is sensitive to the measure used to proxy trade liberalization, but that, in general, trade liberalization is not strongly linked to aggregate tax revenue or its components-though with one measure, it is linked to higher income tax revenue. Currency appreciation and higher inflation show some linkage to lower tax revenues or its components. These results show some partial consistency with previous findings, and support the notion that trade liberalization accompanied by appropriate macroeconomic policies can be undertaken in a way that preserves overall revenue yield.
    Keywords: Trade liberalization , Sub-Saharan Africa , Exchange rates , Tax revenues ,
    Date: 2004–10–04
  15. By: Norbert Funke; Faisal Ahmed; Rabah Arezki
    Abstract: Over the past decade, South Africa has attracted relatively little foreign direct investment (FDI), but considerable amounts of portfolio inflows. In this context, the objective of the paper is twofold: to identify the determinants of the level and composition of capital flows to emerging markets and to draw policy conclusions for South Africa. We estimate a dynamic panel for up to 81 emerging markets using GMM (Generalized Method of Moments) techniques. The results suggest that further trade and capital control liberalization would increase the share of FDI. Additionally, a reduction in exchange rate volatility would affect the composition of capital flows in favor of FDI.
    Keywords: Capital flows , South Africa , Exchange rates , Foreign investment ,
    Date: 2005–03–11
  16. By: Mwanza Nkusu
    Abstract: This paper demonstrates that the Dutch disease need not materialize in low-income countries that can draw on their idle productive capacity to satisfy the aid-induced increased demand. Diagnoses on, and prognoses for, the Dutch disease should take into account country-specific circumstances to avoid ill-advised policies. The paper emphasizes that using public resources inefficiently can be more painful than real exchange rate appreciations, which may not necessarily embody the Dutch disease.
    Keywords: Development assistance , Exchange rate appreciation , Economic growth , Poverty , Economic models ,
    Date: 2004–04–05
  17. By: Rodolphe Blavy; Murat  Yülek; Anupam Basu
    Abstract: Based on the experience of selected countries, this paper offers a critical presentation of the development of the microfinance sector in Africa. The paper supports the view that microfinance institutions, especially those engaged in full financial intermediation, complement effectively the banking sector in extending financial services and successfully draw on the rich experience of community-based development and preexisting informal methods of financial intermediation in Africa. Growing linkages between microfinance institutions and the banking system and the dissemination of good practices by nongovernment organizations contribute to the sound development of the sector, supported by regulation and supervision by local authorities.
    Keywords: Public finance , Africa , Bank regulations , Savings , Economic models ,
    Date: 2004–09–28
  18. By: François Leroux; Roland Daumont; Françoise Le Gall
    Abstract: The purpose of this paper is to study the origins of banking crises in sub-Saharan Africa, drawing upon the experience of ten countries during the period 1985-95. It examines, in particular, which factors were the most important sources of these crises. The conclusions underscore that the banking crises examined did not represent an entirely special case-a number of factors identified in the general literature, including macroeconomic shocks, were highly relevant-but note that several of their features were nonetheless specific to this part of the world. These banking crises were the very prototype of endemic crises associated with heavy government intervention in the banking system. In this regard, the paper analyzes the complex role of the government in banking in sub-Saharan Africa, the many channels through which governments intervened, and the economic and institutional environment in which the banks operated.
    Keywords: Banking systems , Africa , Financial crisis , Intervention , Bank regulations ,
    Date: 2004–04–20
  19. By: Etienne B. Yehoue
    Abstract: This paper seeks to elucidate the debate over currency union in Africa. The paper examines whether empirical investigation points to the gradual emergence of currency blocs. Based on the historical data on inflation, trade, and the comovements of prices and outputs, I argue that the emergence of large-scale currency blocs in Africa will follow a gradual path and that this dynamic does not lead to the emergence of a single continental currency at this time. Rather, the pattern which emerges seems to suggest three blocs: one in West Africa, a second around South Africa, and a third in Central Africa. Although little evidence is found supporting the emergence of a single African currency at this time, the emergence of an African currency union is not necessarily precluded, since the ultimate decision to surrender a nation's monetary policy to a supranational institution is not made based solely on economic considerations. I then address the issue of a possible anchor for the union, were it to emerge and opt for an anchorage. I find- based on the trade criterion-that the euro seems to be a good choice.
    Keywords: Monetary unions , Africa , Financial crisis , Emerging markets , Production , Trade relations , Economic models ,
    Date: 2005–03–15
  20. By: Mwanza Nkusu
    Abstract: Uganda's market-friendly development strategy and poverty reduction agenda have attracted large financial inflows, including aid. During 2000-02, concerns about a possible aid-induced Dutch disease were heightened by widening macroeconomic imbalances and an upward trend in the real effective exchange rate (REER). This paper shows that the REER remained broadly stable during a 10-year period and nontraditional exports increased remarkably, contrary to the predictions of the Dutch disease model. Also, economic growth was strong. This good performance is attributed to sound macroeconomic policies and important structural reforms, which have allowed an increased use of available production factors.
    Keywords: Development assistance , Uganda , Poverty reduction , Exchange rates , Economic growth ,
    Date: 2004–09–21
  21. By: Priyadarshani Joshi; Jeromin Zettelmeyer
    Abstract: We compute realized transfers implicit in IMF lending from 1973-2003, based on 2003 IMF repayment projections and promised debt relief. IMF lending rates to high-and middleincome countries fell short of industrial country borrowing rates by 30-150 basis points over the period as a whole, but exhibited a small premium after 1987. The subsidy received by low-income and HIPC countries was much higher (400-600 basis points, respectively). In 2002 NPV terms, cumulative transfers were 12-15 percent of 2002 GDP for the HIPCs, 2-3 percent for low income countries, and less than ¾ percent for the emerging market countries.
    Keywords: Fund , Subsidies , HIPC Initiative , Heavily indebted poor countries ,
    Date: 2005–01–27
  22. By: Yongzheng Yang; Sanjeev Gupta
    Abstract: Regional trade arrangements (RTAs) in Africa have been ineffective in promoting trade and foreign direct investment. Relatively high external trade barriers and low resource complementarity between member countries limit both intra- and extraregional trade. Small market size, poor transport facilities and high trading costs make it difficult for African countries to reap the potential benefits of RTAs. To increase regional trade and investment, African countries need to undertake more broad-based liberalization and streamline existing RTAs, supported by improvements in infrastructure and trade facilitation. Early action to strengthen the domestic revenue base would help address concerns over revenue losses from trade liberalization.
    Keywords: International trade agreements , Africa , Trade policy ,
    Date: 2005–03–04
  23. By: Richard Podpiera; Martin Cihák
    Abstract: We analyze the structure, performance, and role of banking systems in the three member countries of the East African Community-Kenya, Tanzania, and Uganda-against the backdrop of recent financial sector reforms. Focusing on the behavior of different types of banks, we find no support for the argument that the presence of large international banks would have an adverse effect on the effectiveness and efficiency of banking sectors in developing countries. International banks are generally more efficient and more active in lending than domestic banks. However, as suggested by the Kenyan experience, the presence of international banks may not lead to increased competition and provision of banking services if weak institutions are allowed to remain in the system.
    Date: 2005–07–14
  24. By: Hristos Doucouliagos; Martin Paldam (Department of Economics, University of Aarhus, Denmark)
    Abstract: The AEL (aid effectiveness literature) is econo¬metric studies of the macroeconomic effects of development aid. It contains about 100 papers of which 68 are reduced form estimates of the effect of aid on growth in the recipient country. The raw data show that growth is unconnected to aid, but the AEL has put so much structure on the data that all results possible have emerged. The present meta study considers both the best-set of the 68 papers and the all-set of 543 regressions published. Both sets have a positive average aid-growth elasticity, but it is small and insignificant: The AEL has not established that aid works. Using meta- regression analysis it is shown that about 20 factors influence the results. Much of the variation between studies is an artifact and can be attributed to publication outlet, institu¬ tional affiliation, and specification differences. However, some of the difference between studies is real. In particular, the aid-growth association is stronger for Asian countries, and the aid-growth association is shown to have been weaker in the 1970s.
    Keywords: Aid effectiveness, meta study, economic growth
    JEL: B2 F35
    Date: 2005–07–21
  25. By: Herbertsson, Tryggvi Thor; Martin Paldam (Department of Economics, University of Aarhus, Denmark)
    Abstract: Aid flows are included into the standard cross-country catch-up relation. Robust¬ness of the result is tested by changing time periods and by adding extra variables. The main results are: Absolute conver¬gence and absolute aid effec¬ti¬ve¬ness are both rejected. While conditional convergence is accepted, conditional aid effecti¬ve¬ness is found to be weak. The two relations are largely inde¬pendent. However, aid has a clear activity effect in the short run. Finally, we try to divide the countries into an A-group where aid is effective and a B-group where it harms. Several criteria of division were explored, but none were very successful – the most satisfactory is the one that divides countries according to their level of development.
    Keywords: Convergence, growth, development aid effectiveness
    JEL: C14 C23 F35 O4
    Date: 2005–07–21
  26. By: E.W. Crawford (Department of Agricultural Economics, Michigan State University); T.S. Jayne; V.A. Kelly
    Abstract: This paper outlines the role of improved soil fertility in the process of structural transformation, and examines specific financial, economic, social, and political arguments in favor of promoting increased fertilizer use, particularly in smallholder farming systems. The paper draws experiences and insights from the literature on which policies and programs appear to work best and which least well in stimulating a sustainable increase in fertilizer use by small farmers. Special attention is given to addressing the question of fertilizer subsidies: Under what circumstances are they warranted and what form should they take, if and when they are implemented?
    Keywords: food security, food policy, fertilizer use
    JEL: Q18
    Date: 2005
  27. By: Emilio Sacerdoti
    Abstract: This study discusses issues of access to bank credit in Sub-Saharan Africa, and examines measures that could help facilitate access by the private sector to bank credit. It reviews in particular obstacles to credit small- and medium-scale enterprises and agriculture, and examines progress in the design and implementation of reform measures that are needed to create an institutional environment more supportive of credit activity. It also reviews bank interest rate spreads and profit margins, and their determinants, and compares such spreads with those prevailing in other regions of the world.
    Date: 2005–08–25
  28. By: Benoît Mercereau; Dhaneshwar Ghura
    Abstract: This paper provides empirical evidence that the propensity for political instability in the Central African Republic (C.A.R.) has been increased by low tax revenues and deteriorations in the terms of trade. The direct effect of political instability on economic growth is not statistically significant, once account is taken of domestic investment, and economic growth in neighboring countries. The policy implications are: (i) mobilization of domestic revenues to pay public employees' salaries and provide basic social services would lower the probability of coups; (ii) economic diversification would reduce the propensity for adverse terms of trade shocks to fuel coups; and (iii) neighboring countries' efforts to resolve conflicts and achieve sustained growth would be beneficial for the C.A.R.'s economic performance.
    Keywords: Economic conditions , Central African Republic , Economic growth ,
    Date: 2004–05–25
  29. By: Hulya Ulku; Tito Cordella
    Abstract: Under what conditions should grants be preferred to loans? To answer this question, we present a simple model à la Krugman (1988) and show that, for any given level of developmental assistance, the optimal degree of loan concessionality is positively associated with economic growth if countries are poor, have bad policies, and high debt obligations. We then test our model by estimating a modified growth model for a panel of developing countries, and find evidence supporting our predictions. Finally, we assess the determinants of current aid allocations and find that the degree of concessionality is negatively correlated with countries' levels of development.
    Keywords: Loans , Development , Economic growth , Economic models ,
    Date: 2004–09–13
  30. By: Peter S. Heller
    Abstract: Substantially scaling up of aid flows will require development partners to address many issues, including the impact of higher aid flows on: the competitiveness of aid recipients; the management of fiscal and monetary policy; the delivery of public services; behavioral incentives; and the rate of growth of the economy. Other issues will include the appropriate sequencing of aid-financed investments; balancing alternative expenditure priorities; the implications for fiscal and budget sustainability; and exit strategies from donor funding. Donors will need to ensure greater long-term predictability and reduced short-term volatility of aid. The international financial institutions can play a critical role in helping countries address these scaling-up issues.
    Keywords: Development assistance , Fiscal policy , Financial institutions ,
    Date: 2005–09–22
  31. By: Volker Treichel
    Abstract: Since 1995, Tanzania has made major progress in economic reform and macroeconomic stabilization, resulting in strong growth and low inflation. This paper reviews Tanzania's growth performance and prospects and assesses the impact of growth on poverty. It finds that growth has been increasingly driven by higher factor productivity and that a continuation of recent policies should allow Tanzania to grow above 5 percent a year over the medium term. Furthermore, it finds that growth since 1995 has resulted in a significant decline of poverty and that prospects are favorable for Tanzania to attain its objectives for reducing income poverty by 2015.
    Keywords: Economic growth , Tanzania , Developing countries , Poverty Reduction ,
    Date: 2005–03–03
  32. By: Matthias Cinyabuguma; Bernardin Akitoby
    Abstract: The paper investigates the sources of growth in the Democratic Republic of the Congo since 1960 and evaluates the relative importance of total factor productivity growth and factor accumulation, using a cointegration method and a growth accounting framework. The main findings confirm that poor economic policies and bad governance (through their effects on total factor productivity and capital accumulation) contributed to the country's economic decline during the 40-year period, 1960-2000. Looking forward, the paper finds that the right policies are being put in place to pave the way for a restoration of economic growth.
    Keywords: Economic growth , Congo, Democratic Republic of the , Industrial production ,
    Date: 2004–07–20
  33. By: Stephan Klasen (University of Goettingen); Silke Woltermann (University of Goettingen)
    Abstract: In this paper, we analyze whether current demographic dynamics in Mozambique are likely to reduce per capita growth and poverty reduction. The findings suggest that population dynamics do not appear to be a major driver of changes in growth of per capita incomes, poverty, or inequality. At the macro level this can be seen at the off-setting effects of population growth on the one hand and the potential to reap the benefits of a demographic gift and higher population density on the other. At the micro level, it is clear that household size has not changed drastically and the existing negative impact of household size on poverty and inequality appears to have fallen in recent years, particularly in rural areas. Thus demographic dynamics have helped support rising per capita incomes and falling poverty rather than hindering it.
    Keywords: poverty, inequality, population growth, Mozambique
    JEL: J1 I32 O15
    Date: 2005–05–01

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