nep-afr New Economics Papers
on Africa
Issue of 2005‒11‒05
seventeen papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. Evidence of Returns to Schooling in Africa from Household Surveys: Monitoring and Restructuring the Market for Education By T. Paul Schultz
  2. Aid Effectiveness and Limited Enforceable Conditionality By Almuth Scholl
  3. Effects of financial autarky and integration: the case of the South Africa embargo By Brahima Coulibaly
  4. Can Macroeconomic Policy Stimulate Private Investment in South Africa? New Insights from Aggregate and Manufacturing Sector-Level Evidence By Léonce Ndikumana
  5. Determinants of Poverty in Kenya: A Household Level Analysis By Alemayehu Geda; Niek de Jong; Mwangi S. Kimenyi; Germano Mwabu
  6. The Evolution of Development Thinking: Theory and Policy By Gustav Ranis
  7. Employment, Poverty, and Gender in Ghana By James Heintz
  8. Motives for Household Private Transfers in Burkina Faso By Harounan Kaziango
  9. Learning About a New Technology: Pineapple in Ghana By Timothy G. Conley; Christopher R. Udry
  10. GMOs: Prospects for Increased Crop Productivity in Developing Countries By Robert E. Evenson
  11. Female Schooling, Non-Market Productivity, and Labor Market Participation in Nigeria By Adebayo B. Aromolaran
  12. Intra-Household Redistribution of Income and Calorie Consumption in South-Western Nigeria By Adebayo B. Aromolaran
  13. Natural Resource use Conflict: Gold Mining in Tropical Rainforest in Ghana By Akpalu, Wisdom; Parks, Peter J.
  14. Achieving Universal Primary Education: Can Kenya Afford it? By Rob Vos; Arjun Bedi; Paul K. Kimalu; Damiano K. Manda; Nancy N. Nafula; Mwangi S. Kimenyi
  15. Early Initiation of Highly Active Antiretroviral Therapies for Aids: Dynamic choice with Endogenous and Exogenous Learning By Pierre Lasserre; Jean-Paul Moatti; Antoine Soubeyran
  16. Social Networks in Ghana By Christopher Udry; Timothy G. Conley
  17. Measuring Potential Output and Output Gap and Macroeconomic Policy: The Case of Kenya By Angelica E. Njuguna; Stephen N. Karingi; Mwangi S. Kimenyi

  1. By: T. Paul Schultz (Economic Growth Center, Yale University)
    Abstract: Wage-differentials by education of men and women are examined from African household surveys to suggest private wage returns to schooling. It is commonly asserted that returns are highest at primary school levels and decrease at secondary and postsecondary levels, whereas private returns in six African countries are today highest at the secondary and post secondary levels, and rates are similar for women as for men. The large public subsidies for postsecondary education in Africa, therefore, are not needed to motivate students to enroll, and those who have in the past enrolled in these levels of education are disproportionately from the better-educated families. Higher education in Africa could be more efficient and more equitably distributed if the children of well-educated parents paid the public costs of their schooling, and these tuition revenues facilitated the expansion of higher education and financed fellowships for children of the poor and less educated parents.
    Keywords: Africa, Wage Returns to Schooling, Inequality, HIV/AIDS
    JEL: O15 O55 J31 J24
    Date: 2003–12
  2. By: Almuth Scholl
    Abstract: This paper analyzes optimal foreign aid policy in a neoclassical framework with a conflict of interest between the donor and the recipient government. Aid conditionality is modelled as a limited enforceable contract. We define conditional aid policy to be self-enforcing if, at any point in time, the conditions imposed on aid funds are supportable by the threat of a permanent aid cutoff from then onward. Quantitative results show that the effectiveness of unconditional aid is low while self-enforcing conditional aid strongly stimulates the economy. However, increasing the welfare of the poor comes at high cost: to ensure aid effectiveness, less democratic political regimes receive permanently larger aid funds.
    JEL: E13 F35 O11 O19
    Date: 2005–01
  3. By: Brahima Coulibaly
    Abstract: The economic embargo imposed on South Africa between 1985 and 1993 brought the country closer to financial isolation. This paper interprets the imposition and removal of the embargo as financial autarky and financial integration ‘natural experiments’, and studies the effects on the economy. The aggregate data indicate a decrease in the levels and growth rates of investment, capital, and output during the embargo period relative to the pre-embargo and post-embargo periods. To further rationalize the findings in the aggregate data, we calibrate a neoclassical growth model to the South African economy. During the transition to steady-state, we model the embargo by limiting the country’s ability to borrow for a period corresponding to the duration of the embargo. The derived dynamics for investment, capital, and output support the view of a positive (negative) link between financial integration (isolation) and economic growth.
    Date: 2005
  4. By: Léonce Ndikumana
    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.
    Date: 2005
  5. By: Alemayehu Geda (Institute of Social Studies and Addis Ababa University); Niek de Jong (Institute of Social Studies, The Hague); Mwangi S. Kimenyi (University of Connecticut); Germano Mwabu (University of Nairobi and Yale University)
    Abstract: Strategies aimed at poverty reduction need to identify factors that are strongly associated with poverty and that are amenable to modification by policy. This article uses household level data collected in 1994 to examine probable determinants of poverty status, employing both binomial and polychotomous logit models. The study shows that poverty status is strongly associated with the level of education, household size and engagement in agricultural activity, both in rural and urban areas. In general, those factors that are closely associated with overall poverty according to the binomial model are also important in the ordered-logit model, but they appear to be even more important in tackling extreme poverty.
    Keywords: Poverty, Kenya, Africa, Probability Models
    JEL: I30 I32 N97
    Date: 2005–01
  6. By: Gustav Ranis (Economic Growth Center, Yale University)
    Abstract: This paper makes an effort to trace the course of development thinking and associated development policy over the past six decades. Section I focuses on the early Post-War Consensus, with theory focused on extensions of classical dualism theory and policy concentrating on creating the pre-conditions for development. Section II traces the increasing awareness of the role of prices, a diminishing reliance on the developmentalist state and an increased reliance on structural adjustment lending associated with IFI conditionality. Section III illuminates the search for "silver bullets" which can be identified as key to the achievement of success. Finally, Section IV presents the author's assessment of where we are now and where we will, or should be, heading in the effort to achieve the third world's basic development objectives.
    Keywords: Development Theory, Development Policy
    JEL: O11 O20
    Date: 2004–05
  7. By: James Heintz
    Abstract: This paper examines the connections among gender, employment, and poverty in Ghana using data from the fourth round of the Ghana Living Standards Survey. The relationships are explored through a series of tabulations that shed light on how labor force segmentation, different forms of employment, and gender dynamics influence poverty rates and earnings of individuals and households. The estimates suggest that substantial labor force segmentation is evident in Ghana. Women are disproportionately represented in more precarious forms of employment. In addition, poverty and earnings differ markedly from one employment status category to the next. These results have important implications for “pro-poor” employment policies in Ghana.
    Date: 2005
  8. By: Harounan Kaziango
    Abstract: Resource transfers among households have received considerable interest among economists in recent years. Two of the main reasons for the surge of interest in household transfers are the information on human nature conveyed by transfer behavior and the implication on income redistribution policy that private transfer might have. Empirical studies, however, provide mixed results on transfer behavior. This is because previous inquiries were confronted with several estimation issues and have focused on data from developed countries where private transfers are already small. This paper contributes to the literature on transfer behavior by using a multifaceted econometric approach to examine the motives of household transfers in Burkina, a low-income country with a well-documented tradition of gift exchanges. The findings suggest that risk sharing is not central to transfers. Altruistic transfers are apparent for the middle income class, but not a low income level. The evidence implies that crowding out may be minimal at a low income level, suggesting that public transfers targeting poor households may be effective.
    Keywords: Private transfers, Altruism, Exchanges, Risk Sharing
    JEL: D63 D64 I30
    Date: 2004–10
  9. By: Timothy G. Conley; Christopher R. Udry (Economic Growth Center, Yale University)
    Abstract: This paper investigates the role of social learning in the diffusion of a new agricultural technology in Ghana. We use unique data on farmers’ communication patterns to define each individual’s information neighborhood, the set of others from whom he might learn. Our empirical strategy is to test whether farmers adjust their inputs to align with those of their information neighbors who were surprisingly successful in previous periods. We present evidence that farmers adopt surprisingly successful neighbors’ practices, conditional on many potentially confounding factors including common growing conditions, credit arrangements, clan membership, and religion. The relationship of these input adjustments to experience further supports their interpretation as resulting from social learning. In addition, we apply our methods to input choices for another crop with known technology and they correctly indicate an absence of social learning effects.
    Keywords: Social Learning, Technology, Innovation
    JEL: O31 O12 O13
    Date: 2000–07
  10. By: Robert E. Evenson (Economic Growth Center, Yale University)
    Abstract: Genetically Modified Crops (GMO foods) have been widely available to farmers since 1996. The Gene Revolution, based on recombinant DNA (rDNA) genetic engineering techniques, is seen by proponents as both supplanting Green Revolution varieties, based on conventional plant breeding techniques, and potentially enabling "disadvantaged" production environments, unreached by Green Revolution varieties to achieve productivity improvements. This paper argues that the private firms supplying GM crop products have generally had little interest in selling products in disadvantaged production environments. The paper also argues that present rDNA techniques allow only static gains from specific "trait" improvements. But these GM products can be installed on Green Revolution varieties where continued dynamic varietal improvement is possible. As a consequence, the Gene Revolution complements the Green Revolution, and because trait incorporation expands area planted to Green Revolution varieties, there is potential for productivity improvement in disadvantaged environments.
    Keywords: Genetically Modified Foods, Genetic Engineering
    JEL: O1 O4 Q1
    Date: 2003–12
  11. By: Adebayo B. Aromolaran
    Abstract: Economists have argued that increasing female schooling positively influences the labor supply of married women by inducing a faster rise in market productivity relative to non-market productivity. I use the Nigerian Labor Force Survey to investigate how own and husband's schooling affect women's labor market participation. I find that additional years of postsecondary education increases wage market participation probability by as much as 15.2%. A marginal increase in primary schooling has no effect on probability of wage employment, but could enhance participation rates in self-employment by about 5.40%. These effects are likely to be stronger when a woman is married to a more educated spouse. The results suggest that primary education is more productive in non-wage work relative to wage work, while postsecondary education is more productive in wage work. Finally, I find evidence suggesting that non-market work may not be a normal good for married women in Nigeria.
    Keywords: Nigeria, Female Schooling, Women's Labor Market Participation, Non-Market Productivity
    JEL: I21 J22 J24 O15
    Date: 2004–01
  12. By: Adebayo B. Aromolaran
    Abstract: This study investigates how per capita calorie intake in low income households of rural southwestern Nigeria responds to changes in total household income and women's share of household income. The study addresses two major questions. First, is calorie-income elasticity large enough to justify the use of income increases as a food/nutrition policy strategy for increasing calorie intake among low income households? Second, what is the potential effect of intra-household redistribution of income from men to women on per capita calorie consumption? My results show that calorie-income elasticity is small and close to zero, implying that income policies may not be the most effective way to achieve substantial improvements in calorie consumption. I also find that increases in women's share of household income are likely to result in marginal declines in per capita food calorie intake, suggesting that income redistribution from men to women would not increase per capita food energy intake in these households.
    Keywords: Nigeria, Intra-Household Redistribution of Income, Women's Income Share Elasticity, Income Elasticity, Calorie Consumption.
    JEL: D13 I12 O15 Q18
    Date: 2004–07
  13. By: Akpalu, Wisdom (Department of Economics, School of Economics and Commercial Law, Göteborg University); Parks, Peter J. (Department of Agricultural Economics and Marketing, Cook College,)
    Abstract: Gold is frequently mined in rainforests that can provide either gold or forest benefits, but not both. This conflict in resource use occurs in Ghana, a developing country in the tropics where the capital needed for mining is obtained from foreign direct investment (FDI). We use a dynamic model to show that an ad valorem severance tax on gross revenue can be used to internalize environmental opportunity costs. The optimal tax must equal the ratio of marginal benefits from forest use to marginal benefits from gold extraction. Over time, this tax must change at a rate equal to the difference between the discount rate and the rate of change in the price of gold. Empirical results suggest that the 3 percent tax rate currently used in Ghana is too low to fully represent the external cost of extraction (i.e., lost forest benefits). <p>
    Keywords: Optimal taxation; Efficiency; Externality; Dynamic analysis; Firm behaviour
    JEL: C61 D21 H21 H23
    Date: 2005–10–28
  14. By: Rob Vos (Institute of Social Studies, The Hague); Arjun Bedi (Institute of Social Studies, The Hague); Paul K. Kimalu (Kenya Institute for Public Policy Research and Analysis); Damiano K. Manda (Kenya Institute for Public Policy Research and Analysis); Nancy N. Nafula (Kenya Institute for Public Policy Research and Analysis); Mwangi S. Kimenyi (University of Connecticut)
    Abstract: Kenya has experienced a rapid expansion of the education system partly due to high government expenditure on education. Despite the high level of expenditure on education, primary school enrolment has been declining since early 1990s and until 2003 when gross primary school enrolment increased to 104 percent after the introduction of free primary education. However, with an estimated net primary school enrolment rate of 77 percent, the country is far from achieving universal primary education. The worrying scenario is that the allocations of resources within the education sector seems to be ineffective as the increasing expenditure on education goes to recurrent expenditure (to pay teachers salaries). Kenya's Poverty Reduction Strategy Paper (PRSP) and the Economic Recovery Strategy for wealth and Employment Creation (ERS) outlines education targets of reaching universal primary education by 2015. The Government is faced with budget constrains and therefore the available resources need to be allocated efficiently in order to realize the education targets. The paper uses Budget Negotiation Framework (BNF) to analyze the cost effective ways of resource allocation in the primary education sector to achieve universal primary education and other education targets. Budget Negotiation Framework is a tool that aims at achieving equity and efficiency in resource allocation. Results from the analysis shows that universal primary education by the year 2015 is a feasible target for Kenya. The results also show that with a more cost- effective spending of education resources - increased trained teachers, enhanced textbook supplies and subsidies targeting the poor - the country could realize higher enrolment rates than what has been achieved with free primary education.
    JEL: I22 C53 H40
    Date: 2004–12
  15. By: Pierre Lasserre; Jean-Paul Moatti; Antoine Soubeyran
    Abstract: Criteria for initiation of highly active antiretroviral treatments (HAART) in HIV-infected patients remain a matter of debate world-wide because short-term benefits have to be balanced with costs of these therapies, and restrictions placed on future treatment options if resistant viral strains develop. On the other hand, postponing the introduction of HAART may involve a therapeutic opportunity cost if a patient’s health is allowed to deteriorate to such an extent of becoming unable to benefit from new treatments currently under development when they become available. We introduce a two period model where period one treatment adoption is an irreversible act with future, but uncertain, consequences. New information, both endogenous and exogenous, arises over time and shapes the conditions surrounding the second period therapeutic decision. A surprising result is that, under conditions that appear close to those surrounding the HAART debate, the magnitude of the feared resistance effect has no effect on leaves the optimal treatment decision as far as it is high enough. <P>Le bien-fondé d’administrer précocement des traitements antirétroviraux à haute activité (HAART) aux personnes infectées par le VIH reste objet de débats dans le monde, car leurs bienfaits à court terme peuvent compromettre les traitements futurs si se développent des souches résistantes du virus. Par ailleurs retarder le recours aux HAART comporte un coût d’opportunité thérapeutique si la santé du patient se dégrade au point qu’il ne peut plus bénéficier par la suite des traitements encore en cours de développement. Nous formulons un modèle à deux périodes où l’adoption du traitement de première période est irréversible et engage le futur, alors que des informations et connaissances nouvelles, exogènes et endogènes, déterminent les conditions entourant la décision thérapeutique de deuxième période. Paradoxalement, sous des conditions reflétant bien les enjeux du recours aux HAART, il s’avère que l’effet résistance éventuel a d’autant moins de chance d’importer pour la décision optimale, que sa gravité est élevée.
    Keywords: therapeutic decisions, uncertainty, information, irreversibility, treatment, endogenous learning, exogenous learning, décisions thérapeutiques, incertitude, information, irréversibilité, traitement, apprentissage endogène, apprentissage exogène
    JEL: I18 C61
    Date: 2005–10–01
  16. By: Christopher Udry (Economic Growth Center, Yale University); Timothy G. Conley
    Abstract: In this chapter we examine social networks among farmers in a developing country. We use detailed data on economic activities and social interactions between people living in four study villages in Ghana. It is clear that economic development in this region is being shaped by the networks of information, capital and influence that permeate these communities. This chapter explores the determinants of these important economic networks. We first describe the patterns of information, capital, labor and land transaction connections that are apparent in these villages. We then discuss the interconnections between the various economic networks. We relate the functional economic networks to more fundamental social relationships between people in a reduced form analysis. Finally, we propose an equilibrium model of multi-dimensional network formation that can provide a foundation for further data collection and empirical research.
    Keywords: Endogenous Networks, Informal Credit, Social Learning
    JEL: O12 D85
    Date: 2004–05
  17. By: Angelica E. Njuguna (Kenyatta University and KIPPRA); Stephen N. Karingi (United Nations Economic Commission for Africa); Mwangi S. Kimenyi (University of Connecticut)
    Abstract: Measuring the level of an economy.s potential output and output gap are essential in identifying a sustainable non-inflationary growth and assessing appropriate macroeconomic policies. The estimation of potential output helps to determine the pace of sustainable growth while output gap estimates provide a key benchmark against which to assess inflationary or disinflationary pressures suggesting when to tighten or ease monetary policies. These measures also help to provide a gauge in the determining the structural fiscal position of the government. This paper attempts to measure Kenya.s potential output and output gap using alternative statistical techniques and structural methods. Estimation of potential output and output gap using these techniques shows varied results. The estimated potential output growth using different methods gave a range of .2.9 to 2.4 percent for 2000 and a range of .0.8 to 4.6 for 2001. Although various methods produce varied results, they however provided a broad consensus on the over-all trend and performance of the Kenyan economy. This study found that firstly, potential output growth is declining over the recent time and secondly, the Kenyan economy is contracting in the recent years.
    JEL: N10 N17 O47
    Date: 2005–10

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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.