nep-afr New Economics Papers
on Africa
Issue of 2005‒11‒09
nine papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. Context Matters – Rethinking the Resource Curse in Sub-Saharan Africa By Matthias Basedau
  2. Major Flaws in Conflict Prevention Policies towards Africa. The Conceptual Deficits of International Actors’ Approaches and How to Overcome Them By Andreas Mehler; Hans-Christian Mahnke
  3. Real Income Stagnation of Countries, 1960-2001 By Sanjay G. Reddy; Camelia Minoiu
  4. Historical Legacies: A Model Linking Africa's Past to its Current Underdevelopment By Nathan Nunn
  5. The Modern World: The effect of democracy, colonialism and war on economic growth 1820-2000 By Branko Milanovic
  6. Refundable The Effect of Minimum Wages on the Employment and Earnings of South Africa's Domestic Service Workers By Tom Hertz
  7. Industrial development in small islands economies. A comparative study of Mauritius and La Reunion growth performances By Michel Dimou
  8. La Banque à distance en Tunisie : Comment rattraper le retard ? By Achraf AYADI
  9. Spatial effects on technical progress: growth, and convergence among countries By Fernando Barreiro-Pereira

  1. By: Matthias Basedau (Deutsches Übersee-Institut)
    Abstract: Natural resources in sub-Saharan Africa suffer from a bad reputation. Oil and diamonds, particularly, have been blamed for a number of Africa’s illnesses such as poverty, corruption, dictatorship and war. This paper outlines the different areas and transmission channels of how this so-called “resource curse” is said to materialize. By assessing empirical evidence on sub-Saharan Africa it concludes that the resource curse theory fails to sufficiently explain why and how several countries have not or only partly been affected by the “curse”. Theoretically, the paper argues that whether or not natural resources are detrimental to a country’s socio-economic and political development depends on a number of contextual variables, divided into country-specific conditions and resource-specific conditions (type, degree/level of abundance and dependence, resource revenue management, involved companies etc.). Methodologically, a future research agenda needs to examine the complex interplay of these contextual variables by adding sophisticated comparative research designs, especially “small and medium N” comparisons, to the tool box which has been widely confined to the juxtaposition of “large N” and country case studies.
    Keywords: Sub-Saharan Africa; Natural Resources, Political Economy, Institutions, Violent Conflict, Socio-Economic Development; Democracy
    JEL: B25 N5 N57 O13
    Date: 2005–08–16
  2. By: Andreas Mehler (Deutsches Übersee-Institut); Hans-Christian Mahnke (Institut für Auslandsbeziehungen)
    Abstract: Current thinking on African conflicts suffers from misinterpretations (oversimplification, lack of focus, lack of conceptual clarity, state- centrism and lack of vision). The paper analyses a variety of the dominant explanations of major international actors and donors, showing how these frequently do not distinguish with sufficient clarity between the ‘root causes’ of a conflict, its aggravating factors and its triggers. Specifically, a correct assessment of conflict prolonging (or sustaining) factors is of vital importance in Africa’s lingering confrontations. Broader approaches (e.g. “structural stability”) offer a better analytical framework than familiar one-dimensional explanations. Moreover, for explaining and dealing with violent conflicts a shift of attention from the nation-state towards the local and sub-regional level is needed.
    Keywords: Saharan Africa, Conflict Prevention, Conflict Factors, Root causes, Conflict Prolonging Factors, Escalation Patterns, Peace Order, Structural Stability
    JEL: N57
    Date: 2005–08–09
  3. By: Sanjay G. Reddy (Department of Economics, Barnard College, Columbia University); Camelia Minoiu (Department of Economics, Columbia University)
    Abstract: This paper examines the phenomenon of real-income stagnation (in which real-income growth is negligible or negative for a sizable uninterrupted sequence of years). It analyzes data for four decades from a large cross-section of countries. Real income stagnation is a conceptually distinct phenomenon from low average growth and other features of the growth sequence that have been held to be of interest in the literature. We find that real income stagnation has affected a significant number of countries (103 out of 168), and resulted in substantial income loss. Countries that suffered spells of real income stagnation were more likely to be poor, in Latin America or sub-Saharan Africa, conflict ridden and dependent on primary commodity exports. Stagnation is also very likely to persist over time. Countries that were afflicted with stagnation in the 1960s had a likelihood of seventy-five percent of also being afflicted with stagnation in the 1990s.
    Keywords: real income stagnation, patterns of economic growth
    JEL: O10 O11 O47
    Date: 2005–09–07
  4. By: Nathan Nunn (University of British Columbia)
    Abstract: Recent studies have found evidence linking Africa’s current underdevelopment to colonial rule and the slave trade. Given that these events ended long ago, why do they continue to matter today? I develop a model, exhibiting path dependence, that explains how these past events could have lasting impacts. The model has multiple equilibria: one equilibrium with secure property rights and a high level of production and others with insecure property rights and low levels of production. I show that external extraction, when severe enough, causes a society initially in the high production equilibrium to move to a low production equilibrium. Because of the stability of low production equilibria, the society remains trapped in this suboptimal equilibrium even after the period of external extraction ends. The model provides one explanation why Africa’s past events continue to matter today.
    JEL: O P
    Date: 2005–08–22
  5. By: Branko Milanovic (World Bank)
    Abstract: The paper uses the recently available data on growth rates, democracy, protectionism, and wars over the period 1820 to 2000 to look at the determinants of economic growth over the long-term. It is motivated by the following questions: what is the effect of democracy on growth, was colonialism economically bad for colonies, does protectionism affect growth negatively, what is the effect of wars? We find that own democracy has a significant positive impact on growth which increases as country’s income goes up. (Overall level of democracy in the world however has no effect on growth.) The effect of colonialism is not statistically significant. Lower average level of protection in the world helps growth. Wars, whether civil or between the states, are strongly detrimental to economic growth.
    Keywords: growth,democracy,protectionism,war,colonialism,communism
    JEL: O P
    Date: 2005–09–06
  6. By: Tom Hertz (American University; American University)
    Abstract: Minimum wages have been in place for South Africa's one million domestic service workers since November of 2002. Using data from seven waves of the Labour Force Survey, this paper documents that the real wages, average monthly earnings, and total earnings of all employed domestic workers have risen since the regulations came into effect, while hours of work per week and employment have fallen. Each of these outcomes can be linked econometrically to the arrival of the minimum wage regulations. The overall estimated elasticities suggest that the regulations should have reduced poverty somewhat for domestic workers, although this last conclusion is the least robust.
    Keywords: minimum, wage, south africa, hertz, earnings, hours
    JEL: H3 I31 J31
    Date: 2005–08
  7. By: Michel Dimou
    Abstract: Small islands economic development may follow different pathways, according to the particular combination of growth mechanisms. A comparative study of the long term growth in Mauritius and in La Reunion, two islands with strong historical, sociological and cultural links, shows that they are engaged in two different process of industrialization. La Reunion has
    Date: 2004–08
  8. By: Achraf AYADI (Institut National des Télécommunications d'Evry)
    Abstract: Cet article est une tentative d'analyser les difficultés des banques tunisiennes à adopter la banque en ligne et de proposer les principales solutions. Il a été publié dans la revue 'Le Manager' en Juillet 2005. Référence: Ayadi A. (2005), 'La Banque à distance en Tunisie : Comment rattraper le retard ?', Le Manager (Tunisie), n°108, Juillet, pp.34-36.
    Keywords: Electronic Banking
    JEL: O P
    Date: 2005–08–24
  9. By: Fernando Barreiro-Pereira
    Abstract: This paper analyses how several spatial variables coming from cities and transportation system can affect money market, specially the income velocity of circulation, assuming an unit-elastic aggregate demand function and considering money velocity as a variable. Fluctuations in velocity caused by some spatial variables, under certain conditions, can affect the aggregate demand curve. The specification of the main relation-ship has found in the Baumol-Tobin model for transaction money demand, and in Christaller-Lösch central place theory. The estimation of the model has been based on panel data techniques and applied across 61 countries during 14 years in the 1978-1991 period. Theoretical and econometric results indicates that seven spatial variables like the country’s first city population, the population density, the passengers-kilometer transported by railways, and several ratios referred to some geographical variables, can provokes fluctuations on aggregate demand curve in the short run. In the long run, the aggregate supply can be also affected by means of these variables. In order to checking this question, considering that these spatial variables are not product factor, we propose to observe if these variables can affect the technological progress coefficient, A, concerning to an aggregate production function, according to a neo-classical growth model. Results by means of the Mankiw, Romer and Weil method, and also by means of an endogenous growth model of technology diffusion, indicates that some spatial variables affect the speed of convergence relative to the real per head income, across these 61 countries. However, a certain amount in some of these variables generates a congestion process in some countries. For checking it, we utilize a Barro and Sala i Martin endogenous growth model which reflects government activities. The concluding remarks indicates that some of these spatial variables above mentioned increases the speed of convergence but generates congestion in some countries. These spatial variables also affect the aggregate supply, and hence the price and output levels. Key words: transportation, regional growth, convergence, congestion. JEL Class.: R41
    Date: 2004–08

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