nep-afr New Economics Papers
on Africa
Issue of 2006‒08‒05
thirty-one papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. Excess Liquidity and the Effectiveness of Monetary Policy: Evidence from Sub-Saharan Africa By Magnus Saxegaard
  2. HIV/AIDS: The Impact on Poverty and Inequality By Gonzalo Salinas; Markus Haacker
  3. What is Fuzzy About Clustering in West Africa? By Charalambos G. Tsangarides; Mahvash Saeed Qureshi
  4. Coping Strategies in Post-War Rural Mozambique By Brück, Tilman
  5. Social Disparities in Education in Sub-Saharan African Countries : Gender, geographical location and family income By Alain Mingat
  6. Aid and Development By Finn Tarp
  7. Aid and Development: The Mozambican Case By Channing Arndt; Sam Jones; Finn Tarp
  8. Corruption and Development Indicators: An Empirical Review By Nelson Ramírez-Rondán; Saki Bigio
  9. Does US Aid Buy UN General Assembly Votes? A Disaggregated Analysis By Axel Dreher; Peter Nunnenkamp; Rainer Thiele
  10. Broadening Access to Primary Education: Contract Teacher Programs and Their Impact on Education Outcomes in Africa – An Econometric Evaluation for Niger By Jean Bourdon; Markus Frölich; Katharina Michaelowa
  11. Aid Volatility and Dutch Disease: Is There a Role for Macroeconomic Policies? By Thierry Tressel; Alessandro Prati
  12. Do IMF and World Bank Influence Voting in the UN General Assembly? By Axel Dreher; Jan-Egbert Sturm
  13. R&D and private investment: How to conserve indigenous fruit biodiversity of Southern Africa By Mithöfer, Dagmar; Wesseler, Justus; Waibel, Hermann
  14. Reflections on Quantitative Fiscal Conditionality in African PRGF-Supported Programs By Daria Zakharova; Annalisa Fedelino
  15. Focused Targeting against Poverty Evidence from Tunisia By Christophe Muller; Sami Bibi;
  16. Aid Scaling Up: Do Wage Bill Ceilings Stand in the Way? By Annalisa Fedelino; Gerd Schwartz; Marijn Verhoeven
  17. Resource Scarcity Induced Conflict and its Management: Implication for Sustainable Rural Livelihoods in Eastern Ethiopia By Ayalneh Bogale
  18. Macroeconomic Policies and Pro-Poor Growth in Nigeria By Osinubi, Tokunbo Simbowale; Gafaar, Oluwatoyin Alade S
  19. Measuring and Explaining Government Inefficiency in Developing Countries By Van de Sijpe, Nicolas; Rayp, Glenn
  20. Agglomeration and Aid By Steven Brakman; Harry Garretsen; Charles van Marrewijk
  21. Uganda: No more pro-poor growth? By Kappel, Robert; Lay, Jann; Steiner, Susan
  22. The elimination of Madagascar ' s Vanilla Marketing Board, ten years on By Cadot, Olivier; Dutoit, Laure; de Melo, Jaime
  23. State Dependence and Causal Feedback of Poverty and Fertility in Ethiopia By Arnstein Aassve; Abbi Kedir; Habtu Tadesse Weldegebriel
  24. The Road to Pro-Poor Growth in Zambia: Past Lessons and Future Challenges By Thurlow, James; Wobst, Peter
  25. An Empirical Investigation of the Exchange Rate Pass-Through to Inflation in Tanzania By Nkunde Mwase
  26. Distributional Effects of Oil Price Changes on Household Expenditures: Evidence from Mali By Kangni Kpodar
  27. How Much is Enough? Monte Carlo Simulations of an Oil Stabilization Fund for Nigeria By Ulrich Bartsch
  28. V comme Vélo ou le grand absent des capitales africaines By Pascal Pochet
  29. Altruism and Workers' Remittances: Evidence from Selected Countries in the Middle East and Central Asia By Jacques Bouhga-Hagbe
  30. Adopting Full Dollarization in Postconflict Economies: Would the Gains Compensate for the Losses in Liberia? By Jiro Honda; Liliana Schumacher
  31. Modeling Firm Dynamics to Identify the Cost of Financing Constraints in Ghanaian Manufacturing By Schündeln, Matthias

  1. By: Magnus Saxegaard
    Abstract: This paper examines the pattern of excess liquidity in sub-Saharan Africa and its consequences for the effectiveness of monetary policy. The paper argues that understanding the consequences of excess liquidity requires quantifying the extent to which commercial bank holdings of excess liquidity exceed levels required for precautionary purposes. It proposes a methodology for measuring this quantity and uses it to estimate a nonlinear structural VAR model for the CEMAC region, Nigeria and Uganda. The study suggests that excess liquidity weakens the monetary policy transmission mechanism and thus the ability of monetary authorities to influence demand conditions in the economy.
    Keywords: Excess liquidity , Sub-Saharan Africa , Central African Economic and Monetary Community , Nigeria , Uganda , Monetary policy , Money supply , Credit , Economic models ,
    Date: 2006–05–12
  2. By: Gonzalo Salinas; Markus Haacker
    Abstract: Using available data on the distribution of HIV/AIDS prevalence across population groups for four sub-Saharan African countries and transposing this information to household income and expenditure surveys, we simulate the impact of HIV/AIDS on poverty and inequality. We find that the epidemic lowers average income and increases poverty, and that the jump in poverty is larger than expected from the fall in average income. This disproportionate increase in poverty reflects the large share of the population living on the threshold of poverty and the higher HIV prevalence rates in those segments of the population.
    Keywords: Income distribution , Sub-Saharan Africa , Ghana , Kenya , Swaziland , Zambia , Poverty , Economic growth , Health care , HIV and AIDS , Social security ,
    Date: 2006–05–25
  3. By: Charalambos G. Tsangarides; Mahvash Saeed Qureshi
    Abstract: Applying techniques of clustering analysis to a set of variables suggested by the convergence criteria and the theory of optimal currency areas, this paper looks for country homogeneities to assess membership in the existing and proposed monetary unions of the broader west African region. Our analysis reveals considerable dissimilarities in the economic characteristics of the countries in west and central Africa. In particular, the West African Monetary Zone (WAMZ) countries do not form a cluster with the West Africa Economic and Monetary Union (WAEMU) countries; and, within the WAMZ, there is a significant lack of homogeneity. Furthermore, when west and central African countries are considered together, we find significant heterogeneities within the CFA franc zone, and some interesting similarities between the Economic and Monetary Community of Central Africa (CEMAC) and WAMZ countries. Overall, our findings raise some questions about the geographical boundaries of several existing and proposed monetary unions.
    Keywords: Monetary unions , Africa , West African Economic and Monetary Union , Central African Economic and Monetary Community , Data analysis ,
    Date: 2006–04–14
  4. By: Brück, Tilman
    Abstract: This paper analyses post-war coping strategies by farm households in developing countries. The analysis is based on a portfolio model of activity choices in war-affected rural Sub-Saharan Africa. A case study using farm household survey data estimates the determinants of agricultural coping strategies in post-war Mozambique. Post-war coping strategies are expected to differ from pre- and mid-crisis coping strategies. War-affected households are forced to adopt very risky coping strategies that re-enforce their vulnerability. Households choose between market and non-market forms of exchange and even exit markets entirely. Post-war reconstruction policy should focus on re-capitalizing households and providing public goods.
    Keywords: agriculture, households, rural development, war, Mozambique, Africa
    Date: 2005
  5. By: Alain Mingat (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - [CNRS : FRE5211] - [Université de Bourgogne], World Bank, Human Development Department, The Africa Region)
    Abstract: In this paper we have two complementary objectives: the first consists in proposing a description of the magnitude of social disparities that exist in the systems of education of Sub-Saharan African countries; we focus on recent data but we put also these data in a time perspective. The second objective aims at identifying some of the factors that may explain these disparities or the impact of the actions targeted to their reduction.
    Keywords: Social disparities ; Education ; Subsaharan Africa ; Educational policy
    Date: 2006–07–18
  6. By: Finn Tarp (Department of Economics, University of Copenhagen)
    Abstract: Foreign aid looms large in the public discourse; and international development assistance remains squarely on most policy agendas concerned with growth, poverty and inequality in Africa and elsewhere in the developing world. The present review takes a retrospective look at how foreign aid has evolved since World War II in response to a dramatically changing global political and economic context. I review the aid process and associated trends in the volume and distribution of aid and categorize some of the key goals, principles and institutions of the aid system. The evidence on whether aid has been effective in furthering economic growth and development is discussed in some detail. I add perspective and identify some critical unresolved issues. I finally turn to the current development debate and discuss some key concerns, which I believe should be kept in mind in formulating any agenda for aid in the future.
    Keywords: foreign aid; aid impact
    JEL: F35 O10
    Date: 2006–06
  7. By: Channing Arndt (Purdue University); Sam Jones (Ministry of Planning and Development, Mozambique); Finn Tarp (Department of Economics, University of Copenhagen)
    Abstract: This paper considers the relationship between external aid and development in Mozambique from 1980 to 2004. The main objective is to identify the specific mechanisms through which aid has influenced the developmental trajectory of the country and whether one can plausibly link outcomes to aid inputs. We take as our point of departure a growth accounting analysis and review both intended and unintended effects of aid. Mozambique has benefited from sustained aid inflows in conflict, post-conflict and reconstruction periods. In each of these phases aid has made an unambiguous, positive contribution both enabling and supporting rapid growth since 1992. At the same time, the proliferation of donors and aid-supported interventions has burdened local administration and there is a distinct need to develop government accountability to its own citizens rather than donor agencies. In ensuring sustained future growth, Mozambique will have to develop its capacity to maximise the benefits from its natural resources while ensuring at the same time the necessary framework is put in place to promote constructive integration in international markets.
    Keywords: Mozambique; foreign aid; development
    JEL: F35 O10 O55
    Date: 2006–06
  8. By: Nelson Ramírez-Rondán (Central Bank of Peru); Saki Bigio (New York University)
    Abstract: In this paper we report international evidence on the relationship between corruption and several development indicators such as economic stability, quality in educational expenditures, fiscal income, inequality, investment and economic growth. We first show how this relationship is negative by presenting simple unconditional correlations between corruption and these indicators. We then procede to quantify the effects of corruption on growth: we estimate a Dynamic Panel Data model for a sample of 80 countries and taking 1960-2000 as our sample period. Our findings suggest that in improvement in corruption indicators from levels in Latina America and Africa to developed country standards would increase output growth in 0,5% and 0,7% respectively.
    Keywords: Corruption, Development, Growth
    JEL: D73 O11 O50
    Date: 2006–06
  9. By: Axel Dreher (Center of Economic Research at ETH Zurich); Peter Nunnenkamp (Kiel Institute for the World Economy); Rainer Thiele (Kiel Institute for the World Economy)
    Abstract: Using panel data for 143 countries over the period 1973-2002, this paper empirically analyzes the influence of US aid on voting patterns in the UN General Assembly. We use disaggregated aid data to account for the fact that various forms of aid may differ in their ability to induce political support by recipients. We obtain strong evidence that US aid buys voting compliance in the Assembly. More specifically, our results suggest that general budget support and untied grants are the major aid categories by which recipients have been induced to vote in line with the United States. When replicating the analysis for other G7 donors, no comparable patterns emerge.
    Keywords: Bilateral Aid, UN General Assembly, Voting
    JEL: F33
    Date: 2006–04
  10. By: Jean Bourdon (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - [CNRS : FRE5211] - [Université de Bourgogne]); Markus Frölich (UCL - University College London - [London's Global University]); Katharina Michaelowa (HWWA - Hamburg Institute of International Economics - [Hamburgisches Welts-Wirtschafts Archiv])
    Abstract: For Sub-Saharan Africa as a whole, but particularly for countries in the Sahel zone, full primary enrolment and completion at acceptable quality as codified in the Millennium Development Goals and the Education for All objectives still remains a major challenge. In order to enhance education supply, many of these countries have launched large scale teacher recruitment programs in recent years, whereby the teachers are no longer engaged in civil servant positions, but on the basis of fixed-term contracts typically implying considerably lower salaries and a sharply reduced duration of professional training. While this policy has led to a boost of primary enrolment, stakeholders in the education system generally fear an important loss in the quality of education. Using data from the "Program on the Analysis of Education Systems" (PASEC) for Niger in 2000/2001, we show that once confounding factors are controlled for, the performance of contract teachers is not generally worse than the performance of other teachers. Matching students taught by contract teachers to those taught by civil servants provides no significant evidence of an advantage of the latter in grade 5. In grade 2, there is evidence for a sizeable advantage of traditional teachers - but only as long as job experience is not appropriately taken into account. Given the strong impact on enrolment and the generally insignificant effect on education quality, the overall assessment of the program remains clearly positive.
    Keywords: Enseignant enseignement primaire ; Recrutement des enseignants ; Statut ; Contrat de travail ; Efficacité des enseignants ; Analyse économétrique ; Niger ; Afrique ; Enseignement primaire
    Date: 2006–07–17
  11. By: Thierry Tressel; Alessandro Prati
    Abstract: This paper studies how macroeconomic policies can help offset two unintended and undesirable features of foreign aid: its volatility and Dutch disease. We present evidence that aid volatility augments trade balance volatility and that foreign aid, with the important exception of years of adverse shocks, depresses exports. We also find that these effects can be mitigated through changes in net domestic assets of the central bank-a variable that reflects both monetary and fiscal policy. To characterize the optimal policy, we develop a general equilibrium model in which the capital account is closed and aid influences productivity growth through positive (public expenditure) and negative (Dutch disease) externalities. In this setting, macroeconomic policies permanently affect real variables and can improve welfare if donors do not distribute foreign aid optimally over time.
    Keywords: Development assistance , Monetary policy , Real effective exchange rates , Balance of trade ,
    Date: 2006–06–21
  12. By: Axel Dreher (Center of economic Research at ETH Zurich); Jan-Egbert Sturm (Center of economic Research at ETH Zurich)
    Abstract: Using panel data for 188 countries over the period 1970-2002 this paper empirically analyzes the influence of the IMF and the World Bank on voting patterns in the UN General Assembly. Countries receiving adjustment programs and larger non-concessional loans from the World Bank vote more frequently in line with the average G7 country. The same is true for countries obtaining non-concessional IMF programs. Regarding voting coincidence with the US, World Bank (concessional and non-concessional) loans have a significant impact, while the IMF has not. These results are robust to the inclusion of control variables and method of estimation.
    Keywords: IMF, World Bank, UN General Assembly, Voting, Aid
    JEL: F33
    Date: 2006–04
  13. By: Mithöfer, Dagmar; Wesseler, Justus; Waibel, Hermann
    Abstract: Indigenous fruits contribute widely to rural incomes in Southern Africa but their availability is declining. A domestication program aims to increase farm-household income and conserve biodiversity through farmer-led tree planting. Planting domesticated indigenous fruit trees is an uncertain, irreversible but flexible investment. Our analysis applies the real option approach using contingent claims analysis, which allows solving the discounting problem. The article analyses (1) to what level fruit collection cost and/or (2) the necessary technical change, i.e. breeding progress, have to rise in order to render tree planting economical, using data from income portfolios of rural households in Zimbabwe. Results currently show that collecting indigenous fruits is more profitable than planting the trees. A combination of technical change and decrease in resource abundance can provide incentives for farmer-led planting of domesticated trees and biodiversity conservation. However, breeding progress must be significant for investment in tree planting to be economically attractive.
    Keywords: indigenous fruits, real option, technology adoption, uncertainty, ex ante impact assessment, Zimbabwe
    JEL: O13 Q01 Q16 Q23
    Date: 2005
  14. By: Daria Zakharova; Annalisa Fedelino
    Abstract: We survey quantitative fiscal conditionality in selected sub-Saharan African PRGFsupported programs, and assess the conditionality against some possible benchmarks and best practices. While noting many caveats, the paper suggests some possible scope for further attuning of this conditionality to countries' specific macro-fiscal situations. The paper also offers some suggestions on how quantitative fiscal conditionality might be further enhanced.
    Date: 2006–05–12
  15. By: Christophe Muller (Universidad de Alicante); Sami Bibi (Faculté des Sciences Economiques et de Gestion de Tunis (FSEGT) and Unité de Recherche en Econométrie Appliquée (URECA));
    Abstract: This paper introduces a new methodology to target direct transfers against poverty. Our method is based on observable correlates and on estimation methods that focus on the poor. Using data from Tunisia, we estimate ‘focused’ transfer schemes that improve anti-poverty targeting performances. Post-transfer poverty can be substantially reduced with the new estimation method. The impact of these schemes on the welfare of the poor is also much stronger than the current food subsidies system in Tunisia. Finally, the obtained levels of undercoverage of the poor is so low that ‘proxy-means’ focused transfer schemes becomes a realistic alternative to price subsidies, likely to avoid social unrest.
    Keywords: Poverty; Targeting; Transfers.
    JEL: D12 D63 H53 I32 I38
    Date: 2006–04
  16. By: Annalisa Fedelino; Gerd Schwartz; Marijn Verhoeven
    Abstract: This paper assesses whether the scaling up of aid and the resulting increase in government spending that is needed to meet the Millennium Development Goals (MDGs) would be hampered by wage bill ceilings that are often part of government programs supported by the IMF's Poverty Reduction and Growth Facility (PRGF). Based on country case studies for 2003-05, the paper suggests that, in the past, wage bill ceilings have not restricted the use of available donor funds. Yet the paper offers a number of suggestions for further enhancing the flexibility of wage bill conditionality in PRGF-supported programs to respond to higher aid flows that may result in the future.
    Keywords: Conditionality , Development assistance , Wage restraint , Millennium Development Goals , Fiscal policy , Government expenditures , Wages , Labor costs , Labor markets , Fund role , Poverty Reduction and Growth Facility ,
    Date: 2006–05–08
  17. By: Ayalneh Bogale (Alemaya University)
    Date: 2006
  18. By: Osinubi, Tokunbo Simbowale; Gafaar, Oluwatoyin Alade S
    Abstract: Recently the depth and severity of extreme poverty in Nigeria has been alarming. And over the years, the government undertook some macroeconomic policies with the aim of reducing, if not totally eradicating poverty. These policies were expected to at least raise the standard of living of Nigerians. The impact of these policies on alleviating poverty has been contentious. Some studies in the past have argued that the poor has benefited more from these policies while some found that there was positive real growth yet poverty and inequality still worsened. This can be traced to the nature of growth pursued and the macroeconomic policies that underline it. This study empirically evaluates macroeconomic policies vis-à-vis pro-poor growth in Nigeria using secondary data covering the period 1960-2000. The study found among others that economic growth in Nigeria has been slightly pro-poor. This implied that growth was actually weakly pro-poor. Also, those that are far below the poverty line have not really been enjoying the benefits of growth. Infact, the benefits getting to them has been decreasing at an increasing rate. More so, economic growth in rural areas will be slightly more pro-poor than in urban areas. Overall, growth in Nigeria is not necessarily always pro-poor.
    Date: 2005
  19. By: Van de Sijpe, Nicolas; Rayp, Glenn
    Abstract: We show the relevance of government expenditure inefficiency using the Barro (1990) model. We estimate government inefficiency for 52 developing countries using a data envelopment analysis. The estimated inefficiencies are subsequently used in a general to specific approach in order to identify their determinants. We find the government expenditure inefficiency is primarily determined by governance and political variables, and structural country variables. Economic policy determinants apparently count less. Government inefficiency of the Sub Saharan countries in the sample is substantially higher.
    Keywords: Government inefficiency, data envelopment analysis, economic development
    JEL: H21 H50 O23
    Date: 2005
  20. By: Steven Brakman; Harry Garretsen; Charles van Marrewijk
    Abstract: A key issue in development economics is the explanation of core-periphery patterns around the world. Combining this issue with that of analyzing unilateral transfers (e.g. foreign aid) points in the direction of the use of New Economic Geography (NEG) models which, so far, has not been done explicitly. This paper tries to fill this gap in the literature by studying the (possibly ‘catastrophic’) effects of aid around the so-called break-points and sustain-points in a NEG model. We also analyze the effects of a “bystander”, that is a country which is not directly involved in the transfer. In the traditional transfer literature a bystander is known to potentially cause transfer paradoxes. Our findings in this NEG setting are as follows. First, direct transfer paradoxes are not possible in a symmetric setting even if a bystander is present. Second, the effects of foreign aid depend on the level of economic integration between donor and recipient. Third, if the equilibrium from which aid is given is stable, aid only has a temporary effect (even if there is a bystander present). Fourth, if the donor is relatively large, not only the recipient but also the bystander benefits from foreign aid.
    JEL: F12 F35
    Date: 2006
  21. By: Kappel, Robert; Lay, Jann; Steiner, Susan
    Abstract: This article illustrates changing growth regimes in Uganda from pro-poor growth in the 1990s to growth without poverty reduction, actually even a slight increase in poverty, after 2000. Not surprisingly, we find that good agricultural performance is the key determinant of direct pro-poor growth in the 1990s as well as lower agricultural growth is the root cause of the recent increase in poverty. Yet after 2000, low agricultural growth appears to have induced important employment shifts out of agriculture, which have dampened the increase in poverty. We also assess the indirect way of pro-poor growth by analysing the incidence of public spending and the tax system and find that indirect pro-poor growth has only been achieved to a limited extend.
    Date: 2005
  22. By: Cadot, Olivier; Dutoit, Laure; de Melo, Jaime
    Abstract: This paper explores how the elimination of Madagascar ' s Marketing Board in 1995 affected prices paid to farmers, incentives, and regional indicators of poverty and inequality. After steadily losing market share, Madagascar has been able to regain some of the lost ground since the mid-1990s. Margins between freight on board (FOB) and farmgate prices have spectacularly narrowed down, but this effect is dwarfed by that of world-price volatility. A counterfactual analysis based on a model of Cournot competition between vanilla traders suggests that whatever limited competition there is among them has contributed to raise purchase prices and the cash income of vanilla farmers. But the effect on farmers ' consumption remains small because a large part of it is self-consumed. The effect on aggregate measures of poverty and inequality is even smaller, even at the regional level. After taking into account the reduction in Madagascar ' s monopoly power on the world vanilla market implied by the elimination of the Marketing Board, the induced rise in producer prices is estimated to have lifted about 20,000 individuals out of poverty.
    Keywords: Markets and Market Access,Access to Markets,Economic Theory & Research,Crops & Crop Management Systems,Food & Beverage Industry
    Date: 2006–08–01
  23. By: Arnstein Aassve (Institute for Social and Economic Research); Abbi Kedir (University of Leicester); Habtu Tadesse Weldegebriel (University of Nottingham)
    Abstract: The paper implements simultaneous random effect models as a means to analyse causality issues related to poverty and fertility in Ethiopia, a country which is plagued by high and persistent poverty and very high fertility rates in rural areas. Using longitudinal data from both urban and rural areas of Ethiopia, we analyse the relationship between childbearing and poverty. In addition to identifying state dependence in poverty and fertility, we investigate to what extent fertility act as a feedback mechanism leading to higher poverty and vice versa. We find that poverty itself has little effect on fertility, whereas there is evidence of state dependence in poverty and important feedback from fertility on future poverty. Not unexpected, we find substantial differences between rural and urban areas.
    Keywords: fertility, panel data, poverty, probit regressions
    Date: 2006–07
  24. By: Thurlow, James; Wobst, Peter
    Date: 2005
  25. By: Nkunde Mwase
    Abstract: The paper examines the effect of exchange rate changes on consumer prices in Tanzania using structural vector autoregression (VAR) models. Using a data set covering the period 1990-2005, we find that the exchange rate pass-through to inflation declined in the late 1990s despite the depreciation of the currency. This could be partly attributed to the macroeconomic and structural reforms that were implemented during this period. The decline in the pass-through does not necessarily imply that exchange rate fluctuations are less significant in explaining macroeconomic fluctuations. The recent increase in the share of imports in the economy suggests that the pass-through could rise over the medium term. The findings imply that the authorities should remain vigilant in assessing the potential impact of foreign prices on the dynamics of inflation in Tanzania. In this regard, the authorities should seek to maintain low and stable inflation and continue the ongoing structural reforms designed to improve efficiency and increase competition.
    Date: 2006–06–26
  26. By: Kangni Kpodar
    Abstract: Using an input-output approach, this paper assesses the distributional effects of a rise in various petroleum product prices in Mali. The results show that, although rising gasoline and diesel prices affect mainly nonpoor households, rising kerosene prices are most harmful to the poor. Overall, the impact of fuel prices on household budgets displays a U-shaped relationship with expenditure per capita. Regardless of the oil product considered, highincome households would benefit disproportionately from oil price subsidies. This suggests that a petroleum price subsidy is an ineffective mechanism for protecting the income of poor households compared with a targeted subsidy.
    Keywords: Oil prices , Mali , Income distribution , Oil subsidies ,
    Date: 2006–04–17
  27. By: Ulrich Bartsch
    Abstract: In oil-dependent countries, a major issue is how to stabilize fiscal spending when government revenue fluctuates along with the international price of oil. A stabilization fund would allow the government to pull through an oil price trough and absorb windfall revenue when prices are high. This paper focuses on two key issues. First, the paper proposes to base government spending on moving averages of past oil prices that are shown to behave nearly as a random walk. Second, it uses Monte Carlo simulations of a fiscal policy model to look at the probability that a given level of assets in the stabilization fund is exhausted over a certain number of years. The simulations show that with a fiscal policy based on moving averages over three to five years, a stabilization fund of about 75 percent of 2004 oil revenue would be adequate, which, in Nigeria, would equate to US$16-18 billion.
    Keywords: Revenues , Nigeria , Oil prices , Government expenditures ,
    Date: 2006–06–14
  28. By: Pascal Pochet (LET - Laboratoire d'économie des transports - [CNRS : UMR5593] - [Université Lumière - Lyon II] - [Ecole Nationale des Travaux Publics de l'Etat])
    Abstract: Le vélo demeure très peu utilisé dans les grandes villes africaines, à de rares exceptions près. En règle générale, en Afrique, la bicyclette est beaucoup plus répandue en milieu rural qu'en ville. Pourtant, l'achat et l'usage de véhicules motorisés étant hors de portée des citadins à bas revenus, soit la majorité, le choix du moyen de transport se fait bien souvent entre des transports collectifs coûteux et... la marche à pied. Moins chère à l'usage que les autres modes mécanisés, plus rapide et moins éprouvante que la marche, la bicyclette pourrait constituer une partie de la solution pour améliorer les conditions de déplacements des citadins défavorisés. Différents facteurs expliquent cette quasi-absence de la bicyclette dans les villes africaines. Insécurité sur la voire, mais aussi et surtout image sociale négative (pauvreté, ruralité...) attachée à ce mode de transport.
    Keywords: bicyclette ; mobilité quotidienne ; usage du mode de transport ; représentation sociale; Afrique subsaharienne ; Bamako ; Ouagadougou
    Date: 2006–07–21
  29. By: Jacques Bouhga-Hagbe
    Abstract: Workers' remittances have been playing an increasingly important role in the balance of payments of many countries and can significantly contribute to the strength of their external positions. Assessing the likely stability of remittance flows could be a valuable input to the analysis of their external vulnerabilities. This paper argues that "altruism," as a motive to send money home, would contribute to the stability of these flows. Using a simple framework that relates workers' remittances to agricultural GDP, which is used as an indicator of economic "hardship" in the home country, evidence suggests that altruism could have played an important role in the flow of remittances to Egypt, Jordan, Morocco, Pakistan, and Tunisia in recent years.
    Keywords: Workers remittances , Egypt , Jordan , Morocco , Pakistan , Tunisia , Middle East and Central Asia , Balance of payments positions ,
    Date: 2006–05–31
  30. By: Jiro Honda; Liliana Schumacher
    Abstract: This paper discusses whether adopting the U.S. dollar as the sole legal tender could help Liberia, a postconflict economy, to boost growth and strengthen fiscal discipline. In view of the performance of exchange rate regimes in many countries and Liberia's own experience with dollarization, we conclude that Liberia should not adopt full dollarization for the following reasons: (i) the alleged benefits voiced by the proponents of dollarization, in terms of enhanced fiscal discipline and faster economic growth, are not supported by the empirical evidence; (ii) dollarization would increase the Liberian economy's vulnerability to external shocks and Liberia's social fragility; (iii) banks in fully dollarized economies face additional capitalization requirements that Liberian banks cannot meet at present; and (iv) dollarization would be costly in terms of real resources because of the loss of seigniorage.
    Date: 2006–04–10
  31. By: Schündeln, Matthias
    Abstract: Economic development requires the growth of productive firms. However, financing constraints may limit firms’ investment abilities. This paper estimates the cost of financing constraints to firms, for example in terms of idle investment opportunities, and their aggregate implications. To this end, I develop and estimate a dynamic model of firm-level investment. The model allows me to deal with the main identification problem faced by work that studies financing constraints, namely to identify the investment opportunities and the constraints of a firm separately. The model also allows for other potential explanations of the observed phenomenon, in particular adjustment costs and uncertainty. I solve the model using dynamic programming methods and estimate it via simulation methods, using firm level data from Ghana. Counterfactual analyses are then carried out to quantify the importance of financing constraints. These counterfactuals indicate that removing the constraints would imply economically significant increases in investment that are associated with higher levels of consumption.
    Date: 2005

This nep-afr issue is ©2006 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.