nep-afr New Economics Papers
on Africa
Issue of 2006‒11‒04
seven papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. Understanding South Africa's Economic Puzzles By Rodrik, Dani
  2. Lost Decades: Lessons from Post-Independence Latin America for Today's Africa By Robert H. Bates; John H. Coatsworth; Jeffrey G. Williamson
  3. Services inputs and firm productivity in Sub-Saharan Africa : evidence from firm-level data By Arnold, Jens Matthias; Mattoo, Aaditya; Narciso, Gaia
  4. Mobilizing urban infrastructure finance within a responsible fiscal framework : South African case By van Ryneveld, Philip
  5. The investment climate in post-conflict situations By Mills, Rob; Qimiao Fan
  6. Human Resource Management in Eritrea: Current and Future Trends By Ghebregiorgis , Fitsum; Karsten, Luchien
  7. Brain drain and human capital formation in developing countries : winners and losers By Michel, BEINE; Frédéric, DOCQUIER; Hillel, RAPOPORT

  1. By: Rodrik, Dani
    Abstract: South Africa has undergone a remarkable transformation since its democratic transition in 1994, but economic growth and employment generation have been disappointing. Most worryingly, unemployment is currently among the highest in the world. While the proximate cause of high unemployment is that prevailing wages levels are too high, the deeper cause lies elsewhere, and is intimately connected to the inability of the South African to generate much growth momentum in the past decade. High unemployment and low growth are both ultimately the result of the shrinkage of the non-mineral tradable sector since the early 1990s. The weakness in particular of export-oriented manufacturing has deprived South Africa from growth opportunities as well as from job creation at the relatively low end of the skill distribution. Econometric analysis identifies the decline in the relative profitability of manufacturing in the 1990s as the most important contributor to the lack of vitality in that sector.
    Keywords: economic growth; South Africa
    JEL: O11 O14
    Date: 2006–10
  2. By: Robert H. Bates; John H. Coatsworth; Jeffrey G. Williamson
    Abstract: Africa and Latin America secured their independence from European colonial rule a century and half apart: most of Latin America after 1820 and most of Africa after 1960. Despite the distance in time and space, they share important similarities. In each case independence was followed by political instability, violent conflict and economic stagnation lasting for about a half-century (lost decades). The parallels suggest that Africa might be exiting from a period of post-imperial collapse and entering a period of relative political stability and economic growth, as did Latin America a century and a half earlier.
    JEL: N0 O10 O54 O55
    Date: 2006–10
  3. By: Arnold, Jens Matthias; Mattoo, Aaditya; Narciso, Gaia
    Abstract: The authors investigate the relationship between the productivity of African manufacturing firms and their access to services inputs. They use data from the World Bank Enterprise Survey for over 1,000 firms in 10 Sub-Saharan African countries to calculate the total factor productivity of firms. The Enterprise Surveys also contain unique measures of firms ' access to communications, electricity, and financial services. The availability of these measures at the firm level, both as subjective and objective indicators, allows the authors to exploit the variation in services performance at the subnational regional level. Furthermore, by using the regional variation in services performance, they are also able to address concerns about the possible endogeneity of the services variables. The results show a significant and positive relationship between firm productivity and service performance in all three services sectors analyzed. The authors thus provide support for the argument that improvements in services industries contribute to enhancing the performance of downstream economic activities, and thus are an essential element of a strategy for promoting growth and reducing poverty.
    Keywords: Economic Theory & Research,Education for the Knowledge Economy,Rural Communications,Commodities,Urban Economics
    Date: 2006–11–01
  4. By: van Ryneveld, Philip
    Abstract: Since South Africa held its first democratic elections in 1994, it has given significant attention to building an effective system of decentralization including provincial and local government. While provincial governments are responsible mainly for the implementation of social services such as health and education, the provision of much of the urban infrastructure is the responsibility of local government. Although many challenges remain, the country has made significant progress over the past decade in addressing urban service backlogs in poor areas. At the same time, it has greatly improved macroeconomic fundamentals. The system of financing local government seeks to place accountability firmly at the local level, with most revenues in the larger urban centers raised locally through a combination of local taxes and fees for services, while poorer regions are predominantly grant funded. The objective has been to encourage the financing of capital infrastructure through local borrowing based on sustainable, transparent local finances rather than national repayment guarantees, which are outlawed. There is some indirect subsidization of loans through the state-owned Development Bank of Southern Africa. But the emphasis is on achieving redistribution through transparent, formula-based grants paid directly from national to local governments. While further bedding down of the system is needed, the approach is proving largely successful. The paper concludes by recommending that the existing division between provinces as providers of social services and local governments as the key locus of responsibility for services related to the built environment should be strengthened, particularly through the devolution of more urban transport related functions. A number of key risks are also highlighted, including issues related to the reform of local business taxes.
    Keywords: Municipal Financial Management,Urban Economics,Public & Municipal Finance,Regional Governance,Urban Governance and Management
    Date: 2006–11–01
  5. By: Mills, Rob; Qimiao Fan
    Abstract: This paper is a policy review of the role of investment climate in post-conflict situations. It summarizes the broad range of ways in which conflict negatively affects the investment climate, from macroeconomic instability to a degraded regulatory framework. It stresses that attention needs to be paid to the broader " enabling environment, " including institutions, governance, capacity, and social capital. It suggests that a vibrant private sector underpinned by a good investment climate is particularly important in the post-conflict recovery phase for three reasons: it generates employment, provides public services where the state has retrenched, and builds social capital. By addressing these important " greed and grievance " factors, the private sector helps reduce the likelihood of a return to conflict. The paper concludes by distilling key lessons relating to the management of the post-conflict reform process. Despite the importance of a good investment climate, greater effort is needed to ensure that private sector development reforms are included in the first round of post-conflict policymaking. Local ownership of reforms and enhanced local capacity to implement them is key to sustainable improvements in the investment climate. Development partners have an important role to play in facilitating dialogue and promoting partnerships between public and private sector stakeholders. At the same time, development partners need to ensure that their presence in fragile post-conflict economies does not damage the very sector they are trying to support.
    Keywords: Political Economy,Labor Markets,Trade and Regional Integration,Social Conflict and Violence,Investment and Investment Climate
    Date: 2006–11–01
  6. By: Ghebregiorgis , Fitsum; Karsten, Luchien (Groningen University)
    Date: 2006
  7. By: Michel, BEINE; Frédéric, DOCQUIER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Hillel, RAPOPORT
    Abstract: The brain drain has long been viewed as a serious constraint on poor countries development. However, recent theoretical literature suggests that emigration prospects can raise the expected return to human capital and foster investment in education at home. This paper takes advantage of a new dataset on emigration rates by education level (Docquier and Marfouk, 2006) to examine the impact of brain drain migration on human capital formation in developing countries. We find evidence of a positive effect of skilled migration prospects on gross human capital levels in a cross-section of 127 developing countries. For each country we then estimate the net effect of the brain drain using counterfactual simulations. We find that countries combining relatively low levels of human capital and low skilled emigration rates are likely to experience a net gain, and conversely. There appears to be more losers than winners, and in addition the former tend to lose relatively more than what the latter gain. At an aggregate level however, and given that the largest developing countries are all among the winners, brain drain migration may be seen not only as increasing the number of skilled workers worldwide but also the number of such workers living in developing countries.
    Keywords: Brain drain, skilled migration, human capital formation, immigration policy, developing countries
    JEL: F22 J24 O15
    Date: 2006–05–15

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.
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