nep-afr New Economics Papers
on Africa
Issue of 2006‒11‒12
six papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. Dynamic Contracting for Development Aid Projects. Mechanism Design and High Performance Computation By Rashid, Salim; Shorish, Jamsheed; Sobh, Nahil
  2. Debt Relief and Changing Governance Structures in Developing Countries By Andreas Freytag; Gernot Pehnelt
  3. Datation du Cycle du PIB Camerounais entre 1960 et 2003 By Odia Ndongo, Yves Francis
  4. The Economics of Smallholder Households in Tobacco and Cotton Growing Areas of the Zambezi Valley of Mozambique By Rui Benfica; Julieta Zandamela; Arlindo Miguel; Natérica de Sousa
  5. Determinants of Moral Hazard in Microfinance: Empirical Evidence from Joint Liability Lending Programs in Malawi By Simtowe, Franklin; Zeller, Manfred
  6. Impact of Trade Liberalization on the Environment in Developing Countries: The Case of Nigeria By Feridun, Mete

  1. By: Rashid, Salim (Department of Economics, University of Illinois at Urbana-Champaign); Shorish, Jamsheed (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria); Sobh, Nahil (National Center for Supercomputing Applications, University of Illinois at Urbana-Champaign)
    Abstract: Developing economies share both microeconomic and macroeconomic characteristics which are often unique relative to their more developed counterparts. Indeed, many authors (e.g. Parente and Prescott 2000) have emphasized the role of institutional frictions within developing nations as a major determinant of economic growth (or the lack thereof). We examine one type of institutional friction, concerning the observation and reporting of information, and construct a straightforward dynamic contracting model of foreign donor investment in an aid project. We show that even within a simple class of such models, the dynamic contracting problem rapidly becomes computationally intensive, yet remains manageable when high performance. We argue that the natural modeling, simulation and testing environment to both analyze development aid issues and help generate effective aid policy should involve–indeed, rely upon–high performance computational resources.
    Keywords: Development aid, Dynamic contracts, Computation
    JEL: G20 C63 D86
    Date: 2006–11
  2. By: Andreas Freytag (University of Jena, Faculty of Economics); Gernot Pehnelt (University of Jena, Faculty of Economics)
    Abstract: In this paper we empirically discuss the question whether or not debt relief in the past fifteen years has been economically rational. Analysing the determinants of debt relief our results suggest that governance quality did not play a role in the decision of creditor countries to forgive debt in the 1990s. Furthermore, even the actual debt burden of highly indebted poor countries had not been crucial for the decision whether or not debt forgiveness was granted. Rather, debt relief followed a strong path dependence: those countries whose debt had been forgiven in the first half of the 1990s have also been granted debt forgiveness in the second half of this decade. However, this allocation pattern changed at the beginning of the 21st century, where the path dependence was less strong and at least some dimensions of governance quality have been taken into account by donor countries.
    Keywords: debt relief, HIPC, development, governance, institutional quality
    JEL: O17 O19 O29
    Date: 2006–10–20
  3. By: Odia Ndongo, Yves Francis
    Abstract: This work aims to analyse the dynamics of macroeconomic fluctuations in Cameroon and to determine the resulting business and growth cycles turning point chronology. The construction of a reference turning point chronology poses some problems related to the choice of the methods to be used. In this work, we use the Bry and Broschan algorithm and the HODRICK-PRESCOTT filter to estimate the Cameroonian classical business cycle and growth cycle turning point chronology respectively. On the one hand, the results obtained point to a great similarity in the duration phases of the two kinds of cycles. On the other hand, the emerging cycles allow us to observe the influence of the negative shock of the 1985-86 years on the evolution of the Cameroonian GDP cycle.
    Keywords: macroeconomic fluctuations; business cycles; growth cycles
    JEL: E65 E37 N1 E32
    Date: 2006–10–21
  4. By: Rui Benfica (Department of Agricultural Economics, Michigan State University); Julieta Zandamela; Arlindo Miguel; Natérica de Sousa
    Abstract: This paper is the first output generated with the data collected in that survey. It is a descriptive piece that focuses on identifying and presenting a snapshot of the rural economy in the Zambezi Valley cash cropping economies. It makes it by presenting key statistics on selected representative characteristics of rural households in both cotton and tobacco growing areas. For each of those areas, the tabular and graphical results are broken down into growers versus nongrowers of those key cash crops. Although not analytical, the paper sheds light in a number of issues of concern in cash cropping economies in the region.
    Keywords: food security, food policy, tobacco, cotton, household, Zambezi Valley, Mozambique
    JEL: Q18
    Date: 2005
  5. By: Simtowe, Franklin; Zeller, Manfred
    Abstract: Moral hazard is widely reported as a problem in credit and insurance markets, mainly arising from information asymmetry. Although theorists have attempted to explain how group lending with joint liability can be an important tool for mitigating moral hazard among the poor, empirical studies are rare and sometimes give mixed results. In Malawi, for example, although, group lending with joint liability has been practiced for nearly four decades, the unwillingness to repay loans remains the single major cause of default. This paper examines the extent of occurrence of moral hazard and investigates its determinants of occurrence among joint liability lending programs from Malawi, using group level data from 99 farm and non-farm credit groups. Results reveal that peer selection, peer monitoring, peer pressure, dynamic incentives and variables capturing the extent of matching problems explain most of the variation in the incidence of moral hazard among credit groups. The implications are that joint liability lending institutions will continue to rely on social cohesion and dynamic incentives as a means to enhancing their performance which has a direct implication on their outreach, impact and sustainability.
    Keywords: moral hazard; joint liability; dynamic incentives; group lending; Malawi
    JEL: M21 M20
    Date: 2006–10–12
  6. By: Feridun, Mete
    Abstract: This article aims at investigating the impact of trade openness on pollution and resource depletion in Nigeria. Results indicate that pollution is positively related to trade intensity and real GDP per square kilometer, while capital to labor ratio and GNP are negatively related to pollution. In addition, strong evidence suggests that trade intensity, real GDP per square kilometer and GNP are positively related to environmental degradation indicating that the technique, scale, and total effects of liberalization are detrimental to the environment. The composition effect of trade liberalization on natural resource utilization,on the other hand, is beneficial. A number of policy implications emerge from the study for Nigeria as well as other developing economies.
    Keywords: development; environmental degradation; environmental Kuznets Curve; trade liberalization
    Date: 2006–11–08

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