nep-afr New Economics Papers
on Africa
Issue of 2007‒01‒14
23 papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. Does Africa Really Benefit from Trade? By Matthias Busse; José Luis Groizard
  2. AIDS, freedom and the moral community of citizens in Southern Africa By O'LAUGHLIN, B.
  3. On the Renaissance of African Modes of Thought: The Example of Occult Belief Systems By Kohnert, Dirk
  4. Togo: a didactic drama of misled democratisation in Africa By Kohnert, Dirk
  5. The real exchange rate of the rand and competitiveness of South Africa's trade By Mtonga, Elvis
  6. Dynamics of Malawi’s trade flows: a gravity model approach By Simwaka, Kisu
  7. Common roots, shared traits, joint prospects? On the articulation of multiple modernities in Benin and Haiti By Kohnert, Dirk
  8. On the benefit of African immigration to Europe. Turn in the EU immigration policy? By Kohnert, Dirk
  9. On the Articulation of Witchcraft and Modes of Production among the Nupe, Northern Nigeria By Kohnert, Dirk
  10. Interview with Kenneth Arrow By Dubra, Juan
  11. Household Poverty Dynamics in Malawi By Bokosi, Fanwell Kenala
  12. Entry, survival, and growth of manufacturing firms in Ethiopia By SHIFERAW, A.
  13. The Long-run Effects of HIV/AIDS in Kenya By Bruhns, Ramona
  14. The effectiveness of official intervention in foreign exchange market in Malawi By Simwaka, Kisu
  15. Financial Development and Economic Growth: Time Series Evidence from Egypt By Suleiman Abu-Bader; Aamer Abu-Qarn
  16. The determinants of the Harare Stock Exchange (HSE) market capitalisation By Ilmolelian, Peter
  17. Financial Developent and Economic Growth Nexus: Time Series Evidence from Middle Eastern and North African Countries By abu-bader, suleiman; abu-qarn, aamer
  18. Les sources des fluctuations marcoéconomiques au Cameroun By ODIA NDONGO, Yves Francis
  19. Physical public infrastructure and private sector output/productivity in Uganda: a firm level analysis By MUSISI, A.A.
  20. Travail des femmes, caractéristiques familiales et sociales: le cas du Maroc By Anna Paterno; Giuseppe Gabrielli; Agata Valentina D´Addato
  21. Measuring the Capability to Raise Revenue Process and Output Dimensions and Their Application to the Zambia Revenue Authority By Christian von Soest
  22. Nigerian economy: Essays on Economic Development By Feridun, Mete
  23. Can Risk-aversion towards fertilizer explain part of the non-adoption puzzle for hybrid maize? Empirical evidence from Malawi By Simtowe, Franklin

  1. By: Matthias Busse (Hamburg Institue of International Economics (HWWA)); José Luis Groizard (Universitat de les Illes Balears)
    Abstract: We empirically analyse the impact of trade on income levels in the sub-Saharan Africa countries. The results indicate that the linkage between both variables is negative for these countries. This outcome may explain the negative sign of the Africa dummy in income (or growth) regressions.
    Keywords: Trade, Income Levels, Sub-Saharan Africa.
    JEL: F1 O24 O40
    Date: 2006
  2. By: O'LAUGHLIN, B.
    Keywords: AIDS; public health; health policy; liberalism; politics; Southern Africa;
    Date: 2006
  3. By: Kohnert, Dirk
    Abstract: The analysis of African occult belief systems provides a unique example for demonstrating that seemingly outdated and exotic African modes of thought, such as the belief in magic and witchcraft, are modern and have significant impact on social, economic and political structures. Official approaches, designed to cope with the problems of witchcraft violence in Africa, have since the advent of colonial rule, been based on eurocentric views and colonial jurisdiction, legitimised by Western social science. These answers are inadequate; in fact, they constitute part of the problem itself. African religions could provide a framework for valuable indigenous solutions to actual problems of contemporary life, including the problem of witchcraft violence. Besides this, they might, under certain conditions, provide the outside world with an inspiring new dimension of philosophic thought and emancipative action for example, within the realm of conflict resolution and reconciliation. However, even in the case of the ‘domestication’ of witchcraft violence, this holds only in so far as appropriate African answers can be shielded against the negative impact of globalised liberal capitalism.
    Keywords: African Renaissance; occult belief; rationality; rational actor; sub-saharan Africa;
    JEL: O57 Z1 Z12 Z13 N37
    Date: 2006
  4. By: Kohnert, Dirk
    Abstract: When the longest-serving African dictator, Togo's Gnassingbé Eyadéma, died unexpectedly in February 2005 after 38 years of autocratic rule, Togo became a test case for indigenous democratisation efforts of African states. However, it soon became clear that a change of regime through the ballot box was impossible, in view of the consolidation of this dictatorship through decades of ill-applied foreign assistance. Political conflict flared up again. Eyadémas son, Faure Gnassingbé, sized power in a coup with the backing of the army and the Barons of the ruling party. Violent protest at home and diplomatic pressure of major donors and African peers forced Gnassingbé to hold presidential elections in April. But as the elections were rigged right from the beginning, it was no surprise that they confirmed the power of the incumbent as heir to the throne of his father. In the interest of political stability in the sub-region, neighbouring states, France and the ECOWAS condoned the election results and the brutal political persecution of opponents. About 700 people died and some 40,000 fled to neighbouring Benin and Ghana in fear of reprisals. Only if the international giver community is ready to take and learn from its errors responsibility for it, a democratic Transition can still succeed. This requires first of all a "durable" mandate of the EU or the United Nations, i.e. substantial security, organizational and financial intervention for the support of the democratic forces of Togo at the time of the execution of fair and free elections. Afterwards a long-term reconstruction assistance is indispensable.
    Keywords: Africa south of Sahara; West Africa; Togo; democratisation; transition; governance; dictatorship; foreign aid; aid effectiveness; globalization;
    JEL: Z1 F35 O55 L31 O17
    Date: 2005–06–01
  5. By: Mtonga, Elvis
    Abstract: In the last 10 years since South Africa transformed into a democracy, the rand has seen an increase in volatility of its real exchange rate. These fluctuations in the rand’s real exchange rate have raised questions as to whether they signify significant misalignment of the currency and thereby undermine competitiveness of South Africa’s exports abroad. This is a pertinent question in the South African context because foreign trade has been critical to the growth of the economy. Efforts to address current high levels of unemployment and widespread poverty among the majority of the population have depended upon this growth. This study investigates the extent to which fluctuations in the rand’s real exchange rate have impacted on the competitiveness of South African trade flows by determining whether, at some point, the rand had been misaligned, and the likely consequences of such a misalignment. Using data from 1972 to 2003, and an equilibrium correction model of the rand’s real exchange rate drawn on existing literature, the study finds that, from 1994 to 1996, and also in 1998, the rand’s real exchange rate became undervalued by an average 10%. By early 2002, the extent of overshooting had reached 20%. However, the strong recovery of the rand at the start of 2002 reversed this overshooting and instead pushed the real exchange rate above its equilibrium by an average 16 to 17% at the end of 2003. This suggests significant loss of trade competitiveness during 2003 and needed a nominal depreciation to correct the imbalance.
    Keywords: Real exchange rate; South African rand; trade competitiveness
    JEL: F41 F31 F3
    Date: 2006–12–15
  6. By: Simwaka, Kisu
    Abstract: The paper attempts to examine Malawi’s trade with her major trading partners using an econometric gravity model. In the model, the bilateral trade is a linear function of economic size of the country, geographical distance, and exchange rate volatility, among other factors. Preliminary results show that the fixed effects model is favourable over the random effects gravity model. Specifically, Malawi’s bilateral trade is positively determined by the size of the economies (GDP of the importing country) and similar membership to regional integration agreement. On the other hand, transportation cost, proxied by distance, is found to have a negative influence on Malawi’s trade. Likewise, exchange rate volatility depresses Malawi’s bilateral trade whereas regional economic groupings have had insignificant effect on the flow of bilateral trade. The implications of these results are many. First, all kinds of barriers to trade must be liberalized to a greater extent to enhance Malawi’s trade. One of the main problems of bilateral trade in Africa is transport infrastructure network. Improvement in infrastructure may be a necessary step for successful trade flows within Africa. Second, Malawi can do better if the country trades more with its neighbours. Third, greater stability in the international exchange system would help increase prospects for trade and investments for Southern African countries. Finally, the flow of trade in regional blocks is constrained by problems of compensation issues, overlapping membership, policy harmonization and poor private sector participation.
    Keywords: Malawi’s trade dynamics; gravity model; panel data; fixed effects model
    JEL: F15
    Date: 2006–10–10
  7. By: Kohnert, Dirk
    Abstract: The globalized Western culture of innovation, as propagated by major aid institutions, does not necessarily lead to empowerment or improvement of the well-being of the stakeholders. On the contrary, it often blocks viable indigenous innovation cultures. In African societies and African Diasporas in Latin America, Cultures of Innovation largely accrue from the informal, not the formal sector. Crucial for a proper understanding is its structural differentiation according to class, gender or religion, and between different trans-national social spaces. Different innovation cultures may be complementary, mutually reinforcing, or conflicting, leading in extreme cases even to a 'clash of cultures' at the local level. The repercussions of competing, even antagonistic agencies of innovative strategic groups are demonstrated, taking the example of the impact of African religion on development in Benin and Haiti.
    Keywords: economic development; cultural change; religion; social structure; Benin; Haiti;
    JEL: Z1 Z12 O31 N36 E26 Z13 O55 O57
    Date: 2006
  8. By: Kohnert, Dirk
    Abstract: A growing number of Africans flees from their desolate economic situation or violent conflicts and political persecution at home to Europe. The European Union shares responsibil-ity for this growing economic misery, in view of its egoistic external trade policy. Neverthe-less, it intensifies the foreclosure of its external borders. Thereby, the escape routes become even more dangerous, thousands die every year. The European-African migration summits in Rabat and Tripoli in June and November 2006 even strengthened this policy of exclusion. Yet, well adapted immigration regulations would serve the interest of all parties involved. Last, but not least, it could contribute to protect the over-aged population of European mem-ber states in the long run against threatening economic decline. Even Germany and France meanwhile hesitantly accept the fact that they are an immigration country. The EU commis-sion endorses a limited and temporarily restricted immigration of Africans. However, two fundamental problems remain unsolved. Cost and benefit of immigration are distributed asymmetrically between the social classes. In addition, the EU favours the admission of high skilled labour, which tends to strengthen the 'brain drain' from Africa even more, while mil-lions of unskilled irregular migrants compete with the growing army of unemployed in the host countries. Both will aggravate the imminent danger of violent conflicts and of right-wing extremism in the immigration regions.
    Keywords: International migration; Africa; EU; economic development; international trade policy; human rights;
    JEL: O2 N37 F22 F35 F53 F42 O55 N17 O52 R23 O15 N44
    Date: 2006–12–06
  9. By: Kohnert, Dirk
    Abstract: The article aims to provide better insight into the multiple facets of informal politics and covert social conflicts at the local level during the transformation of African states, using witchcraft accusations as an indicator and the Nupe of Northern Nigeria, as an example. A tentative long-term study on the growth of the Nupe state since pre-colonial times indicates a close relationship between the content and form of witchcraft accusations and the mode of production under which the stakeholders used to work. This paper is based on the author’s hitherto unpublished empirical material, which, although collected some twenty years ago, is not simply of historical value, but remains crucial in backing the major theses of the article. Over time, witchcraft accusations among the Nupe apparently served different, even antagonistic ends, depending on the mode of production in which they were embedded; these ranged from the defence of the village community against a flagrant violation of its social norms to the ruthless exploitation of the Nupe villages by their Fulani overlords. In the long run, however, the socio-economic impact of any form of witchcraft accusation undermines the very same mode of production on which it is based, thereby contributing to its own decline. Much of the continuing confusion in the literature on the apparent contradiction between “emancipating” and "oppressive" functions of witchcraft beliefs could be solved by considering this articulation between modes of production, witchcraft accusations, and the underlying vested interests of the ruling powers.
    Keywords: modes of production; informal politics; social conflicts; occult belief; Nupe; Northern Nigeria; Africa
    JEL: Z1 P16 N37 Z12 O17 Z13 O55
    Date: 2006
  10. By: Dubra, Juan
    Abstract: Arrow argues that the biggest failures of economic theory are: our failure to explain the business cycle; the missing explanations for the size of fluctuations of prices; our failure to explain the causes of growth and of the spread of innovation. He then discusses several of the existing alternatives to the rational expectations paradigm. He tells the story of his dissertation, and how Koopmans wanted to decline his Nobel Prize.Finally, he discusses health care reform, and malaria in Africa.
    Keywords: Health Care; Business Cycles; Fluctuations.
    JEL: D00 D01 G12 E32 I0
    Date: 2005–03
  11. By: Bokosi, Fanwell Kenala
    Abstract: This paper’s goal is to identify the sources of expenditure and poverty dynamics among Malawian households between 1998 and 2002 and to model poverty transitions in Malawi using a bivariate probit model with endogenous selection to address the "initial conditions' problem. The exogeneity of the initial state is strongly rejected and could result in considerable overstatement of the effects of the explanatory factors. The results of the bivariate probit model do indicate that education of the household head, per capita acreage cultivated and changes in household size are significantly related to the probability of being poor in 2002 irrespective of the poverty status in 1998. For those households who were poor in 1998, the probability of being poor in 2002 was significantly influenced by household size, value of livestock owned and mean time to services, while residence in the Northern region was a significant variable in determining the probability of being poor in 2002 for households that were not poor in 1998.
    Keywords: Poverty transitions; characteristics of the poor; poverty dynamics; determinants of poverty; Malawi
    JEL: I32 C14
    Date: 2006–12–12
  12. By: SHIFERAW, A.
    Keywords: manufacturing; business economics; econometric analysis; Ethiopia;
    Date: 2006
  13. By: Bruhns, Ramona
    Abstract: This essay analyzes the long-run economic effects of HIV/AIDS in Kenya, with emphasis on fertility, education and child labor. Human capital, which is built up through formal education and parental child-rearing, is the only input in production. Two aspects are central to the analysis: First, a mature AIDS epidemic causes massive premature adult mortality, thereby destroying existing human capital and reducing the labor force on a large scale. Second, the transmission of human capital to future generations is weakened, as children are left orphaned and surviving adults are correspondingly burdened. As a consequence, per capita income decreases and communities can less afford to raise and educate children as they did before the outbreak of the disease. The underlying theoretical model, in which it is assumed that parents raise and educate children for both financial and altruistic reasons, is calibrated using data for the period 1920 to 2000. The long-run effects of the disease, which depend heavily on parents' expectations about future mortality rates, are estimated for the years 2000-2040. Both human capital and per capita income grow significantly more slowly after the outbreak of the epidemic, while the incidence of child labor doubles for some periods. The level of fertility falls in the immediate aftermath of the outbreak, but can be significantly higher when the epidemic has reached a mature phase, depending on parents' expectations. Governmental interventions in the health sector in the early phase of the epidemic can strongly mitigate its adverse effects.
    Keywords: child labor; growth; fertility; health; epidemic; HIV/AIDS; Kenya;
    JEL: I1 I2 O4 O1
    Date: 2006–11–28
  14. By: Simwaka, Kisu
    Abstract: The Malawi Kwacha was floated in February 1994. Since then, the Reserve Bank of Malawi has periodically intervened in the foreign exchange market. This paper analyses the effectiveness of foreign exchange market interventions carried out by the Reserve Bank of Malawi. We use a GARCH (1, 1) model to simultaneously estimate the effect of intervention on the mean and volatility of the Malawi kwacha. Using monthly exchange rates and official intervention data from January 2002 to February 2006, the empirical results suggest that intervention activities of the Reserve Bank of Malawi affect the kwacha. In line with similar findings elsewhere in the literature, the paper finds that net sales of dollars by the Reserve Bank of Malawi depreciate, rather than appreciate, the kwacha. This effect is very small, however. Moreover, the paper also finds that the Reserve Bank of Malawi intervention reduces the volatility of the kwacha. This shows that the Reserve Bank actually achieves its objective of smoothing out fluctuations of the kwacha. This can be evidenced by the stability of the kwacha during a greater part of 2004. Thus intervention is, to some extent, used as an effective tool for moderating fluctuations of the kwacha. However, its effectiveness is constrained by the amounts of foreign exchange reserves, which are usually low.
    Keywords: Official intervention; foreign exchange market; garch model
    JEL: E58
    Date: 2006–11–20
  15. By: Suleiman Abu-Bader (Department of Economics, Ben-Gurion University of the Negev); Aamer Abu-Qarn (Department of Economics, Ben-Gurion University of the Negev)
    Abstract: This paper examines the causal relationship between financial development and economic growth in Egypt during the period 1960-2001 within a trivariate VAR setting. We employ four different measures of financial development and apply Granger causality tests using the cointegration and vector error correction methodology. Our results significantly support the view that financial development Granger-causes economic growth either through increasing investment efficiency or through increasing resources for investment. This finding suggests that the financial reforms launched in 1990 can explain the rebound in economic performance since then and that further deepening of the financial sector is an important instrument to stimulate saving/investment and therefore long-term economic growth.
    Keywords: Financial development, Economic growth, Egypt, Granger causality, Error-correction models, Cointegration
    JEL: O16 G18 G28
    Date: 2005–07
  16. By: Ilmolelian, Peter
    Abstract: This is an exploratory study that attempts to identify and provide empirical evidence on the possible determinants of the market capitalisation of the Harare Stock Exchange (HSE) with the view of understanding the development prospects of the HSE and other similar markets. The study used 1976-1996 quarterly data from the International Finance Corporation (IFC) and Microfit was used to analyse the data. Using the assumption that market size is positively correlated with the ability to mobilise capital and diversify risk, the study findings suggest that share price and the exchange rate are the most important determinants of the HSE market capitalisation. The study suggests that further in-depth research into the determinants of market capitalisation for the African and other emerging stock markets is required to identify best ways of developing these markets within the global financial system while at the same time promoting local economic growth. The paper begins with an introduction about the HSE followed by short description of stock markets in developing countries. The second part of the paper outlines the theory behind market capitalisation, the development of of the general econometric model and specific cointegrating regression model and the results from the analysis. The third section provides conclusions and policy implications associated with encouraging the stock markets in the emerging stock markets with particular reference to the HSE.
    Keywords: Zimbabwe; Harare Stock Exchange; Stock Markets; African Stock Markets; Developing Countries; Cointegration; Econometrics; Error Correction Models (ECM); Time Series; Third World Stock Markets; Stock Exchange
    JEL: C51 C46 G11 C87 G32 G18 G12 C82 G15 C33 C13 C22
    Date: 2005–11–20
  17. By: abu-bader, suleiman; abu-qarn, aamer
    Abstract: This paper examines the causal relationship between financial development and economic growth in five Middle Eastern and North African (MENA) countries for different periods ranging from 1960 to 2004, within a trivariate vector autoregressive (VAR) framework. We employ four different measures of financial development and apply Granger causality tests using the cointegration and vector error-correction (VEC) methodology. Our empirical results show weak support for a long-run relationship between financial development and economic growth, and for the hypothesis that finance leads growth. In cases where cointegration was detected, Granger causality was either bidirectional or it ran from output to financial development.
    Keywords: Financial development; Economic growth; MENA; Granger causality; Error-correction models; Cointegration
    JEL: G28 O16 G18
    Date: 2006
  18. By: ODIA NDONGO, Yves Francis
    Abstract: This work aims at analysing the dynamics of macroeconomic fluctuations in Cameroon, using a semi-structural VAR to determine the sources of its macroeconomic fluctuations. The results obtained point out that the macroeconomic fluctuations in Cameroon, even though influenced by external shocks, are deeply tributary of internal shocks, notably on public expenses.
    Keywords: macroeconomic fluctuations; economic cycles
    JEL: E61 E32 C51 F10 C5 E37
    Date: 2007–01–03
  19. By: MUSISI, A.A.
    Keywords: physical infrastructure; public works; private sector; productivity; enterprises; Uganda;
    Date: 2006
  20. By: Anna Paterno; Giuseppe Gabrielli (Max Planck Institute for Demographic Research, Rostock, Germany); Agata Valentina D´Addato (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Le taux d’activité féminine au Maroc, malgré un trend mouvant dans les années entre la fin du XX siècle et le nouveau millénaire n’a pas subi des accroissements remarquables. Dans ce travail nous mettons en relief quelques facteurs qui expliquent la participation féminine au marché du travail marocain. On poursuit ce but dans une optique comparative «temporelle», en observant l’évolution qui a eu lieu approximativement pendant la dernière décennie, et «spatiale», en distinguant les milieux urbains des milieux ruraux. Dans cette optique, nous traçons en premier lieu le cadre général des caractéristiques sociales, familiales et d’emploi des femmes marocaines, faisant recours aux principales informations officielles produites sur place, malgré leur caractère fragmentaire. Dans la suite du travail, nous utilisons les données issues de deux enquêtes conduites sur le territoire national en 1992 et entre fin 2003 et début 2004, qui s’inscrivent dans le programme international «Demographic and Health Surveys» (DHS). Finalement, des analyses multivariées mettent en lumière les principaux déterminants du désir des Marocaines de faire partie du marché du travail, et les motivations les plus significatives à la base de leur insertion dans un secteur d’activité spécifique. Les analyses effectuées mettent en évidence que la participation féminine au marché du travail marocain reste liée, surtout en milieu rural, à des modèles familiaux traditionnels dans lesquels le rôle des femmes est limité à des fonctions secondaires, souvent en dehors du travail rémunéré. Les résultats obtenus suggèrent aussi que la stabilité substantielle de la participation féminine au marché du travail observée pourrait être considérée plus que comme une «occasion perdue» dans le chemin d’une amélioration du statut des femmes, plutôt comme une étape obligée du processus de leur affranchissement des activités dégradantes d’un système de production arriéré, étape nécessaire afin d’atteindre un niveau de développement global plus élevé.
    Keywords: Morocco, female employment
    JEL: J1 Z0
    Date: 2006–12
  21. By: Christian von Soest (GIGA Institute of African Affairs)
    Abstract: The worldwide diffusion of the good governance agenda and new public management has triggered a renewed focus on state capability and, more specifically, on the capability to raise revenue in developing countries. However, the analytical tools for a comprehensive understanding of the capability to raise revenue remain underdeveloped. This article aims at filling this gap and presents a model consisting of the three process dimensions ‘information collection and processing’, ‘merit orientation’ and ‘administrative accountability’. ‘Revenue performance’ constitutes the fourth capability dimension which assesses tax administration’s output. This model is applied to the case of the Zambia Revenue Authority. The dimensions prove to be valuable not only for assessing the how much but also the how of collecting taxes. They can be a useful tool for future comparative analyses of tax administrations’ capabilities in developing countries.
    Keywords: capability to raise revenue, revenue authority, tax administration, Zambia
    Date: 2006–12
  22. By: Feridun, Mete
    Abstract: Containing over 20 research articles on the Nigerian economy, this book constitutes a comprehensive and up-to-date review of the contemporary issues in the Nigerian economy. It is an invaluable guide for students and instructors, and an ideal reference book for researchers.
    Keywords: Nigeria; economic development
    JEL: A10
    Date: 2006
  23. By: Simtowe, Franklin
    Abstract: This study investigates the linkage between attitudes towards risk and adoption. We empirically examine the relative risk premium related to fertilizer-use among 404 farmers from Malawi and examine the relationship between risk aversion on fertilizer-use and the adoption of hybrid maize. Results show that Malawian farmers exhibit absolute Arrow-Pratt risk aversion towards the use of fertilizer. The findings also reveal that risk aversion towards the use of fertilizer is strongly associated with low intensity of hybrid maize adoption and that other than the safety net programs, human and financial capital variables such as age, household size, land size and off-farm income can be helpful in explaining the non-adoption puzzle. While safety net programs such as the free input distribution increase the likelihood of adoption, they are associated with low adoption intensity for hybrid maize. A key lesson is that when considering promoting a technology, it is important to assess the profit distribution associated with the use of complementary inputs and its implications for risk preference among technology users in order to avoid formulating misguiding policies.
    Keywords: Adoption; hybrid maize; fertilizer; risk-aversion; Malawi
    JEL: Q01
    Date: 2006–09–20

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