nep-afr New Economics Papers
on Africa
Issue of 2007‒03‒24
24 papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. Exporing growth linkages and market opportunities for agriculture in Southern Africa: By Nin Pratt, Alejandro; Diao, Xinshen
  2. The Prospects for Sustained Growth in Africa: Benchmarking the Constraints By Simon Johnson; Jonathan David Ostry; Arvind Subramanian
  3. Impact of Remittances on Poverty and Financial Development in Sub-Saharan Africa By Smita Wagh; Sanjeev Gupta; Catherine A. Pattillo
  4. Agricultural trade liberalization under Doha: the risks facing African countries By Badiane, Ousmane
  5. Sources of Inflation in Sub-Saharan Africa By Shanaka J. Peiris; Regis Barnichon
  6. Do South-South Trade Agreements Increase Trade? Commodity-Level Evidence from COMESA By Anna Maria Mayda; Chad Steinberg
  7. Household-level Credit Constraints in Urban Ethiopia By Gamal Ibrahim; Abbi Kedir; Sebastian Torres
  8. TRIPLE DIVIDENDS OF WATER CONSUMPTION CHARGES IN SOUTH AFRICA By Anthony Letsoalo; James Blignaut; Theuns de Wet; Martin de Wit; Sebastiaan Hess; Richard S.J. Tol; Jan van Heerden
  10. Aid, agriculture and poverty in developing countries. By Paul Mosley; Abrar Suleiman
  11. Subsidies and regulatory reform in West African cotton: What are the development stakes? By Shepherd, Ben; Delpeuch, Claire
  12. Assessing potential impact of avian influenza on poultry in West Africa: a spatial equilibrium model analysis By You, Liangzhi; Diao, Xinshen
  13. EU and US safeguards against Chinese textile exports: What consequences for West African cotton-producing countries? By Delpeuch, Claire
  14. Budget support, conditionality and poverty. By Paul Mosley; Abrar Suleiman
  16. Determinants of change in household-level consumption and poverty in Uganda, 1992/93-1999/00: By Benin, Sam; Mugarura, Samuel
  17. Technical Efficiency and Small-scale Fishing Households in Tanzanian coastal Villages: An Empirical Analysis By Jennifer K. sesabo; Richard S.J. Tol
  18. Development domains for Ethiopia: capturing the geographical context of smallholder development options By Chamberlin, Jordan; Pender, John; Yu, Bingxin
  19. Foreign Direct Investment: a comparative study of the attraction of Moroccan and Tunisian economies (In French) By Dalila NICET-CHENAF (GREThA-GRES); Eric ROUGIER (GREThA-GRES)
  20. Egypt--Searching for Binding Constraints on Growth By Klaus-Stefan Enders
  21. The development of trust and social capital in rural Uganda: An experimental approach. By Paul Mosley; Arjan Verschoor
  22. Remittances in Fragile Settings: a Somali Case Study By Anna Lindley
  23. Mobility and earnings in Ethiopia ' s urban labor markets, 1994-2004 By Bigsten, Arne; Mengistae, Taye; Shimeles, Abebe
  24. Fixed Exchange Rates and the Autonomy of Monetary Policy: The Franc Zone Case By Romain Veyrune

  1. By: Nin Pratt, Alejandro; Diao, Xinshen
    Abstract: "Considering the heterogeneity of the countries of southern Africa and the presence of South Africa and other middle-income countries in the region, southern Africa has a unique opportunity to exploit agricultural potential and regional trade opportunities through regional dynamics and integration. We analyze the implications of such opportunities for the growth of the low-income countries, using a regional general equilibrium model that captures growth linkages. We find that growth in the middle-income southern African countries, such as South Africa, benefits the region's low-income countries through increased demand for their agricultural exports. Agricultural productivity growth, however, is necessary for low-income countries to take advantage of South Africa's growth. Productivity growth in the low-income countries' grain and livestock sectors generates more growth in GDP and food consumption than growth in nontraditional export crops. Unlike other regions where growth in grain production is likely to be constrained by domestic demand, expanding middle-income economies in southern Africa provide additional demand for grains and livestock, slowing the decline in grain prices in the region." Authors' Abstract
    Keywords: Regional trade, General equilibrium model, Regional integration, Agricultural productivity, Grain production,
    Date: 2006
  2. By: Simon Johnson; Jonathan David Ostry; Arvind Subramanian
    Abstract: A dozen countries had weak institutions in 1960 and yet sustained high rates of growth subsequently. We use data on their characteristics early in the growth process to create benchmarks with which to evaluate potential constraints on sustained growth for sub-Saharan Africa. This analysis suggests that what are usually regarded as first-order problems-broad institutions, macroeconomic stability, trade openness, education, and inequality-may not now be binding constraints in Africa, although the extent of ill-health, internal conflict, and societal fractionalization do stand out as problems in contemporary Africa. A key question is to what extent Africa can rely on manufactured exports as a mode of "escape from underdevelopment," a strategy successfully deployed by almost all the benchmark countries. The benchmarking comparison specifically raises two key concerns as far as a development strategy based on expanding exports of manufactures is concerned: micro-level institutions that affect the costs of exporting, and the level of the real exchange rate-especially the need to avoid overvaluation.
    Keywords: Sustained growth , Africa , constraints , benchmark , Economic growth , Africa , Trade liberalization , Imports , Exports ,
    Date: 2007–03–08
  3. By: Smita Wagh; Sanjeev Gupta; Catherine A. Pattillo
    Abstract: This paper assesses the impact of the steadily growing remittance flows to sub-Saharan Africa (SSA). Though the region receives only a small portion of the total recorded remittances to developing countries, and the volume of aid flows to SSA swamps remittances, this paper finds that remittances, which are a stable, private transfer, have a direct poverty mitigating effect, and promote financial development. These findings hold even after factoring in the reverse causality between remittances, poverty and financial development. The paper posits that formalizing such flows can serve as an effective access point for "unbanked" individuals and households, and that the effective use of such flows can mitigate the costs of skilled out-migration in SSA.
    Keywords: Workers remittances , Sub-Saharan Africa , Poverty reduction , Financial sector , Development ,
    Date: 2007–02–26
  4. By: Badiane, Ousmane
    Abstract: "African countries tend to be affected by global agricultural policies in the same way as other economies but with much more severe economy-wide repercussions... The present discussion paper 1) examines the vulnerability of Africa economies with respect to global agricultural trading policies and their induced changes in world agricultural markets, based on the above characteristics; 2) analyzes the efficiency effects within Africa's agricultural sector of world market distortions resulting from agricultural trading policies; 3) illustrates the impact of global protectionism on poverty levels and distribution among rural households in Africa and the implication for the objective of poverty reduction; 4) reviews the options and risks facing African countries in their pursuit of opportunities for greater participation in the global trading system, in particular in connection with the Doha trade agenda; and 5) discusses options for global trade liberalization that would best benefit African economies. The paper argues that the insistence on the part of African countries on Special and Differential Treatment entails much more risks than benefits for their economies. It also indicates that trade preferences have been less beneficial to African economies than usually assumed and at any rate have not been significant enough to compensate African countries for the negative impact of global protectionism. Finally, the paper also disagrees with the widely accepted conclusion that African countries would suffer from liberalization of global agricultural policies because they tend to be net food importers. That conclusion does not sufficiently take into consideration the dynamic long term effects of global policy changes on production and trading patterns among African countries and the potential efficiency effects that would emanate there from." Authors' Abstract
    Keywords: Agricultural policies, International trade, agricultural sector, Protectionism, Doha agreement, trade liberalization, Poverty reduction, Rural households,
    Date: 2006
  5. By: Shanaka J. Peiris; Regis Barnichon
    Abstract: This paper explores the sources of inflation in Sub-Saharan Africa by examining the relationship between inflation, the output gap, and the real money gap. Using heterogeneous panel cointegration estimation techniques, we estimate cointegrating vectors for the production function and the real money demand function to recover the structural output and money gaps for seventeen African countries. The central finding is that both gaps contain significant information regarding the evolution of inflation, albeit with a larger role played by the money gap. There is no significant evidence of asymmetry in the relationship.
    Keywords: Inflation , Phillips curve , money demand , panel cointegration , growth accounting , Inflation , Sub-Saharan Africa , Demand for money , Production , Accounting , Economic models ,
    Date: 2007–02–21
  6. By: Anna Maria Mayda; Chad Steinberg
    Abstract: South-South trade agreements are proliferating: Developing countries signed 70 new agreements between 1990 and 2003. Yet the impact of these agreements is largely unknown. This paper focuses on the static effects of South-South preferential trade agreements stemming from changes in trade patterns. Specifically, it estimates the impact of the Common Market for Eastern and Southern Africa (COMESA) on Uganda's imports between 1994 and 2003. Detailed import and tariff data at the 6-digit harmonized system level are used for more than 1,000 commodities. Based on a difference-in-difference estimation strategy, the paper finds that-in contrast to evidence from aggregate statistics-COMESA's preferential tariff liberalization has not considerably increased Uganda's trade with member countries, on average across sectors. The effect, however, is heterogeneous across sectors. Finally, the paper finds no evidence of trade-diversion effects.
    Keywords: South-South trade agreements , trade creation , trade diversion , International trade agreements , Uganda , Imports , Commodities , Developing countries , Common Market for Eastern and Southern Africa , Trade models ,
    Date: 2007–02–26
  7. By: Gamal Ibrahim; Abbi Kedir; Sebastian Torres
    Abstract: Empirical evidence on determinants of credit constraints and the amount borrowed by urban household in Sub-Saharan Africa is almost non-existent. Using an extended direct approach by virtue of the unique data set we have (the Fourth Round Ethiopian Urban Household Survey), we analysed the determinants of credit constraints and the amount borrowed by urban households. We find a high percentage of credit-constrained households, the majority of which constitute discouraged borrowers. Discrete choice models that control for potential endogeneity and selectivity bias have been fitted to our data. Our analysis shows current household resources, number of dependants, and location as significant correlates.
    Keywords: credit constrained households; credit rationing; endogeneity; instrumental variables; urban Ethiopia; Africa
    JEL: D12 O12 O55
    Date: 2007–03
  8. By: Anthony Letsoalo; James Blignaut; Theuns de Wet; Martin de Wit; Sebastiaan Hess; Richard S.J. Tol (Economic and Social Research Institute, Dublin); Jan van Heerden
    Abstract: The South African government is exploring ways to address water scarcity problems by introducing a water resource management charge on the quantity of water used in sectors such as irrigated agriculture, mining and forestry. It is expected that a more efficient water allocation, lower use and a positive impact on poverty can be achieved. This paper reports on the validity of these claims by applying a computable general equilibrium model to analyse the triple dividend of water consumption charges in South Africa: reduced water use, more rapid economic growth, and a more equal income distribution. It is shown that the appropriate, budget-neutral combination of water charges, particularly on irrigated agriculture and coal mining, and reduced indirect taxes, particularly on food, would yield triple dividends.
    Keywords: water scarcity, water charges, triple dividend, poverty alleviation, computable general equilibrium model
    JEL: O13 Q25
    Date: 2005–04
  9. By: John Serieux (Department of Economics University of Manitoba)
    Abstract: This Conference Paper by John Serieux was presented at the “Global Conference on Gearing Macroeconomic Policies to Reverse the HIV/AIDS Epidemic”, jointly organized by UNDP’s HIV/AIDS Group and IPC and held in Brasilia, November 2006. It is part of an IPC-supported Research Programme on “Macroeconomic Policies to Combat HIV/AIDS”. The paper argues that any adverse macroeconomic effects of a large scaling up of HIV/AIDS financing can be prevented by proper exchange-rate management, including frontloading aid, building up a modest stock of foreign exchange reserves and refraining from over-reacting to initial moderate increases in inflation and the value of the exchange rate.
    Keywords: Poverty, MDG, HIV/AIDS, EXCHANGE RATE
    JEL: B41
    Date: 2007–03
  10. By: Paul Mosley; Abrar Suleiman (Department of Economics, The University of Sheffield)
    Abstract: We make two contributions to the debate on aid-effectiveness, illustrating that for impact on poverty what matters is not just the level but also the composition and stability of aid. One specific implication of this for aid policy is that aid most effectively reduces poverty if it supports public (and other) expenditures which are supportive of agricultural development – these, our regression analysis confirms, are not only direct expenditure on agriculture, but also education and infrastructure, and military expenditure has a negative impact. Three factors appear to be particularly conducive to the development of stable pro-poor expenditure patterms (and in particular pro-agriculture expenditure patterns). These are expenditure strategies which protect the poor against risk, the development of stable relations between governments and aid donors, and long-term political commitment to pro-poor strategies by government. The argument is pursued partly by panel-data econometric analysis of developing countries as a whole, and partly by case studies of sustained and non-sustained green revolutions in heavily aid-dependent countries in Africa.
    Date: 2005–06
  11. By: Shepherd, Ben; Delpeuch, Claire
    Abstract: • Available evidence strongly suggests that cotton producers in West Africa are relatively unresponsive to changes in world prices. This means they are poorly placed to take advantage of improved market conditions that might result from the reduction or abolition of cotton subsidies in rich countries. • To increase price responsiveness and ensure that the results of multilateral reform match producers’ expectations it is now more urgent than ever to undertake comprehensive regulatory reform of cotton marketing structures. • While most West African countries have already taken important steps in that direction, much work still remains to be done, in particular in Mali. The necessary path of reform is highly complex and country-specific, but we can suggest some overarching goals: Assuring closer alignment between world and domestic (producer) prices; Improving cotton sector productivity by reinforcing market infrastructure at crucial points in the supply chain, and ensuring openness to technological advances including biotechnology; Investing in physical and informational infrastructure so as to bring farmers closer to markets.
    Keywords: International trade; agriculture; cotton; commodity marketing; regulatory reform; West Africa.
    JEL: F13 Q17
    Date: 2007–03
  12. By: You, Liangzhi; Diao, Xinshen
    Abstract: "In this paper, the authors analyze the potential economic impacts of avian influenza (AI) in West Africa, taking Nigeria as an example. They find that, depending on the size of the affected areas, the direct impact of the spread of AI along the two major migratory bird flyways would be the loss of about 4 percent of national chicken production. However, the indirect effect—consumers' reluctance to consume poultry if AI is detected, causing a decline in chicken prices—is generally larger than the direct effect. The study estimates that Nigerian chicken production would fall by 21 percent and chicken farmers would lose US$250 million of revenue if the worst-case scenario occurred. The negative impact of AI would be unevenly distributed in the country, and some states and districts would be seriously hurt. This study is based on a spatial equilibrium model that makes use of the most recent spatial distribution data sets for poultry and human populations in West Africa. The study shows that, while most of the attention has focused on preventing global influenza pandemic, preventive measures are also needed at the national, subnational, and local levels, because AI could potentially have a huge negative impact on the poultry industry and the livelihood of smallholder farmers in many regions in West Africa.." Authors' Abstract
    Keywords: Computable general equilibrium (CGE) modeling, Small farmers, Spatial analysis (Statistics),
    Date: 2006
  13. By: Delpeuch, Claire
    Abstract: In 2005, following the phase-out of the Agreement on Textile and Clothing, the EU and the US have implemented new restrictions on textile and clothing imports from China. Available data suggests that the shortfall thus imposed on China, in terms of textile exports to the EU and to the US, is significant. West African cotton-producing countries are very dependant on cotton earnings for their GDP and over the last years, most of the growth of their cotton exports’ revenues has resulted from increasing exports to China. The results of a model of Chinese and West African cotton exchanges suggests that Chinese imports of West African cotton are strongly dependant on its textile exports to the EU and the US. EU and US safeguards against Chinese textile might have seriously hampered West African cotton exports opportunities over the past two years.
    Keywords: West-Africa; cotton; ATC; EU and US safeguards; China; textile
    JEL: Q17 F13
    Date: 2007–03
  14. By: Paul Mosley; Abrar Suleiman (Department of Economics, The University of Sheffield)
    Abstract: This paper examines the effectiveness of budget support aid as an anti-poverty instrument. We argue that a major determinant of this effectiveness is the element of trust – or `social capital´, as it may be seen – which builds up between representatives of the donor and recipient. Thus we model the conditionality processes attending budget support aid, not purely in the conventional way as a non-cooperative two-person game, but rather as a non-cooperative game which may mutate into a collaborative equilibrium if sufficient trust between the negotiating parties builds up. Whether or not this happens is, we argue, fundamental to the effectiveness of conditionality, and of budget support aid. This then requires us to enquire into the determinants of trust, which - we empirically demonstrate - derive from the experience of the negotiating parties with one another, from the incentives they are able to provide to trust one another and from the processes within which their negotiations are conducted. The model is tested against two samples: extensively against a broad sample of all African countries undergoing budget support operations and intensively against a narrow sample of Ethiopia, Uganda, Malawi and Zambia. The statistical analysis suggests that trust has in practice been achieved not only through a positive `social history´ but by the transmission of forward-looking `signals´ or `bona fides´ concerning fundamentals: high pro-poor expenditure, low military expenditure, and low corruption show a positive relationship with growing trust (measured in terms of freedom from programme interruptions). Where these signals are present, budget support aid is in general growing, and slippage on overt conditionality is in general forgiven; but there are exceptions to this trend, as our case-study analysis demonstrates . A proactive stance in defence of a pro-poor strategy is positive for trust, as are certain procedural reforms including the presence of an IMF resident mission and frequent face-to-face meetings between negotiators for donor and recipient. High trust generates stability of aid, and stability of aid, in conjunction with its level and its targeting, significantly influences growth and poverty outcomes.
    Date: 2005–06
  15. By: Robert Pollin (Department of Economics and Political Economy); James Heintz (Research Institute, University of Massachusetts-Amherst)
    Abstract: This IPC Country Study by Robert Pollin and James Heintz examines three policy areas related to monetary policies in Kenya: inflation dynamics and the relationship between inflation and long-run growth; monetary policy targets and instruments; and exchange rate dynamics and the country’s external balance. It concludes with five main policy recommendations.
    JEL: B41 D11 D12 E31 I32 O54
    Date: 2007–03
  16. By: Benin, Sam; Mugarura, Samuel
    Abstract: "Recent estimates showing increase in the incidence of poverty in Uganda has kindled interest in understanding the factors that cause changes in poverty, as the reversal of the positive trend in the 1990s threatens the government's poverty eradication plan of reducing poverty to a level below 28% by 2014. Using a household and community panel dataset, this paper analyzes the factors contributing to change in household-level consumption and poverty... Results from econometric analyses suggest that adopting policies and strategies that reduce the pressure on agricultural land, creates employment opportunities, and improves access to farmland will be key interventions for raising real per capita consumption and reducing poverty across the country. However, the results also show that the impact of several factors are not the same across the country, suggesting that different interventions for raising consumption will also be needed for different parts of the country." from Authors' Abstract
    Keywords: Poverty, household consumption,
    Date: 2006
  17. By: Jennifer K. sesabo; Richard S.J. Tol (Economic and Social Research Institute, Dublin)
    Abstract: The effort to conserve fisheries resources and improve the welfare of small-scale fishing households is an important objective of Poverty Reduction Strategies (PRS) in Tanzania. The success of such strategies depends both on the variation and the level of efficiency within small-scale fishing households. This paper examines the technical efficiency of small-scale fishing households in Tanzania using data from two coastal villages (Mlingotini and Nyamanzi). A stochastic frontier (with technical inefficiency effects) model is specified and estimated. The estimated mean technical efficiency of small-scale fishing households is 52%. Results show that the efficiency of individual fishing households is positively associated with fishing experience, size of farming land, distance to the fishing ground, and potential market integration and negatively related to non-farm employment and bigger household sizes. We find that future policies aiming at targeting conservation-development issues in fishing communities should be concerted to provide mechanisms, which improve the access of small-scale fishing households to less destructive fishing tools via provision of credits, and markets as well as the creation of new employment opportunities in other sectors.
    Keywords: Fishing households, Fisheries development, Stochastic production frontier, Technical efficiency, Tanzania
    JEL: D13 O13 Q22
    Date: 2006–01
  18. By: Chamberlin, Jordan; Pender, John; Yu, Bingxin
    Abstract: "The choices that smallholder farmers are able to make are strongly conditioned by the geographic conditions in which they live. The importance of this fact for rural development strategy is not lost on policy makers. For example, the government of Ethiopia frequently frames policy discussions by broadly different geographical conditions of moisture availability, recognizing moisture reliable, drought prone and pastoralist areas. These conditions are seen as important criteria for determining the nature, extent and priority of development interventions for different parts of the country. There is considerable evidence, however, that other geographical factors also have important implications for rural development options. This paper uses agroecology, access to markets, and population density to define development domains: geographical locations sharing broadly similar rural development constraints and opportunities. Unlike similar efforts conducted elsewhere, this work is unique in that it seeks to move away from a subjective mapping of factors of theorized importance to a more rigorous definition of development domains on the basis of quantitative data on smallholder livelihood strategies. After selecting variables for mapping, we calibrate our definition for domains in such a way that their explanatory power is maximized across a range of livelihood strategies that figure in the current Ethiopian rural development discourse (market engagement, dependence upon agriculture, etc.)." Authors' Abstract
    Keywords: Smallholders, Small farmers, Geographic conditions, rural development strategies, Development policy, Agro-ecology, Market access, Livelihoods, Population density,
    Date: 2006
    Abstract: The existing literature points to a series of determinants of FDI attraction such as the size of markets, the costs of labor, infrastructure, the educational level of the labor force, or policy reforms and political stability … However, potential trade-offs or complementarities between similar countries are rarely underscored as factors explaining the performance or the under-performance in attracting FDI. In this paper we try to determine if there is an inverse (positive) relationship between FDI flows in Tunisia and in Morocco. We test this hypothesis is tested in a VAR model (Vector Autogressive Regression) and we show that FDI in Tunisia attract, in an indirect way, the FDI in Morocco, probably by improving the climate of business in the region. But, meanwhile, Morocco undergoes a significant diversion of FDI in favour of Tunisia in the long run.
    Keywords: Foreign direct investment (FDI), trade-off, attraction, Morocco, Tunisia
    JEL: F59
    Date: 2007
  20. By: Klaus-Stefan Enders
    Abstract: Since 2004 Egypt's growth has been accelerating in step with the launching of a series of ambitious reforms, reversing a trend during the preceding half-decade when Egypt's growth rate fell below that of most regional peers and well below that of the average developing country. This paper seeks to identify factors that held back Egypt's growth in the recent past, and explores whether recent reforms have removed the most binding constraints to allow at least a temporary growth spurt. Overall, the Egyptian reforms launched in 2004 appear to have focused well on the most critical constraints-reducing red tape and tax rates, and improving access to foreign exchange-thereby getting a strong growth response out of a limited set of reforms. However, inefficient bureaucracy remains an important obstacle to higher growth and reforms in this area should continue to have high payoffs. Ongoing reforms are also addressing constraints that are likely to become binding soon (or have become so already), such as inefficient financial intermediation and high public debt. Improvements in education may rapidly become a critical factor for sustaining higher growth.
    Keywords: Egypt , Growth , Growth Constraints ,
    Date: 2007–03–14
  21. By: Paul Mosley; Arjan Verschoor (Department of Economics, The University of Sheffield)
    Abstract: Trust is important for development but can be hard to build. In this paper, we report on experiments designed to understand the determinants of trust in villages in eastern Uganda, and in particular whether trust can be `built´ by offering insurance to people as a protection against the possibility that the trust they offer will not be reciprocated. We find, firstly, that the effects of income and wealth on trust are ambiguous: trust is higher in the richer than the poorer village, but once association and female education are added as explanatory variables, the wealth effect disappears. Secondly, although the offer of insurance is taken up by a majority of players, this is in most cases not an `effective demand´ in the sense of incentivising higher levels of trust. Effective demand for insurance, defined in this way, however responds positively to high levels of risk efficacy, microfinance membership and female education. Insurance offered in this form, therefore, is on its own apparently not a reliable technology for building trust; but its effectiveness as a trust-building instrument appears to increase if certain complementary institutions are in position.
    Keywords: Trust, Social Capital, Insurance, Uganda
    JEL: O12 O16 C93
    Date: 2005–06
  22. By: Anna Lindley (Centre on Migration, Policy and Society, Institute of Social and Cultural Anthropology, University of Oxford)
    Abstract: Literature on conflict has largely overlooked migrants’ remittances, and literature on migrant’s remittances has largely avoided conflict settings. Using a micro-level approach, this paper explores how remittances have affected households coping with conflict and fragility in the Somali city of Hargeisa. Drawing on survey and ethnographic evidence, the paper highlights the transformed geography and diversified participation in remitting, and explores the uneven transnationalisation of family roles. It shows that remittances can help households to meet living expenses, cope with crises, and build livelihoods, although local constraints inhibit the latter. Circulating in the wider community through market relations and social networks, remittances shape Hargeisa’s political economy. The policy implications are explored.
  23. By: Bigsten, Arne; Mengistae, Taye; Shimeles, Abebe
    Abstract: An analysis of panel data on individuals in a random selection of urban households in Ethiopia reveals large, sustained, and unexplained earnings gaps between public and private, and formal and informal sectors over the period 1994-2004. The authors have no formal evidence whether these gaps reflect segmentation of the labor market along either of these divides. In other words, they canno t show whether they are at least in part due to impediments to entry in the higher wage sector. But they do have evidence that, if segmentation explains any part of the observed earnings gaps, then it could only have weakened over the survey decade. The authors find, first, that the rate of mobility increased between the two pairs of sectors. Sample transition rates grew across survey waves, while state dependence in sector choice decreased. Second, the sensitivity of sector choice to earnings gaps increased over the same period. In particular, the role of comparative earnings in selection into the informal sector was evident throughout the survey decade and increased in magnitude over the second half of the period.
    Keywords: Labor Markets,Labor Standards,Work & Working Conditions,Markets and Market Access,Labor Management and Relations
    Date: 2007–03–01
  24. By: Romain Veyrune
    Abstract: This paper compares monetary policy of currency boards with that of the franc zone during the period 1956-2005. It concludes that monetary policy in the zone was more autonomous than under a currency board, even though both systems faced the same exchange rate constraint. So far, the contingency line provided by the French treasury and capital controls have allowed the zone to combine a fixed exchange rate and a relatively autonomous monetary policy. Financial development and zone enlargement would challenge this relative autonomy for two reasons: (1) the potential cost to the French treasury would increase; and (2) residents would potentially be able to avoid capital controls. For the zone to maintain its fixed exchange rate, close targeting of foreign reserves would become important.
    Keywords: Franc zone , currency boards , monetary policy , fixed exchange rate , Exchange rate policy , Monetary unions , Currency boards , Monetary policy ,
    Date: 2007–02–21

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