nep-afr New Economics Papers
on Africa
Issue of 2007‒06‒23
fifteen papers chosen by
Suzanne McCoskey
Foreign Service Institute, US Department of State

  1. Scaling-up HIV/AIDS Financing and the Role of Macroeconomic Policies in Kenya By Degol Hailu
  2. Monetary Policy Transparency and Financial Market Forecasts in South Africa By Vivek B. Arora
  3. Trade Growth under the African Growth and Opportunity Act By Garth Frazer; Johannes Van Biesebroeck
  4. Wage and Productivity Premiums in Sub-Saharan Africa By Johannes Van Biesebroeck
  5. Addressing the Food Aid Curse By Max Blouin; Stéphane Pallage
  6. Mental Accounting and Remittances: A Study of Malawian Households By Davies, Simon; Easaw, Joshy; Ghoshray, Atanu
  7. L’approche Blinder-Oaxaca permet-elle d’identifier les causes des écarts de pauvreté en Guinée ? By Dorothée Boccanfuso; Franck Adoho
  8. Estimating the long-run user cost elasticity for a small open economy: evidence using data from South Africa By Brahima Coulibaly; Jonathan Millar
  9. Financial Sector Reforms and Prospects for Financial Integration in Maghreb Countries By Juan Sole; Patricia D Brenner; Eric De Vrijer; Abdelhak Senhadji; Marina Moretti; Gabriel Sensenbrenner; Amor Tahari
  10. Trade Reform in the CEMAC: Developments and Opportunities By Charalambos G. Tsangarides; Jan Kees Martijn
  11. FDI Promotion policies and dynamic of growth in the South East Mediterranean countries (In French) By Marouane ALAYA (GREThA-GRES); Dalila NICET-CHENAF (GREThA-GRES); Eric ROUGIER (GREThA-GRES)
  12. Oil Price Shocks, Monetary Policy and Aggregate Demand in Ghana By Jumah, Adusei; Pastuszyn, Georg
  13. Power to the People: Evidence from a Randomized Field Experiment of a Community-Based Monitoring Project in Uganda By Björkman, Martina; Svensson, Jakob
  14. What Determines Productivity in Senegal? Sectoral Disparities and the Dual Labor By Fabrice Murtin; Damien Echevin
  15. Estimation of the Equilibrium Interest Rate: Case of CFA zone By DRAMANI, Latif; LAYE, Oumy

  1. By: Degol Hailu (Policy Advisor, UNDP/BDP Caribbean SURF)
    Keywords: Poverty, HIV/AIDS, Kenya, Macroeconomic
    JEL: B41
    Date: 2007–06
  2. By: Vivek B. Arora
    Abstract: The transparency of monetary policy in South Africa has increased substantially since the end of the 1990s; but little empirical work has been done to examine the economic benefits of the increased transparency. This paper shows that, in recent years, South African private sector forecasters have become better able to forecast interest rates, are less surprised by reserve bank policy announcements, and are less diverse in the cross-sectional variety of their interest rate forecasts. In addition, there is some evidence that the accuracy of inflation forecasts has increased. The improvements in interest rate and inflation forecasts have exceeded those in real output forecasts, suggesting that increases in reserve bank transparency are likely to have played a role.
    Date: 2007–05–29
  3. By: Garth Frazer; Johannes Van Biesebroeck
    Abstract: This paper explores whether one of the most important U.S. policies towards Africa of the past few decades achieved its desired result. In 2000, the United States dropped trade restrictions on a broad list of products through the African Growth and Opportunity Act (AGOA). Since the Act was applied to both countries and products, we estimate the impact with a triple difference-in-differences estimation, controlling for both country and product-level import surges at the time of onset. This approach allows us to better address the ‘endogeneity of policy’ critique of standard difference-in-differences estimation than if either a country or a product-level analysis was performed separately. Despite the fact that the AGOA product list was chosen to not include ‘import-sensitive’ products, and despite the general challenges of transaction costs in African countries, we find that AGOA has a large and robust impact on apparel imports into the U.S., as well as on the agricultural and manufactured products covered by AGOA. These import responses grew over time and were the largest in product categories where the tariffs removed were large. AGOA did not result in a decrease in exports to Europe in these product categories, suggesting that the U.S.-AGOA imports were not merely diverted from elsewhere. We discuss how the effects vary across countries and the implications of these findings for aggregate export volumes.
    Keywords: trade liberalization; sub-Saharan Africa; policy evaluation
    JEL: F13 F14 F15 O19
    Date: 2007–06–18
  4. By: Johannes Van Biesebroeck
    Abstract: Using a matched employer-employee data set of manufacturing plants in three sub-Saharan countries, I compare the marginal productivity of different categories of workers with the wages they earn. A methodological contribution is to estimate the firm level production function jointly with the individual level wage equation using a feasible GLS estimator. The additional information of individual workers leads to more precise estimates, especially of the wage premiums, and to a more accurate test. The results indicate that equality holds strongly for the most developed country in the sample (Zimbabwe), but not at all for the least developed country (Tanzania). Moreover, the breakdown in correct remuneration in the two least developed countries follows a distinct pattern. On the one hand, wage premiums exceed productivity premiums for general human capital characteristics (experience and schooling). On the other hand, salaries hardly increase for more firm-specific human capital characteristics (tenure and training), even though these have a clear productivity effect.
    Keywords: Labor market efficiency; wage gap; human capital
    JEL: J31 O12
    Date: 2007–06–18
  5. By: Max Blouin; Stéphane Pallage
    Abstract: In this paper, we build a model of agrarian economies in which a kleptocratic government taxes farmers to maximize its life-time utility. The model is a dynamic general equilibrium model in which the subsistence of farmers requires a minimum level of consumption. We analyze the effect that a benevolent food aid agency can have in such an environment. If it expects the food aid agency to intervene, the kleptocratic government will starve its farmers, in a clear case of the Samaritan's dilemma. We show that the likelihood of man-made famines, however, can be greatly reduced if the food aid agency intervenes with probability slightly lower than one. No aid agency devoted to saving lives, however, can commit to such policy. We propose a solution to this food aid curse.
    Keywords: Food aid, famines, commitment
    JEL: F35 D72 C72
    Date: 2007
  6. By: Davies, Simon; Easaw, Joshy; Ghoshray, Atanu
    Abstract: In this paper we use a behavioural approach to studying household consumption behaviour in Malawi. In particular we are interested to know whether households use mental accounting when consuming different categories of good. It is useful for assessing the impact of remittances on household consumption behaviour. We use 1998 cross-sectional data to find the following key results: (i) mental accounting systems are in operation. Remittance income exhibits a high marginal propensity to save, (ii) household income influences consumption habits, (iii) receipt of remittance income impacts on saving and spending habits. This is in line with the theory of remittances and corresponding mental accounting theory, and, finally, (iv) both remittances and loans are used for consumption smoothing and investment purposes.
    Keywords: Remittances; Household Behaviour; Consumer Economics; Economic Development; Africa; Malawi
    JEL: D12 D1 O15
    Date: 2006–10
  7. By: Dorothée Boccanfuso (GREDI, Faculte d'administration, Université de Sherbrooke); Franck Adoho (GREDI, Faculte d'administration, Université de Sherbrooke)
    Abstract: Après la construction et l’analyse des profils de pauvreté, l’étude de ses déterminants est souvent une priorité dans l’élaboration des Documents stratégiques de réduction de la pauvreté (DSRP). La littérature nous propose en effet, plusieurs méthodes permettant de modéliser les déterminants de la pauvreté. Entre l’estimation de la fonction de pauvreté initiée par Bardhan (1984) et celle consistant à régresser les dépenses ou revenus du ménage directement sur ses caractéristiques, il n’existe pas véritablement de consensus quand au choix méthodologique pour le modélisateur (Appelton, 2001). Plus récemment, certains auteurs se sont intéressés à la méthode de décomposition développée par Oaxaca et Blinder en 1973. Cette approche a été généralisée pour analyser les inégalités et les écarts de pauvreté observés entre groupes d’intérêt (Bourguignon et al., 2002 ; Yun, 2004 ; Yun et al., 2006). L’objectif de ce papier est d’appliquer cette méthode combinée à un modèle Probit, en nous basant sur les travaux de Gang, Sen et Yun (2005) et Borooah (2005) pour déterminer les raisons des écarts de pauvreté entre ménages urbains et ruraux vivant en Guinée. Nous avons privilégié les facteurs géographiques de manière à mieux cibler les besoins des ménages dans chacune des régions, en nous basant sur les principaux faits identifiés dans le DSRP élaboré par la Guinée en 2002. Nos résultats montrent que les caractéristiques expliquant la pauvreté rurale diffèrent de celles des ménages vivant en zone urbaine. C’est le cas notamment du niveau d’instruction du chef de ménage, de la catégorie socioprofessionnelle dans laquelle il évolue ainsi que son accès aux services de base ou encore le fait de vivre dans une région conservatrice. Cependant, nous montrons que l’écart de pauvreté entre les deux milieux ne peut être expliqué qu’à 24,09% par les différences observées au niveau des caractéristiques des ménages et que l’effet des coefficients prédomine avec 25,87 points de pourcentage.
    Keywords: Pauvreté, déterminants, décomposition Oaxaca-Blinder, Guinée
    JEL: O18 I32 O55 C25
    Date: 2007
  8. By: Brahima Coulibaly; Jonathan Millar
    Abstract: This paper estimates the long run elasticity of the demand for fixed nonresidential capital (both equipment and structures) to changes in its user cost using a quarterly panel of two-digit manufacturing data from South Africa from 1970 to 2001. Using a difference specification that does not rely on cointegration, we find highly significant estimates of the user cost elasticity on the order of -0.80. These estimates contrast sharply with many previous studies that obtained small and/or statistically insignificant estimates of the user cost elasticity using U.S. data. This discrepancy may owe to the possibility that the capital demand curve is better identified in a small open economy because shocks to capital supply are more likely to be exogenous. The economic embargo imposed on South Africa from 1985 to 1993 forced its economy to become more closed and therefore provides a unique natural experiment to assess this conjecture. Estimates of the user cost elasticity over this period are small and statistically insignificant, similar to the findings of previous studies where the user cost was likely endogenous. These findings underscore the importance of identification in estimating the user cost elasticity of capital demand.
    Date: 2007
  9. By: Juan Sole; Patricia D Brenner; Eric De Vrijer; Abdelhak Senhadji; Marina Moretti; Gabriel Sensenbrenner; Amor Tahari
    Abstract: A healthy and dynamic financial sector is essential to achieving high and sustainable economic growth in the Maghreb region-Algeria, Libya, Mauritania, Morocco, and Tunisia. Financial integration within the Maghreb region will help deepen financial markets, increase their efficiency, and enhance the resilience of economies to shocks. It can also play a catalyst role for the global financial integration of the Maghreb region. This paper provides an overview of the financial systems, takes stock of the reform effort and highlights the challenges ahead, and examines the prospects for financial integration in the five Maghreb countries.
    Date: 2007–05–31
  10. By: Charalambos G. Tsangarides; Jan Kees Martijn
    Abstract: This paper provides an update on the main elements of the reform agenda concerning the CEMAC trade regime as well as a tentative quantitative assessment of selected effects on tariff revenues and trade patterns. Notwithstanding data limitations, the key messages from the analysis are as follows. First, there is a need for a renewed political commitment to regional integration. In addition, key measures for improving compliance with the requirements for a customs union need to be introduced, including limiting tariff exemptions, phasing out remaining surcharges, strengthening the determination of products' country origin, and enhancing customs administration. There is also a need to improve transportation infrastructure and organization. Finally, there is a strong case for tariff reduction, with or without an EPA. Trade liberalization would help boost economic growth and poverty alleviation and limit risks of trade diversion with an EPA. Tariff reform should be complemented by improvements in domestic revenue mobilization.
    Date: 2007–06–12
    Abstract: In this paper, we ask if the convergence in policies leads to a convergence in growth dynamics for MENA countries. We first show that FDI promotion policies have been very similar in the South East Mediterranean countries during the last decade. Then, we try to find clubs of convergence in this area through KPSS and ADF models, and show the difficulty of observing such clubs among Mediterranean countries.
    Keywords: Development Planning and Policy, Macroeconomic Analyses of Economic Development International; Investment; Long-Term Capital Movements
    JEL: O2 O11 F21
    Date: 2007
  12. By: Jumah, Adusei (Department of Economics, University of Vienna, BWZ, Vienna, Austria); Pastuszyn, Georg (Department of Economics, University of Vienna, BWZ, Vienna, Austria)
    Abstract: The current study examines the relationship between the world oil price and aggregate demand in a developing country, Ghana, via the interest rate channel by means of cointegration analysis. Results of the study indicate that oil price—by impacting the price level positively—negatively impacts real output. The results also indicate that monetary policy is initially eased in response to a surge in the price of oil in order to lessen any growth consequences, but at the cost of higher inflation. The ensuing higher inflation, however, prompts a subsequent tightening of monetary policy leading to a further decline in output. In addition, output does not revert quickly to its initial level after an oil price shock, but declines over an extended period.
    Keywords: Aggregate demand, inflation, monetary policy, oil
    JEL: C32 E50 O13
    Date: 2007–06
  13. By: Björkman, Martina; Svensson, Jakob
    Abstract: Strengthening the relationship of accountability between health service providers and citizens is by many people viewed as critical for improving access to and quality of health care. How this is to be achieved, and whether it works, however, remain open questions. This paper presents a randomized field experiment on increasing community-based monitoring. As communities began to more extensively monitor the provider, both the quality and quantity of health service provision improved. One year into the program, we find large increases in utilization, significant weight-for-age z-scores gains of infants, and markedly lower deaths among children. The findings on staff behaviour suggest that the improvements in quality and quantity of health service delivery resulted from an increased effort by the staff to serve the community. Overall, the results suggest that community monitoring can play an important role in improving service delivery when traditional top-down supervision is ineffective.
    Keywords: Accountability; Field experiment; Health; Monitoring
    JEL: D78 I12 O15
    Date: 2007–06
  14. By: Fabrice Murtin (LSE, London; PSE and CREST, GREDI); Damien Echevin (GREDI, Département d'économique, Université de Sherbrooke)
    Abstract: This paper presents evidence concerning the determinants of productivity in Senegal. Using an original data set that combines data on both employers and their employees, we bring to light significant gaps between the formal and informal sectors. These differences are analyzed both at the aggregate and at the individual level. As a result, we find that differences in human and physical capital account for about two thirds (30% for physical capital and 40% for human capital) of the gap in output per worker between the two sectors. Our results also document considerable heterogeneity between branches of activity: in the formal sector, some activities such as the textile or the paper industries boast increasing returns due to large elasticity; in the informal sector, trade and services firms have the same patterns as in formal ones. Two other important findings concern the informal sector. First, older firms have high capital elasticity. Second, overall capital elasticity increases. Those results thus support the idea that a real potential for growth exists in the informal sector. Finally, adopting a development policy perspective, we emphasize that public policies should focus on infrastructures that impact significantly on both sectors, as well as on schooling that triggers considerable externality, especially in the informal sector.
    Keywords: : formal and informal sectors; productivity; externalities
    JEL: O17 O47 J24
    Date: 2007
  15. By: DRAMANI, Latif; LAYE, Oumy
    Abstract: • Problem Statement The framework of this study is consisted of the countries of zone CFA and in fact the two central banks (BCEAO and BEAC) in charge of the monetary policy implementation. There was a great resurgence of interest these last years on the question in the way of leading the monetary policy. One of the indicators of this phenomenon is the enormous volume of recent papers and the conferences prepared on this subject. In addition, much of macro economists proposed specific rules of policy or ruled on the way in which the monetary policy should be led. The principal objective of this study is the evaluation of the macroeconomic gold rule in the CFA countries which stipulates that in an economy with equilibrium growth and under simplifying macroeconomic assumptions: the neutral interest rate is equal to the potential growth rate of the economy. • Research Method To achieve this objective we try to determine the weight of the goals of monetary and fiscal policies attaches with a quadratic reaction function which takes into account a target of inflation, public expenditure and interest rate. And then the methodology of determination of the neutral interest rate is derived from a generalized Taylor rule. The estimation of the parameters is based on panel data econometrics, the generalized method of moments and the Kalman filter. These different methods are used to emphasize the robustness of the results of our analysis. • Results and conclusion The estimates carried out on the panel data emphasize a neutral interest rate in the interval of 1.4% to 1.6%. It is generally noticed that the estimates made on the panel data are compatible with those carried out by using the Kalman filter. In addition, it is observed that, overall the level of the natural interest rate in UEMOA zone (1.51) is lower than CEMAC zone (1.65). The most important neutral rate is observed in the Malian economy and the lowest in the Burkina economy. But we notice a larger homogeneity in CEMAC zone (standard deviation of 0.12) than UEMOA zone ( standard deviation of 0.29).
    Keywords: Taylor Rule; equilibrium interest rate; Kalman filter
    JEL: C1 C13 E4 E43 E0
    Date: 2007–06–18

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