nep-afr New Economics Papers
on Africa
Issue of 2007‒11‒10
eight papers chosen by
Suzanne McCoskey
George Washington University

  1. Africa’s Education Enigma? The Nigerian Story By Ruth Uwaifo Oyelere
  2. The becoming of a market – A reflection illustrated by two case studies from Uganda By Schmidt, Oliver
  3. Testing Export-led Growth Hypothesis in Kenya: An ADRL Bounds Test Approach By Mohan, Ramesh; Nandwa, Boaz
  4. A Monetary Approach to Exchange Rate Dynamics in Low-Income Countries: Evidence from Kenya By Nandwa, Boaz; Mohan, Ramesh
  5. Disparities in Labor Market Outcomes across Geopolitical Regions in Nigeria: Fact or Fantasy? By Ruth Uwaifo Oyelere
  6. "He who sets the boundary”. Chieftaincy as a “necessary” institution in modern Ghana By Valsecchi Pierluigi
  7. Regional spatial planning assessments for adaptation to accelerated sea level rise - an application to Martinique’s coastal zone By Christine Schleupner
  8. The Politics of IMF Forecasts By Axel Dreher; Silvia Marchesi; James Raymond Vreeland

  1. By: Ruth Uwaifo Oyelere (Georgia Institute of Technology and IZA)
    Abstract: In the last two decades, the social and economic benefits of formal education in Sub-Saharan Africa have been debated. Anecdotal evidence points to low returns to education in Africa. Unfortunately, there is limited econometric evidence to support these claims at the micro level. In this study, I focus on Nigeria a country that holds 1/5 of Africa’s population. I use instruments based on the exogenous timing of the implementation and withdrawal of free primary education across regions in this country to consistently estimate the returns to education in the late 1990s. The results show the average returns to education are particularly low in the 90s, in contrast to conventional wisdom for developing countries (2.8% for every extra year of schooling between 1997 and 1999). Surprisingly, I find no significant differences between OLS and IV estimates of returns to education when necessary controls are included in the wage equation. The low returns to education results shed new light on both the changes in demand for education in Nigeria and the increased emigration rates from African countries that characterized the 90s.
    Keywords: human capital, instrumental variables, Nigeria, returns to education, schooling
    JEL: J24 I21 I29 O12
    Date: 2007–10
  2. By: Schmidt, Oliver
    Abstract: This paper (9,201 words) argues that there is more to the becoming of a market than income-level of the buyer. A market is a fine webbed institutional setting that is worthwhile for economists to study. It argues that there are five characteristics to look at, namely demand, supply, and beyond the neo-classical model the ability to contract, the location (in space and time) to contract, and the purpose why the market was called into being. The interaction of these five characteristics shapes the development paths of markets. The framework is exemplarily applied to a commodity and a public good market, i. e. fish and minibus (“matatu”) services in Uganda, East Africa since the mid-1980ties.
    Keywords: Institutional Setting; Path Dependency; Market Characteristics; Uganda; Fish Market; Public Transport Market
    JEL: O12 L14 D02
    Date: 2007–08
  3. By: Mohan, Ramesh; Nandwa, Boaz
    Abstract: Over the years, there has been extensive research on the relationship between a country’s export and economic growth with ambiguous and mixed results. Instead of using the conventional cointegration approach, this paper re-examines the export-led growth hypothesis for Kenya using autoregressive distributed lag (ADRL) bounds technique. This approach is capable of testing for the existence of a long-run relationship regardless of whether the underlying time series are individually I(1) or I(0). This enhances the stability and robustness of our results. In addition, we examine the Granger causality between exports and economic growth over the sample period. The results indicate that there exists a long-term relationship between GDP growth and exports, and it is unidirectional, running from exports to GDP growth. Hence, in the case of Kenya, export enhancing policies are recommended in promoting and sustaining economic growth.
    Keywords: Exports; economic growth and causality
    JEL: C32 O11 F41
    Date: 2007–11–03
  4. By: Nandwa, Boaz; Mohan, Ramesh
    Abstract: The flexible price monetary model assumes that both the purchasing power parity (PPP) and uncovered interest parity (UIP) hold continuously. In addition, the model posits that money market equilibrium exists, which helps to determine the exchange rate. This paper explores exchange rate determination in low-income economies by applying a monetary model to Kenya to examine the exchange rate dynamics in a post-float exchange rate regime. We apply a multivariate cointegration and error correction model (ECM) to investigate whether the long-run exchange rate equilibrium and the rate of adjustment to the long-run equilibrium hold, respectively. Finally, we evaluate the relative performance of ECM versus a random walk framework in the out-of-sample forecasting. We find that the random walk performs better than the restricted model.
    Keywords: Exchange rate; volatility; regime changes; Kenyan Shilling
    JEL: C32 F31 E58 C53
    Date: 2007–11–02
  5. By: Ruth Uwaifo Oyelere (Georgia Institute of Technology and IZA)
    Abstract: Differences in geopolitical regions of Nigeria are not debatable. However, there is no clear consensus on the dimension of these disparities. In this paper, claims of geopolitical region disparities in labor market outcomes are investigated using survey data from Nigeria between 1996-1999. Both descriptive and econometric analysis are used to test the null hypothesis that there are no significant regional differences in labor market outcomes in Nigeria. The results are surprising given the anecdotal evidence and general perception of disparities along this dimension. First, similar mean incomes across regions in Nigeria were noted. In addition, returns to education were not significantly different for Northern and Southern Nigeria. Given these findings, the null hypothesis cannot be rejected. There is no evidence of significant disparities in labor market outcome across geopolitical regions in Nigeria.
    Keywords: regional disparities, labor market outcomes, Nigeria, returns to education, inequality
    JEL: O5 I0 J70 O18
    Date: 2007–09
  6. By: Valsecchi Pierluigi
    Abstract: The title of this paper was inspired by an etymology formulated in 1929 by a famous Gold Coast maìtre-a-penser, J. de Graft Johnson. He explained the most common akan1 term for a chief ohene as a derivation from hye, boundary, with the meaning of “he who would decide the ohi (boundary) between the various groups farming on lands commonly reputed to be under his control” (de Graft Johnson, 1929). The ohene is therefore ‘the settler of the boundary’. Etymology is a tricky territory and I am not sure whether this interpretation is reliable. However it suits perfectly what I intend to say in my paper: 1) Controversial as Chieftaincy may be in Ghana, it is perhaps the clearest embodiment of shared concepts of what it means to belong to a place. 2) The link between Chieftaincy and place is not a static one. To a great extent chiefs have the power to redefine the very nature, size and scope of the place/locality they embody. 3) They are potentially in a better position to re-shape, manipulate, enlarge or shrink boundaries than most other player on the national stage. 4) From the early 1990s many of them were able to exercise that power to an extent they had not experienced since colonial days and in ways new to Ghanaian society and to themselves. I will try to substantiate my points through reference to a recent case of chieftaincy litigation in the Western Region of Ghana.
    Date: 2007–01
  7. By: Christine Schleupner (Research unit Sustainability and Global Change, Hamburg University)
    Abstract: Accelerated sea level rise and hurricanes are increasingly influencing human coastal activities. With respect to the projected continuation of accelerated sea level rise and global warming one must count with additional expenses for adaptation strategies along the coasts. On the mountainous island Martinique the majority of settlements are situated along the coast almost at sea level. But potential rises in sea level and its impacts are not addressed in coastal management, even if saltwater intrusion and coastal erosion with increasing offshore loss of sediment are locally already a severe problem. Following article deals with the evaluation of human vulnerability to accelerated sea level rise on the Martinique coast. In addition, it assesses the possible effects of sea level rise on the island for future regional planning purposes spatially. The actual situation and legislation measures for coastal zone management of the island are described and sea level rise response strategies are discussed. This paper sees itself as recommendation of action not only for Martinique.
    Keywords: GIS Modelling, Spatial Analysis, Caribbean, Climate Change, Coastal Zone Management
    JEL: Q20
    Date: 2007–10
  8. By: Axel Dreher; Silvia Marchesi; James Raymond Vreeland
    Abstract: Using panel data for 157 countries over the period 1999-2005 we empirically investigate the politics involved in IMF economic forecasts. We find a systematic bias in growth and inflation forecasts. Our results indicate that countries voting in line with the US in the UN General Assembly receive lower inflation forecasts. As the US is the Fund’s major shareholder, this result supports the hypothesis that the Fund’s forecasts are not purely based on economic considerations. We further find inflation forecasts are systematically biased downwards for countries with greater IMF loans outstanding relative to GDP, indicating that the IMF engages in “defensive forecasting.” Countries with a fixed exchange rate regime also receive low inflation forecasts. Considering the detrimental effects that inflation can have under such an exchange rate regime, we consider this evidence consistent with the Fund’s desire to preserve economic stability.
    Keywords: IMF; Economic Forecasts; Political Influence
    JEL: C23 D72 F33 F34
    Date: 2007–10

This nep-afr issue is ©2007 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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