nep-afr New Economics Papers
on Africa
Issue of 2007‒12‒15
seventeen papers chosen by
Suzanne McCoskey
George Washington University

  1. Fiscal decentralisation and gender responsive budgeting in South Africa: An appraisal. By Chakraborty, Lekha S.; Bagchi, Amaresh
  2. The Growth Effects of Openness to Trade and the Role of Institutions: New Evidence from African Countries By Baliamoune-Lutz, Mina; Ndikumana, Léonce
  3. Reserves Accumulation in African Countries: Sources, Motivations, and Effects By Léonce Ndikumana; Adam Elhiraika
  4. The Cleavage Model, Ethnicity and Voter Alignment in Africa: Conceptual and Methodological Problems Revisited By Gero Erdmann
  5. Capital Controls and Foreign Investor Subsidies Implicit in South Africa's Dual Exchange Rate System By Windt, P.C. van der; Schaling, E.; Huizinga, H.P.
  6. Wage Cutting in Kenya Will Expand Poverty, Not Decent Jobs By Robert Pollin; Mwangi we Githinji; James Heintz
  7. The determinants of HIV infection and related sexual behaviors : evidence from Lesotho By de Walque, Damien; Corno, Lucia
  8. Tax Evasion in Kenya and Tanzania:Evidence from Missing Imports By Levin, Jörgen; Widell, Lars
  9. Insurance, credit, and technology adoption : field experimental evidence from Malawi By Yang, Dean; Gine, Xavier
  10. Who Gains from Trade Protection in Ghana? A Household-Level Analysis By Charles Ackah,; Oliver Morrissey,; Simon Appleton
  11. Improving nutritional status through behavioral change : lessons from Madagascar By Umapathi, Nithin; Galasso, Emanuela
  12. Oligopolies of Violence in Post-Conflict Societies By Daniel Lambach
  13. Child Height and Maternal Health Care Knowledge in Mozambique By Katleen Van den Broeck
  14. Intrahousehold Resource Allocation in Egypt: Effect of Power Distribution within the Household on Child Work and Schooling By Soiliou Namoro; Rania Rousdhy
  15. Sectoral Transformations in Neo-Patrimonial Rentier States: Tourism Development and State Policy in Egypt By Thomas Richter; Christian Steiner
  16. Rupture structurelle et demande de monnaie au Rwanda By Jean-François Goux; Thomas Rusuhuzwa Kigabo
  17. Top-down/bottom-up approach for developing sustainable development indicators for mining: Application to the Arlit uranium mines (Niger) By Aurélie Chamaret; Martin O'Connor; Gilles Récoché

  1. By: Chakraborty, Lekha S. (National Institute of Public Finance and Policy); Bagchi, Amaresh (National Institute of Public Finance and Policy)
    Keywords: Gender ; Fiscal decentralisation
    Date: 2007–01
  2. By: Baliamoune-Lutz, Mina; Ndikumana, Léonce
    Abstract: In this paper, we explore the argument that one of the causes for the limited growth effects of trade openness in Africa may be the weakness of institutions. We also control for several major factors and, in particular, for export diversification, using a newly developed dataset on Africa. Results from Arellano- Bond GMM estimations on panel data from African countries show that institutions play an important role in enhancing the growth effects of trade. Moreover, we find that the joint effect of institutions and trade has a U-shape, suggesting that as openness to trade reaches high levels, institutions play a critical role in harnessing the trade-led engine of growth. The results from this paper are informative about the missing link between trade liberalization and growth in the case of African countries.
    JEL: O11 F43
    Date: 2007
  3. By: Léonce Ndikumana (University of Massachusetts, Amherst, and UNECA, Addis Ababa); Adam Elhiraika (UNECA, P.O.B 3005, Addis Ababa, Ethiopia)
    Abstract: African countries have accumulated substantial foreign currency reserves in recent years, mostly from higher commodity exports as well as aid flows. In the context of macroeconomic stabilization, which remains at the forefront of national economic policymaking and aid conditionality, African countries are induced to hold reserves to allow monetary authorities to intervene in markets to control the exchange rate and inflation. Adequate reserves also allow the country to borrow from abroad and to hedge against instability and uncertainty of external capital flows. However, reserve accumulation can have high economic and social costs, including a high opportunity cost emanating from low returns on reserve assets, losses due to reserve currency depreciation, and forgone gains from investment and social expenditures that could be financed by these reserves. Therefore, African countries need to have a better understanding of the determinants and economic costs of reserve accumulation and to design optimal reserve management strategies to minimize these costs and maximize the gains from resource inflows. This study uses panel data from 21 African countries to examine the sources, motivation and economic implications of reserve accumulation with a focus on the impact on the exchange rate, inflation, and public and private investment. While the level of reserves remains adequate on average, some countries have accumulated excessive reserves especially in recent years. The empirical analysis in this paper shows that the recent reserve accumulation cannot be justified by portfolio choice motives (in terms of returns to assets) or stabilization objectives. At the same time it has resulted in exchange rate appreciation while it has yielded little benefits in terms of public and private investment. The evidence suggests that African countries, especially those endowed with natural resources, need to adopt a more pro-growth approach to reserve management. JEL Categories: E22; E51; F31; F41
    Keywords: external reserves; exchange rate appreciation; sub-Saharan Africa; private and public investment; macroeconomic stabilization.
    Date: 2007–12
  4. By: Gero Erdmann (GIGA Institute of African Affairs)
    Abstract: Recent research on political parties and ethnicity has challenged the conventional wisdom about ethnicity as the major factor that explains voter alignment in Africa. The paper maintains that the cleavage model, although modified to include ethnicity, still provides heuristically the best foundation for the explanation of party formation and voting behaviour in Africa. It points out that inconclusive and contradicting research results about the salience of ethnicity can be attributed to a variety of unresolved methodological and conceptual problems linked to the ‘fluidity’ of the concept of ethnicity. To overcome these problems refined research designs and more sophisticated analytical tools are required. Finally, it is safe to assume that the relevance of ethnicity for the formation of party systems and voter alignment is not a uniform pattern across Africa, but will differ from one country to the other.
    Keywords: Africa, social cleavages, cleavage model, ethnicity, political parties, party systems
    Date: 2007–12
  5. By: Windt, P.C. van der; Schaling, E.; Huizinga, H.P. (Tilburg University, Center for Economic Research)
    Abstract: Both in theory and practice, capital controls and dual exchange rate systems can be part of a country's optimal tax policy. We first show how a dual exchange rate system can be interpreted as a tax (or subsidy) on international capital income. We show that a dual exchange rate system, with separate commercial and financial exchange rates, drives a wedge between the domestic and foreign returns on comparable assets. As a borrower, the government itself is a direct beneficiary. Secondly, based on data from South Africa, we present empirical evidence of this revenue implicit in a dual exchange rate system; a revenue that amounted to as much as 0.1 percent of GDP for the South African government. However, this paper also shows that both the capital controls and the dual exchange rate system in South Africa gave rise to many perverse unanticipated e?ects. The latter may render capital controls and dual exchange rate systems unattractive in the end and, thereby, provides a rationale for the recent trend in exchange rate liberalization and unification.
    Keywords: Dual exchange rate systems;capital controls;emerging markets;financial repression;optimal tax policy
    JEL: H21
    Date: 2007
  6. By: Robert Pollin (Univ. of Massachusetts); Mwangi we Githinji (Department of Economics and Political Economy Research Institute (PERI) University of Massachusetts-Amherst); James Heintz (Univ. of Massachusetts)
    Keywords: Wage Cutting in Kenya Will Expand Poverty, Not Decent Jobs
    Date: 2007–12
  7. By: de Walque, Damien; Corno, Lucia
    Abstract: This paper analyzes the socioeconomic determinants of HIV infection and related sexual behaviors using the 2004 Lesotho Demographic and Health Survey. The authors find that in Lesotho education appears to have a protective effect: it is negatively associated with HIV infection (although not always significantly) and it strongly predicts preventive behaviors. The findings also show that married women who have extra-marital relationships are less likely to use a condom than non-married women. This is an important source of vulnerability that should be addressed in prevention efforts. The paper also analyzes HIV infection at the level of the couple. It shows that in 41 percent of the infected couples, only one of the two partners is HIV infected. Therefore, there are still opportunities for prevention inside the couple.
    Keywords: Population Policies,HIV AIDS,Gender and Health,Disease Control & Prevention,Health Monitoring & Evaluation
    Date: 2007–12–01
  8. By: Levin, Jörgen (Department of Business, Economics, Statistics and Informatics); Widell, Lars (Department of Business, Economics, Statistics and Informatics)
    Abstract: In this paper we estimate the amount of tax evasion in customs authorities in both Kenya and Tanzania by calculating measurement errors in reported trade flows between the two countries and correlate those errors with tax rates. We find that the measurement error is correlated with the tax rates in both Kenya and Tanzania. According to the Transparency International Corruption Perceptions Index, Kenya is more corrupt than Tanzania, but we find that the coefficient on tax is higher in Tanzania compared to Kenya implying that tax evasion on imported goods is higher in Tanzania compared to the Kenya. We also introduced a third country into our analysis, the United Kingdom, and tax evasion seems to be more severe in trade flows between Kenya and Tanzania compared to trade flows between the United Kingdom and Kenya/Tanzania. Finally we also find that the tax evasion coefficient is lower in the Kenya-United Kingdom case compared to the Tanzanian-United Kingdom case which supports our previous finding that tax evasion is more severe in the Tanzanian customs authority.
    Keywords: Tax evasion; corruption; trade; Kenya; Tanzania
    JEL: F14 H26
    Date: 2007–11–01
  9. By: Yang, Dean; Gine, Xavier
    Abstract: The adoption of new agricultural technologies may be discouraged because of their inherent riskiness. This study implemented a randomized field experiment to ask whether the provision of insurance against a major source of production risk induces farmers to take out loans to invest in a new crop variety. The study sample was composed of roughly 800 maize and groundnut farmers in Malawi, where by far the dominant source of production risk is the level of rainfall. We randomly selected half of the farmers to be offered credit to purchase high-yielding hybrid maize and improved groundnut seeds for planting in the November 2006 crop season. The other half of the farmers were offered a similar credit package but were also required to purchase (at actuarially fair rates) a weather insurance policy that partially or fully forgave the loan in the event of poor rainfall. Surprisingly, take up was lower by 13 percentage points among farmers offered insurance with the loan. Take-up was 33.0 percent for farmers who were offered the uninsured loan. There is suggestive evidence that the reduced take-up of the insured loan was due to the high cognitive cost of evaluating the insurance: insured loan take-up was positively correlated with farmer education levels. By contrast, the take-up of the uninsured loan was uncorrelated with farmer e ducation.
    Keywords: ,Access to Finance,Debt Markets,Hazard Risk Management,Crops & Crop Management Systems
    Date: 2007–12–01
  10. By: Charles Ackah,; Oliver Morrissey,; Simon Appleton
    Abstract: In this paper, we present one of the first direct microeconometric studies of the impact of trade protection on household income in Ghana. Tariff measures at the two-digit ISIC level are matched to Ghanaian household survey data for 1991/92 and 1998/99 to represent the tariff for the industry in which the household head is employed. We examine the possibility that the effect of protection on income might not be uniform across households characterized by different skill levels. Specifically, we allow the relationship between welfare and trade policy to differ for households with different levels of education. In the absence of suitable panel data, the analysis applies pseudo-panel econometric techniques to our repeated cross-section data. This method has rarely been used in poverty analysis. The results suggest that higher tariffs are associated with higher incomes for households employed in the sector, so tariff reductions may reduce incomes (and increase poverty), at least in the short run, but with differing effects across skill groups. We find that this positive effect of protection is disproportionately greater for low skilled labour households, suggesting an erosion of welfare of unskilled labour households would result from trade liberalization. We conclude that contemplating trade liberalization without recognizing the complementary role of human capital investment may be a sub-optimal policy for the poor, at least in the short-run.
    Keywords: Tariffs; Trade liberalisation; Household welfare; Pseudo-panel; Ghana
  11. By: Umapathi, Nithin; Galasso, Emanuela
    Abstract: This paper provides evidence of the effects of a large-scale intervention that focuses on the quality of nutritional and child care inputs during the early stages of life. The empirical strategy uses a combination of double-difference and weighting estimators in a longitudinal survey to address the purposive placement of participating communities and estimate the effect of the availability of the program at the community level on nutritional outcomes. The authors find that the program helped 0-5 year old children in the participating communities to bridge the gap in weight for age z-scores and the incidence of underweight. The program also had significant effects in protecting long-term nutritional outcomes (height for age z-scores and incidence of stunting) against an underlying negative trend in the absence of the program. Importantly, the effect of the program exhibits substantial heterogeneity: gains in nutritional outcomes are larger for more educated mothers and for villages with better infrastructure. The p rogram enables the analysis to isolate responsiveness to information provision and disentangle the effect of knowledge in the education effect on nutritional outcomes. The results are suggestive of important complementarities among child care, maternal education, and community infrastructure.
    Keywords: Population Policies,Health Monitoring & Evaluation,Early Child and Children ' s Health,Housing & Human Habitats,Nutrition
    Date: 2007–12–01
  12. By: Daniel Lambach (Institute of Development and Peace (Institut für Entwicklung und Frieden – INEF) at the University of Duisburg-Essen)
    Abstract: In post-conflict societies, security is provided by a broad range of actors including the state as well as various non-state formations. The paper identifies three types of post-conflict societies and analyses dynamics of the security market in cases where international troops have intervened. A comparison of seven countries shows that intervention forces were able to establish themselves as market leaders when a disarmament, demobilization and reintegration (DDR) program was successfully conducted in the immediate post-conflict period. Such a program should be embedded in an inclusive peace agreement that is backed up by a credible and robust troop commitment from the international community.
    Keywords: Post-conflict societies, security market, oligopoly of violence, international intervention, disarmament
    Date: 2007–11
  13. By: Katleen Van den Broeck (Department of Economics, University of Copenhagen)
    Abstract: Stunting prevalence rates in Mozambique are very high (41 percent), especially in rural areas (46 percent). Recent research shows that consumption growth alone will not be sufficient to solve the problem of malnutrition. To investigate the role of additional determinants I use a two-stage quantile regression approach with specific attention to the role of maternal preventive health care knowledge and schooling. Three different scores for health care knowledge are used and show similar results. For rural Mozambique, I find that maternal schooling has positive effects especially in the top quintile of the height-for-age distribution while health care knowledge has a positive effect on height-for-age of under two year old children especially at the lower end of the distribution where the severely stunted children are located. Improving health care knowledge of mothers could substitute for the low levels of education and community health care facilities in rural areas and positively affect the height of the most severely stunted children.
    Date: 2007–10
  14. By: Soiliou Namoro; Rania Rousdhy
    Abstract: . . .
    JEL: J13 J16
    Date: 2007–11
  15. By: Thomas Richter (GIGA German Institute of Global and Area Studies); Christian Steiner (Centre for Research on the Arab World (CERAW))
    Abstract: This article challenges claims that liberalising state regulated markets in developing countries may induce lasting economic development. The analysis of the rise of tourism in Egypt during the last three decades suggests that the effects of liberalisation and structural adjustment are constrained by the neo-patrimonial character of the Egyptian political system. Since the decline of oil rent revenues during the 1980s tourism development was the optimal strategy to compensate for the resulting fiscal losses. Increasing tourism revenues have helped in coping with macroeconomic imbalances and in avoiding more costly adjustment of traditional economic sectors. Additionally, they provided the private elite with opportunities to generate large profits. Therefore, sectoral transformations due to economic liberalisation in neo-patrimonial Rentier states should be described as a process, which has led to the diversification of external rent revenues, rather than to a general downsizing of the Rentier character of the economy.
    Keywords: Egypt, rentier state, economic liberalisation, economic development, tourism
    JEL: H27 L83 O11 P26
    Date: 2007–11
  16. By: Jean-François Goux (University of Lyon, Lyon, F-69003, France; CNRS, UMR 5824, GATE, Ecully, F-69130, France; ENS LSH, Lyon, F-69007, France ; Centre Leon Berard, Lyon, F-69003, France); Thomas Rusuhuzwa Kigabo (Département d’Economie, Université Nationale du Rwanda et Banque Nationale du Rwanda)
    Abstract: This study examines, for the case of Rwanda, if the existence of a cointegration relation for money demand can be established by taking account of possibilities of break in the structure of trend of the variables used in modelling. We thus take into account the various events that the country knew for the selected period of study (First quarter 1980 - last quarter 1999). This method makes it possible indeed to highlight such a relation for the velocity of circulation of M1, sensitive to the interest rate and the rate of exchange. It also exists for the money demand M2.
    Keywords: sequential money demand, Rwanda, structural breaks
    JEL: C52 E41
    Date: 2007–11
  17. By: Aurélie Chamaret (C3ED - Centre d'économie et d'éthique pour l'environnement et le développement - IRD : UR063 - Université de Versailles-Saint Quentin en Yvelines); Martin O'Connor (C3ED - Centre d'économie et d'éthique pour l'environnement et le développement - IRD : UR063 - Université de Versailles-Saint Quentin en Yvelines); Gilles Récoché (Bureau de recherches géologiques et minières - BRGM)
    Abstract: Minerals extraction is related to complex sustainable-development issues that are subject to international and local controversies. Debates and decisions need to be based on objective and comparative elements. Defining strong indicators for assessing impacts and performances of mining sites thus appears necessary to inform and support the decision-making process for stakeholders. In recent years, many indicator sets have been developed on an international level based on top-down approaches. But they commonly lack legitimacy for stakeholders and adequacy to specific site issues. They thus need to be complemented by the consultation of local actors concerned by such mining activity, in order to define indicators that are closer to the needs and contexts of the specific sites. This is the goal of the work reported in this paper, undertaken at the Arlit uranium mines in Niger. Our objective was to define indicators that are understood and accepted by all actors, as a basis for robust and transparent assessment of the impacts and performances of mining sites across the four sustainable development dimensions, and at local, regional and national scales.
    Keywords: Deliberation; Evaluation; Indicators; Mining; Multi-criteria; Niger; Stakeholders; Stewardship; Sustainable development; Top-down/bottom-up; Uranium
    Date: 2007

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