nep-afr New Economics Papers
on Africa
Issue of 2008‒05‒17
eight papers chosen by
Suzanne McCoskey
George Washington University

  1. Poverty in South Africa:A profile based on recent household surveys By Paula Armstrong; Bongisa Lekezwa; Krige Siebrits
  3. The South African labour market: 1995 – 2006 By Derek Yu
  4. The Effect of Corruption on Investment Growth: Evidence from Firms in Latin America, Sub-Saharan Africa and Transition Countries. By Elizabeth Asiedu; James Freeman
  5. The Impact of Retirement Benefits on Consumption and Saving in South Africa By Vasco C Nhabinde; Niek J Schoeman
  6. Structural Stability: On the Prerequisites of Nonviolent Conflict Management By Andreas Mehler; Ulf Engel; Lena Giesbert; Jenny Kuhlmann; Christian von Soest
  7. Mondialisation et inégalités de genre chez les populations des états membres de l’union économique et monétaire ouest africaine By Marie Suzanne Badji
  8. The Impact of Liberalizing International Trade of Banking Services in Morocco By Achy, Lahcen; Hassani, Aicha

  1. By: Paula Armstrong (Department of Economics, Stellenbosch University); Bongisa Lekezwa (Department of Economics, Stellenbosch University); Krige Siebrits (Department of Economics, Stellenbosch University)
    Abstract: This paper provides a non-technical, snapshot-like profile of poverty in South Africa based on two surveys recently conducted by Statistics South Africa: the Income and expenditure survey of households 2005/06 (IES2005) and the General household survey 2006 (GHS2006). It uses various “poverty markers” (including geographical location, population group, gender, household structure, the age of the head of the household, and employment status) to identify key characteristics of poverty groups, and also highlights other important dimensions of poverty (deficient access to infrastructure services, high transport cost burdens, limited education attainments, and exposure to hunger). The paper further emphasises that the expansion of social grants since 1999 has significantly reduced extreme poverty.
    Keywords: Poverty, Poverty markers, Burden of poverty, Social grants, South Africa
    JEL: D31 I32
    Date: 2008
  2. By: Antonio Estache (World Bank and, the European Centre for Advanced Research in Economics and Statistics at the Free University of Brussels); Jean-François Perrault (GREDI, Faculte d'administration, Université de Sherbrooke); Luc Savard (GREDI, Faculte d'administration, Université de Sherbrooke)
    Abstract: In this paper we construct an archetype CGE model and apply it to six sub-Saharan African countries to explore the impact of scaling up infrastructure in African countries. As part of the debate on the importance of scaling up infrastructure to stimulate growth and provide a push to African economies, some analysts have raised concerns on providing massive financing for the construction of these infrastructures as the process can create major distortion in the economies and have a negative impact by creating Dutch disease symptoms (Adam and Bevan 2006). This study aims to provide some insight into this debate. It draws from the infrastructure productivity literature to postulate positive productive externalities of new infrastructure and Fay and Yepes (2003) for operating cost associated with new infrastructure. We compare various infrastructure investment funded with different fiscal tools. These investments scenarios are compared to non productive investment that can be interpreted as a business as usual scenario. Our results show that increase in infrastructure investment does produce slight Dutch disease effects but the negative impacts are strongly dependent on the type of investments performed and type of financing scheme used. Moreover, the growth effects we introduced contribute to attenuate the negative effects.
    Keywords: Investment externalities, foreign aid, exchange rate, fiscal reforms
    JEL: C68 E62 F35 H54
    Date: 2008
  3. By: Derek Yu (Department of Economics, Stellenbosch University)
    Abstract: Given the importance of the labour market to economic activity in any country, it is important to correctly infer trends from the available labour data. In South Africa, several researchers have compared selected household surveys with each other and then drew conclusions about the ‘trends’ in the labour market for the entire period between surveys. It is argued that such a methodology is imperfect and could give misleading results. A better methodology would entail looking at all the available surveys to ascertain the real trends over time. Therefore, this paper seeks to examine the trends of the labour force (LF), labour force participation rate (LFPR) and employment, as well as the working conditions of the employed, and the personal and household characteristics of the unemployed from 1995 to 2006, using the October Household Survey (OHS) data from 1995 to 1999, and the Labour Force Survey (LFS) data from 2000 to 2006. The paper finds that, with the exception of an unusual slight decrease between 1995 and 1996, the LF and LFPR in both narrow and broad terms experienced a rapid increase during the OHSs, followed by an abrupt increase during the changeover from OHS to LFS. The narrow LF and LFPR have since increased slightly, while the broad LF and LFPR have stabilized. The trends over the LFS period do not suggest any further “feminization of the LF” (Casale 2004; Casale, Muller & Posel 2005), and the abrupt break in this trend between the LFS and OHS periods may suggest that the observed trend over the former period could perhaps have been the result of improved capturing of participation rather than a real shift in LFPR. In addition, the number of employed clearly shows enormous fluctuations, and it is only since LFS2004b that employment growth enjoyed a stable and continuous increase. Therefore, it is possible to obtain contrasting conclusions on whether job creation or jobless growth has taken place in the South African economy, if different reference points are used for comparison. Finally, both the narrow and broad unemployment rates increased continuously from OHS1995 to LFS2003a, before this was replaced by a continuous downward trend since LFS2003b. Such a decline needs to be more rapid before the ASGISA goal of reducing the narrow unemployment rate to below 15% in 2014 could be achieved.
    Keywords: South Africa, Household survey, Labour market trends
    JEL: J00
    Date: 2008
  4. By: Elizabeth Asiedu (Department of Economics, The University of Kansas); James Freeman (Department of Economics, Wheaton College)
    Abstract: Many of the empirical studies that analyze the impact of corruption on investment have three common features: they employ aggregate (country-level) data on investment, corruption is measured at the country-level, and data for countries from several regions are pooled together. This paper uses firm-level data on investment and measures corruption at the firm and country-level, and allows the effect of corruption to vary by region. Our dependent variable is firms’ investment growth and we employ six measures of corruption from four different sources: two firm-level measures and four country-level measures. We find that the effect of corruption on investments varies significantly across regions: corruption has a negative and significant effect on investment growth for firms in Transition countries but has no significant impact for firms in Latin America and Sub-Saharan Africa. Furthermore, among the variables included in the regressions (firm size, firm ownership, trade orientation, industry, GDP growth, inflation and openness to trade) corruption is the most important determinant of investment growth for Transition countries.
    Keywords: Bribery, Corruption, Firm, Investment, Latin America and Caribbean, Sub-Saharan Africa, Transition Countries.
    JEL: G31 O16
    Date: 2008–05
  5. By: Vasco C Nhabinde (Department of Economics, University of Pretoria); Niek J Schoeman (Department of Economics, University of Pretoria)
    Abstract: In this paper we empirically analyse the impact of retirement benefits on consumption and personal saving in South Africa using the Feldstein 1974 specification and procedure. By using a basic extended Ando-Modigliani life cycle model we show that the introduction of retirement programs crowds out discretionary household saving and consumption of contributors to such programs. There against, benefits paid by these programs contribute positively to consumption with a concomitant decline in the national pool of savings. However, taxes on retirement benefits affect the discounted value thereof and any change in such tax policy would therefore affect the saving behaviour of contributors in the opposite direction of the tax policy. We use time series data on consumption per capita, disposable labour-income per capita and pension and benefit payments from provident funds both public and privately managed. Using OLS, we find that estimates of retirement benefits are robust when regressed with the per capita government deficit and per capita durable consumption. The estimates are also stable when regressed with the full Barro specification (which includes the per capita government deficit, per capita durable consumption expenditure and the product of unemployment and per capita disposable income).
    Keywords: Social Security, Pension Funds, Retirement, Taxes, Consumption, Saving, South Africa, Gender, Productivity
    JEL: H H5 H55
    Date: 2008–05
  6. By: Andreas Mehler (GIGA Institute of African Affairs); Ulf Engel (Institute of African Studies and Centre for Advanced Study, University of Leipzig); Lena Giesbert (GIGA Institute of African Affairs); Jenny Kuhlmann (University of Leipzig); Christian von Soest (GIGA Institute of African Affairs)
    Abstract: The concept of “structural stability” has been gaining prominence in development policy circles. In the EU’s and the OECD Development Assistance Committee’s (OECD DAC) understanding, it describes the ability of societies to handle intra-societal conflict without resorting to violence. This study investigates the preconditions of structural stability and tests their mutual interconnections. Seven dimensions are analyzed: (1) long-term economic growth, (2) environmental security, (3) social equality, (4) governmental effectiveness, (5) democracy, (6) rule of law, and (7) inclusion of identity groups. The postulated mutual enhancement of the seven dimensions is plausible but cannot be proven. The most significant positive relationship appears between “democracy” and “rule of law,” respectively, on the one hand and the dependent variable “violence/ human security” on the other hand. This points to the usefulness of the political concept of structural stability to promote development policy agendas in this area at least. Applications that reach beyond these initial findings will, however, require further research.
    Keywords: Structural stability, violence, human security, development aid, conflict management, prerequisites of nonviolence
    JEL: F35 O10 O22
    Date: 2008–04
  7. By: Marie Suzanne Badji (GREDI, Département d'économique, Université de Sherbrooke)
    Abstract: La revue des travaux portant sur la mondialisation est révélatrice d’une place marginale accordée au genre dans l’analyse des inégalités. Forte de ce constat, cette recherche est une tentative de vérification de la thèse néo-libérale selon laquelle la mondialisation actuelle favorise l’égalité des rapports sociaux de genre chez les populations des États membres de l’UEMOA. Après avoir apprécié, à travers une analyse descriptive, la dynamique des rapports entre les femmes et les hommes de l’Union économique et monétaire ouest africaine (UEMOA), des points de vue de l’accès à l’éducation et à la santé, de l’accès aux ressources productives et aux revenus et de l’accès au pouvoir d’action, il est empiriquement vérifié que la mondialisation est un phénomène qui accentue, qui maintient ou qui réduit les inégalités des rapports sociaux des sexes chez les populations des États membres de l’Union. L’Indice de la Condition de la Femme (ICF), proposé par la Commission Économique des Nations Unies pour l’Afrique, est choisi pour capturer les inégalités de genre. Sur la base de l’observation des tendances évolutives des variables indicatrices de la mondialisation et de l’effectivité de l’Union Douanière, l’année 2000 sert de repère à l’analyse comparative. L’ICF est la variable endogène du modèle estimé. Le vecteur des variables d’ouverture se structure autour des trois (3) piliers de la mondialisation que sont la libéralisation des échanges commerciaux, la délocalisation des firmes multinationales et la libéralisation financière. Le Produit intérieur brut par habitant et les dépenses publiques d’éducation sont les composantes du vecteur des variables de contrôle.
    Keywords: Mondialisation, inégalités de genre, populations UEMOA
    JEL: A13 D63 F02 F11
    Date: 2008
  8. By: Achy, Lahcen; Hassani, Aicha
    Abstract: The purpose of this paper is to assess welfare effects of regulating the banking sector in Morocco along the European Union lines. The agreement between the EU and Morocco, signed in February 1996 and came into force in March 2000, provides for the gradual establishment of an industrial free-trade zone by 2012 and progressive liberalization of trade in agriculture. The agreement between Morocco and the EU foresees, in addition to that, to start negotiations for a free trade area in services. The agreement contains, however, no binding commitments. But Morocco is expected to deepen further its relationships with Europe within the framework of the Neighboring Policy. The relevance of the issue of banking services’ liberalization goes beyond Morocco’s agreement with the EU. On the one hand, Morocco’s free trade agreement with the US encompasses services, more specifically financial services, in addition to manufactured goods, agricultural products, intellectual property rights, and government procurement. This agreement is expected to come into force in 2006. On the other hand, under GATS, Morocco is projected to increase its commitments and opens up further its banking sector to foreign competition. The last commitments made by Morocco in Uruguay Round were mainly under commercial presence (mode 3) as compared to cross border supply (mode 1) and consumption abroad (mode 2). Except lending to finance investment in Morocco or commercial transactions with Morocco allowed under the mode 1, no commitment has been made in other items (Achy 2002). Hence, there is a real need to understand opportunities and challenges of liberalizing banking services on the Moroccan economy.
    Keywords: Banking services; liberalization; Welfare effects; Morocco
    JEL: F15 G21
    Date: 2005

This nep-afr issue is ©2008 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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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.