nep-afr New Economics Papers
on Africa
Issue of 2008‒06‒21
eight papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Aid Effectiveness Revisited: Comparative Studies of Modalities of Aid to Asia and Africa By Hiroyuki Hino; Atsushi Iimi
  2. Fiscal and Monetary Anchors for Price Stability: Evidence from Sub-Saharan Africa By Alfredo Baldini; Marcos Poplawski Ribeiro
  3. The Socio-Economic Distribution of AIDS Incidence and Output By Pedro de Araujo
  4. Armed Conflict and Schooling: Evidence from the 1994 Rwandan Genocide By Richard Akresh; Damien de Walque
  5. Aid volatility, monetary policy rules and the capital account in African economies By Christopher Adam; Stephen O'Connell; Edward Buffie
  6. Post-Apartheid South Africa: Poverty and Distribution Trends in an Era of Globalization By Van der Berg, Servaas; Louw, Megan; Burger, Ronelle
  7. Consumption risk, technology adoption and poverty traps: evidence from Ethiopia By Stefan Dercon; Luc Christiaensen
  8. L’Emploi, le Chômage et les Conditions d’Activité en République Démocratique du Congo : Principaux résultats de la phase 1 de l’Enquête 1-2-3 2004-2005 By Thimotée Makabu Ma Nkenda; Martin Mba; Constance Torelli

  1. By: Hiroyuki Hino (Research Institute for Economics & Business Administration, Kobe University); Atsushi Iimi (The World Bank)
    Abstract: This paper provides a variety of evidence that shows that in Asia, aid leveraged private investment in the long run, while in Africa the correlation between aid and domestic investment was at best ambiguous. Aid in Africa was diametrically opposite to that of Asia in terms of the amounts the countries received, the sector compositions, the size of individual projects, and the intensity of donor involvement. The sharp contrast in aid effectiveness between Asia and Africa could be attributed at least in part to those differences in the modality of aid delivery. Based on the above analysis, the paper concludes with a few suggestions that could link aid more closely to private investment, and avoid pitfalls that Africa experienced.
    Keywords: official development assistance, aid effectiveness, foreign direct investment, East Asia, Sub-Saharan Africa
    JEL: O19 O20
    Date: 2008–03
  2. By: Alfredo Baldini; Marcos Poplawski Ribeiro
    Abstract: The paper presents a model of fiscal dominance with borrowing constraints, and provides evidence for a large number of sub-Saharan African countries on the relative importance of fiscal and monetary determinants of inflation. Based on the dynamic response of inflation to different shocks, including nominal public debt, results show that a number of SSA countries were characterized throughout the period 1980-2005 either by chronic fiscally dominant regimes, with weak or no response of primary surpluses to public debt; or by a consistent adoption of a monetary dominant regime. However, a number of countries were also characterized by lack of a clear monetary and fiscal policy regime. The study also finds that changes in nominal public debt affect price variability via aggregate demand effects, suggesting that fiscal outcomes could be a direct source of inflation variability, as predicted by the fiscal theory of the price level.
    Keywords: Working Paper , Sub-Saharan Africa ,
    Date: 2008–05–13
  3. By: Pedro de Araujo (Indiana University Bloomington)
    Abstract: This paper investigates the effect of HIV/AIDS on steady state output in an overlapping generations economy calibrated to resemble sub-Sahara Africa. I use skill heterogeneity as a proxy for socioeconomic status and test scenarios where the AIDS epidemic affects skills differently. The results indicate that the effects of the epidemic are sensitive to the distribution of the disease across skills. In general, the effect is much greater as the epidemic mainly affects skilled workers. Output is found to be below a no-AIDS output in a range between 3% (10%), when only unskilled workers are affected, and 10% (28%), when only skilled workers affected, whenever the overall infection rate is 7% (20%). When investigating the hypothesis that AIDS affects skilled workers more severely than unskilled at the beginning of the epidemic, with the effect switching as the epidemic becomes more mature, the findings are that the economy can be 8% smaller along the transition path. In all scenarios where the epidemic is temporary, it would take 4 to 5 generations or about 90 years for sub-Saharan Africa to recover.
    Keywords: HIV/AIDS, capital-skill complementarity, heterogeneity, and sub-Sahara Africa
    JEL: E20
    Date: 2008–06
  4. By: Richard Akresh (University of Illinois at Urbana Champaign); Damien de Walque (World Bank)
    Abstract: To examine the impact of Rwanda’s 1994 genocide on children’s schooling, the authors combine two cross-sectional household surveys collected before and after the genocide. The identification strategy uses pre-war data to control for an age group’s baseline schooling and exploits variation across provinces in the intensity of killings and which children’s cohorts were school-aged when exposed to the war. The findings show a strong negative impact of the genocide on schooling, with exposed children completing one-half year less education representing an 18.3 percent decline. The effect is robust to including control variables, alternative sources for genocide intensity, and an instrumental variables strategy.
    Keywords: War, Human capital investment, Education, Genocide, Africa
    JEL: I20 J13 O12 O15
    Date: 2008–04
  5. By: Christopher Adam (University of Oxford); Stephen O'Connell (Swarthmore College); Edward Buffie (Indiana University)
    Abstract: We examine the properties of simple quantity-based monetary policy rules of the kind widely used in low-income African economies. Using a DSGE model and focusing our attention on responses to positive aid shocks, we suggest that policy rules involving substantial reserve accumulation in the face of aid surges serve to ease macroeconomic adjustment to shocks, particularly when a portion of aid is used to support fiscal adjustment. These rules are robust to assumptions about the degree of integration of the domestic public debt market with world capital markets. Although an open capital account facilitates smoother adjustment to temporary aid surges when an aid inflow is fully spent, it exacerbates the adjustment problem when aid is accompanied by fiscal adjustment and hence reinforces the case for a managed float in such circumstances.
    Keywords: Monetary policy, Africa, Aid volatility, foreign capital flows, stochastic simulation models
    Date: 2008–06
  6. By: Van der Berg, Servaas; Louw, Megan; Burger, Ronelle
    Abstract: South Africa’s transition to democracy in 1994 created new possibilities for economic policy. Economic liberalization brought sustained, if unspectacular, growth that reversed the long decline in per capita incomes, but left its scars in much job shedding associated with business becoming internationally competitive. This accords with international evidence that trade liberalization takes time to realize positive employment effects. Disappointing employment growth in the face of an expanding labourforce fed rising unemployment. However, using poverty estimates from a combination of sources, this study demonstrates that poverty nevertheless declined quite substantially after the turn of the century. Poverty dominance testing shows this conclusion to be insensitive to the selection of poverty line or measure. But empirical analysis does not allow strong conclusions to be drawn on causal relationships between globalization and poverty trends.
    Keywords: trade; labour; South Africa; globalization
    JEL: F16 F14 I32
    Date: 2007–09
  7. By: Stefan Dercon (University of Oxford); Luc Christiaensen (World Bank)
    Abstract: Much has been written on the determinants of input and technology adoption in agriculture, with issues such as input availability, knowledge and education, risk preferences, profitability, and credit constraints receiving much attention. This paper focuses on a factor that has been less well documented: the differential ability of households to take on risky production technologies for fear of the welfare consequences if shocks result in poor harvests. Building on an explicit model, this is explored in panel data for Ethiopia. Historical rainfall distributions are used to identify the counterfactual consumption risk. Controlling for unobserved household and time-varying village characteristics, it emerges that not just exante credit constraints, but also the possibly low consumption outcomes when harvests fail, discourage the application of fertiliser. The lack of insurance causes inefficiency in production choices.
    Keywords: Technology adoption, Fertiliser, Risk, Poverty trap, Ethiopia
    JEL: O12 O33 Q12 Q16
    Date: 2008–01
  8. By: Thimotée Makabu Ma Nkenda (Institut National de la Statistique en RDC); Martin Mba (Institut National de la Statistique du Cameroun); Constance Torelli (DIAL)
    Abstract: (english) Democratic Republic of Congo has known dramatic events for the last three decades. Statistical social economic data did not exist really or not available in the period. The Labour force survey, the first phase of the 1-2-3 survey, carried out in 2004-2005 and conducted by the National Statistic Institute provides for the first time a detailed picture of the main characteristics of employment and unemployment in the country. This study, which presents the principal results of the survey, helps highlight the major structural characteristics of the urban and rural labour markets. By identifying their main shortcomings (early labour force participation for children, distortion between young people's expectations and real recruitment prospects, discrimination against women, inefficiency of placement services for the unemployed, generalisation of under-employment, the place of the informal sector, etc.), the study opens up new possibilities for defining policies designed to improve the way labour markets work in DRC. _________________________________ (français) La République Démocratique du Congo a connu une histoire très mouvementée au cours des trois dernières décennies. Les données statistiques socio-économiques de base ont été quasi inexistantes durant la période. L’enquête emploi, première phase du dispositif d’enquête 1-2-3 menée en 2004- 2005 par l’Institut National de la Statistique fournit pour la première fois une image détaillée des principales caractéristiques de l’activité et du chômage dans le pays. Cette étude, qui présente les principaux résultats de l’enquête, permet de mettre en évidence les grandes caractéristiques structurelles du marché du travail en milieu urbain et en milieu rural. En identifiant leurs principales défaillances (mise au travail précoce des enfants, désajustements entre les attentes des jeunes et les perspectives réelles d’embauche, discrimination à l’encontre des femmes, inefficacité des services de placement des chômeurs, généralisation du sous-emploi, place du secteur informel, etc.), l’analyse ouvre des pistes pour la définition de politiques visant à améliorer le fonctionnement du marché du travail en RDC.
    Keywords: Travail, chômage, secteur informel, Afrique de l’Ouest,Labour, Unemployment, Informal Sector, West Africa.
    JEL: J20 J21 J22 J23 J24 J30 J31 J71 J81 J82
    Date: 2007–12

This nep-afr issue is ©2008 by Marco Novarese. 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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