nep-afr New Economics Papers
on Africa
Issue of 2008‒11‒18
twenty papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Is Foreign Aid Beneficial for Sub-Saharan Africa? A Panel Data Analysis By Armah, Stephen; Nelson, Carl H.
  2. Hunting for Leopards: Long-Run Country Income Dynamics in Africa By Arbache, Jorge Saba; Page, John
  3. Monetary Policy Rules for Managing Aid Surges in Africa By Adam, Chris-Datepher S.; Buffie, Edward; O'Connell, Stephen; Pattillo, Catherine
  4. Increasing Cotton Farmers Incomes in Mali West Africa: Eliminate Subsidies in Developed Countries or Productivity Increase in Mali? By BAQUEDANO, Felix G.; SANDERS, John H.
  5. An Error Corrected Almost Ideal Demand System for Major Cereals in Kenya By Nzuma, Jonathan; Sarker, Rakhal
  6. Fuel and Food Tradeoffs: A Preliminary Analysis of South African Food Consumption Patterns By Mabiso, Athur; Weatherspoon, Dave
  7. Foreign Direct Investment and Trade in the Southern African Development Community By Bezuidenhout, Henri; Naude, Wim
  8. Medicine and Economics: Accounting for the full benefits of childhood vaccination in South Africa By Till Bärnighausen; David E. Bloom; Salal Humair; Jennifer O'Brien
  9. Designing an effective evaluation model for the South African Department of Agriculture By Madzivhandila, Percy; Griffith, Garry; Fleming, Euan
  10. Month-of-the-year and pre-holiday seasonality in African stock markets By Alagidede, Paul
  11. Market Integration and Efficiency in the Presence of Cross-border Trade Restrictions: Evidence from selected Maize Markets in Southern Africa By Mutambatsere, Emelly; Christy, Ralph D.
  12. Designing financial-incentive programmes for return of medical service in underserved areas of sub-Saharan Africa By Till Bärnighausen; David E. Bloom
  13. Impacts of land certification on tenure security, investment, and land markets : evidence from Ethiopia By Deininger, Klaus; Ali, Daniel Ayalew; Alemu, Tekie
  14. China, India, Brazil and South Africa in the World Economy: Engines of Growth? By Nayyar, Deepak
  15. Analyzing Growth and Welfare Effects of Public Policies in Models of Endogenous Growth with Human Capital: Evidence from South Africa By Badibanga, Thaddee M.
  16. Ties configuration in entrepreneurs’ personal network and economic performances in African urban informal economy By Jean-Philippe BERROU (GREThA UMR CNRS 5113); François COMBARNOUS (GREThA UMR CNRS 5113)
  17. An alternative reconsideration of macroeconomic convergence criteria for West African Monetary Zone By Balogun, Emmanuel Dele
  18. Behavior of subsistence producers in response to technological change- The elasticity of cassava production and home consumption in Benin By Takeshima, Hiroyuki
  19. Traits Affecting Household Marketing Decisions in Rural Kenya By BALDWIN, Katherine L.; DEVEAU, Vanessa; FOSTER, Ken; MARSHALL, Maria
  20. The short and longer term potential welfare impact of global commodity inflation in Tanzania By Dessus, Sebastien

  1. By: Armah, Stephen; Nelson, Carl H.
    Abstract: Significant ambiguity surrounds the magnitude and sign of the effect of foreign aid on economic economic growth. Foreign aid can potentially augment scarce domestic capital to spur growth but foreign aid can also remove positive incentive to build wealth, stalling growth. This paper characterizes the effect of foreign aid on the growth of Sub-Saharan African countries after correcting endogeneity problems that plague the estimation. Foreign aid is found to be growth promoting given good governance and using fixed effects in a static panel framework. Data from twenty-one Sub-Saharan African countries spanning 1995-2003 was used in the estimation. The finding of a significant foreign aid-growth relationship is pertinent because it suggests that increased aid to Sub Saharan Africa is one way to achieve the UN€ٳ Millennium goals. By lobbying for increased foreign aid, advocates are prescribing a necessary albeit insufficient medicine for Sub Saharan Africa€ٳ economic problems.
    Keywords: Food Security and Poverty,
    Date: 2008
  2. By: Arbache, Jorge Saba; Page, John
    Abstract: This paper examines the country-level dynamics of long-run growth in Africa between 1975 and 2005. We are primarily interested in examining how growth has affected mobility and the distribution of income among countries. We analyse changes in the cross-country income structure and convergence. We also look for evidence of the formation of country groups or ?clubs?. Finally, we use a novel method of breaking up the growth his-Dateries of African economies in-Date medium term spells of growth accelerations and declines -Date see if a group of African ?leopards??the regional equivalent of Asia?s ?tigers??is beginning -Date emerge.
    Keywords: GDP per capita, growth, Sub-Saharan Africa
    Date: 2008
  3. By: Adam, Chris-Datepher S.; Buffie, Edward; O'Connell, Stephen; Pattillo, Catherine
    Abstract: We examine the properties of alternative monetary policy rules in response -Date large aid surges in low-income countries characterized by incomplete capital market integration and currency substitution. Using a dynamic s-Datechastic general equilibrium model, we show that simple monetary rules that stabilize the path of expected future seigniorage for a given aid flow have attractive properties relative -Date a range of conventional alternatives, including those involving heavy reliance on bond sterilization or a commitment -Date a pure exchange rate float. These simple rules, which are shown -Date be robust across a range of fiscal responses -Date aid inflows, appear -Date be consistent with actual responses -Date recent aid surges in a range of post-stabilization countries in Sub-Saharan Africa.
    Keywords: monetary policy, currency substitution, aid, Africa, DSGE models
    Date: 2008
  4. By: BAQUEDANO, Felix G.; SANDERS, John H.
    Abstract: Replaced with revised version of paper 07/21/08.
    Keywords: Agricultural and Food Policy, Crop Production/Industries, Productivity Analysis,
    Date: 2008
  5. By: Nzuma, Jonathan; Sarker, Rakhal
    Abstract: Despite significant progress in theory and empirical methods, the analysis of food consumption patterns in developing countries, particularly those in Sub Saharan Africa has received very limited attention. An attempt is made in this article to estimate an Error Corrected Almost Ideal Demand System for four major cereals consumed in Kenya employing annual data from 1963 to 2005. The model performs well both on theoretical and empirical grounds. All own-price elasticities are negative and statistically significant and all cereals are necessities both in the short-run and in the long-run in Kenya.
    Keywords: Error Correction Model, AIDS, Cereal Consumption, Kenya, Demand and Price Analysis,
    Date: 2008
  6. By: Mabiso, Athur; Weatherspoon, Dave
    Abstract: As oil prices continue to skyrocket and food riots surface across the globe, there are growing concerns that food-fuel tradeoffs are beginning to present serious challenges for food security across the world. In South Africa, where the government is embarking on a biofuels expansion strategy, understanding the nature of food-fuels tradeoffs is imperative for effective policy making and ultimately safeguarding consumers' welfare. Using time series monthly data constructed from various sources, this preliminary study makes a step toward explaining the nature of food-fuel tradeoffs in South Africa. By including fuel prices in the estimation of single-equation and seemingly unrelated regression (SUR) estimates of demands for maize meal (the South African staple food) and wheat bread (which is increasingly accounting for a large proportion of total expenditure in South Africa) the study presents preliminary findings. Further construction of the data used in this preliminary analysis is anticipated in order to allow for a systems approach that entails testing of separability between fuel and food, the estimation of cross-price elasticities and simulations of the expansion in the biofuels industry, for the elicitation of more information on the food-fuel tradeoffs in South Africa.
    Keywords: Food Consumption/Nutrition/Food Safety,
    Date: 2008
  7. By: Bezuidenhout, Henri; Naude, Wim
    Abstract: We use a modified gravity model -Date estimate the relationship between trade and foreign direct investment (FDI) in the Southern African Development Community (SADC). We find evidence of a significant causal relationship Date SADC?s exports -Date inward FDI. Distance (reflecting remoteness and transport costs) and political instability are confirmed -Date be significant determinants of FDI -Date SADC. We discern differences in the patterns and determinants of FDI -Date SADC, whether it is Date the USA and UK or Date continental Europe. In the case of FDI -Date SADC Date the USA and UK, it is exports Date SADC -Date these countries that are significant, and not imports, while, in the case of continental Europe, both exports and imports are significantly associated with FDI -Date SADC.
    Keywords: FDI, SADC, South Africa, exports, gravity model
    Date: 2008
  8. By: Till Bärnighausen (Africa Centre for Health and Population Studies, University of KwaZulu-Natal); David E. Bloom (Harvard School of Public Health); Salal Humair (School of Science and Engineering, Lahore University of Management Sciences, Pakistan); Jennifer O'Brien (Harvard School of Public Health)
    Abstract: While remarkable gains in health have been achieved since the mid-20th century, these have been unequally distributed, and mortality and morbidity burdens in some regions remain enormous. Of the almost 10 million children under 5 years of age who died in 2006, only 100 000 died in industrialised countries, while 4.8 million died in sub-Saharan Africa.1 In deciding whether to finance an intervention, policy makers commonly weigh the expected population health gains against its costs. Most vaccinations included in national immunisation schedules are inexpensive2 and health gains to costs are very favourable compared with other health interventions. Newer vaccinations, such as those with pneumococcal conjugate vaccine (PCV) or rotavirus vaccine, are also effective in averting child mortality and morbidity but are expensive relative to those commonly included in national immunisation schedules. Policy makers may therefore decide that – at current prices – the comparison of health gains with costs does not justify the free public provision of these vaccinations. The authors of this paper argue that in addition to the health benefits of vaccinations, their effects on education and income3 and benefits for unvaccinated community members are considerable and should be included in calculations to establish their value.
    Keywords: Disease, control, global health, vaccination, HIV/AIDS, Africa.
    Date: 2008–10
  9. By: Madzivhandila, Percy; Griffith, Garry; Fleming, Euan
    Abstract: Governments are under increasing pressure to deliver results. Therefore, it is important to evaluate the effectiveness, efficiency and relevance of the public service in implementing policies and programmes for social betterment. Without such evaluations, it is difficult to ensure that evidence is integrated into policy and used in practice due to lack of generalizability and learning. This paper focuses on (1) the knowledge that is relevant to understand evaluation influence, (2) the possible conceptual frameworks that enable understanding of the evaluation implementation process, (3) possible models of the process of organizational evaluation, and (4) the main ways of intervening to increase influence. The context for analysis is the South African Department of Agriculture.
    Keywords: Evaluation, Evaluation Influence, Policy, Programmes, South Africa, Political Economy, Research Methods/ Statistical Methods,
    Date: 2008
  10. By: Alagidede, Paul
    Abstract: Seasonal anomalies (calendar effects) may be loosely referred to as the tendency for financial asset returns to display systematic patterns at certain times of the day, week, month or year. Two popular calendar effects are investigated for African stock returns: the month-of-the-year and the pre-holiday effects, and their implication for stock market efficiency. We extend the traditional approach of modelling anomalies using OLS regressions and, examine both the mean and conditional variance. We find high and significant returns in days preceding a public holiday for South Africa, but this finding is not applicable to the other stock markets in our sample. Our results also indicate that the month-of-the-year effect is prevalent in African stock returns. However, due to liquidity and round trip transactions cost the anomalies uncovered may not necessarily violate the no-arbitrage condition. Finally we discuss promising areas for future research using developing stock markets data.
    Keywords: Calendar effects; African stock markets; month of the year and pre-holiday effects
    Date: 2008–11
  11. By: Mutambatsere, Emelly; Christy, Ralph D.
    Abstract: This study evaluates the extent to which regional trade might be relied upon as a policy strategy in achieving food security in southern Africa. The logic is that if significant diversities exist in production expertise and capacities for countries within the region, in the presence of integrated marketing systems, free trade can improve both supply and trade efficiency. Two components of the debate are analyzed: revealed competitiveness in production and export of the main staple €Ӡmaize; and for a selected set of major markets, the nature of market interactions within the current regional trade policy framework. The analyses employ mainly non-parametric assessments, including such measures as revealed comparative advantage, price difference and transfer costs trends, and cumulative distributions of arbitrage returns, supported by econometric measures of integration and efficiency including parity bounds analyses. Results indicate substantial regional bias in maize trade among southern African countries, although competitiveness in maize production is restricted to a few countries that possess the capacity to supply significant quantities. Price and transfer costs trends, as well as the parametric market integration and efficiency tests, frequently fail to reject the null hypothesis of €ةntegration€٠in a selected set of markets in close proximity, regardless of country location, suggesting fairly consistent price movements, tradability of commodities and/or contestability of such markets across borders. For those markets, however, efficiency appears weak, as trade often fails to exhaust arbitrage profits. Markets not linked through trade tend to have a higher frequency of efficiency, so that the lack of trade often is justified by the lack of positive arbitrage returns. In those cases, market segmentation appears driven more by restrictive transport costs than tariffs or taxes on cross-border trade. These results suggest that the dominant forms of inefficiency in the markets considered in this study are (1) insufficient arbitrage resulting from supply side constraints, and other non-cost trade restrictions and (2) restrictive transport costs. Border administered tariffs and other forms of taxes on imports seem to account for a relatively low proportion of transfer costs, and generally reduce arbitrage returns marginally. Therefore policy interventions addressing both food supply and access are necessary to ensure meaningful food security benefits from trade.
    Keywords: International Relations/Trade,
    Date: 2008
  12. By: Till Bärnighausen (Africa Centre for Health and Population Studies, University of KwaZulu-Natal); David E. Bloom (Harvard School of Public Health)
    Abstract: In many countries in sub-Saharan Africa health worker shortages are one of the main constraints in achieving population health goals. Financial-incentive programmes for return of service, whereby participants receive payments in return for a commitment to practice for a period of time in a medically underserved area, can alleviate local and regional health worker shortages through two mechanisms. First, they can redirect the flow of those health workers who would have been educated without financial incentive from well-served to underserved areas. Second, they can add health workers to the pool of workers who would have been educated without financial incentives and place them in underserved areas. While financial-incentive programmes are an attractive option to increase the supply of health workers to medically underserved areas – they offer students who otherwise would not have the means to finance a health care education an opportunity to do so, establish legally enforceable commitments to work in underserved areas, and work without compulsion – these programmes may be difficult to implement.
    Keywords: Disease, control, global health, financial-incentive programs, Africa.
    Date: 2008–10
  13. By: Deininger, Klaus; Ali, Daniel Ayalew; Alemu, Tekie
    Abstract: Although early attempts at land titling in Africa were often unsuccessful, the need to secure rights in view of increased demand for land, options for registration of a continuum of individual or communal rights under new laws, and the scope for reducing costs by combining information technology with participatory methods have led to renewed interest. This paper uses a difference-in-difference approach to assess economic impacts of a low-cost registration program in Ethiopia that, over 5 years, covered some 20 million parcels. Despite policy constraints, the program increased tenure security, land-related investment, and rental market participation and yielded benefits significantly above the cost of implementation.
    Keywords: Environmental Economics&Policies,Urban Housing,Climate Change,Common Property Resource Development,Rural Land Policies for Poverty Reduction
    Date: 2008–10–01
  14. By: Nayyar, Deepak
    Abstract: This paper attempts -Date analyse the economic implications of the rise of China, India, Brazil and South Africa, for developing countries situated in the wider context of the world economy. It examines the possible impact of their rapid growth on industrialized countries and developing countries, which could be complementary or competitive and, on balance, positive or negative. In doing so, it considers the main channels of transmission, -Date focus on international trade, investment, finance and migration. The essential question is whether, in times -Date come, these four countries could be the new engines of growth for the world economy. The answer is that rapid growth in China already supports growth elsewhere, so far primarily as a market for exports, while India and Brazil have the potential -Date provide similar support, but South Africa does not yet exhibit such a potential. In future, these countries could also provide resources for investment and technologies for productivity. The transformation and catch-up could span half a century or longer. Even so, rapid growth in these large emerging economies is already beginning -Date change the balance of economic power in the world.
    Keywords: China, India, Brazil, South Africa, growth, development, his-Datery, trade, investment, finance, migration
    Date: 2008
  15. By: Badibanga, Thaddee M.
    Abstract: Since the abolition of its Apartheid regime in 1994, South Africa has launched a massive program of education, which has been financed through resources representing on average 21% of the national budget or 7% of GDP. Today, the GDP share of public spending on education is 1.3 times the average of industrialized countries (5.4%) and almost twice that of developing countries (3.9%). In this paper, we simulate fiscal policy experiments to analyze the growth and welfare effects of a shift in the allocation of government expenditures between public spending on education and transfers as well as those of a change in the tax rate in a model of endogenous growth with human capital accumulation for the South African economy. The results of simulations demonstrate that a shift in the allocation of fiscal resources between educational spending and transfers does not affect the long run allocation decisions. In the transition, however, this shift generates a negative effect on the rate of growth of GDP. In fact, a reallocation of expenditures shifts resources away from saving and toward consumption, and translate into lower rate of growth but higher welfare. Nonetheless, these growth and welfare effects are very small. On the other hand, a tax cut generates growth effects in the long run as well as in transition. In fact, reducing or cutting the tax rate in the long run lowers the interest rate, which in turn creates disincentives for saving and results in low rate of growth of GDP. However, in the transition, it reduces or removes distortions and translates into high work effort, high accumulation of human capital, and thus high rate of growth of GDP. Nonetheless, its welfare effect is negative.
    Keywords: Fiscal Policy, Government Expenditures and Education, Growth Model, International Development, Labor and Human Capital, E62, H52, O41,
    Date: 2008
  16. By: Jean-Philippe BERROU (GREThA UMR CNRS 5113); François COMBARNOUS (GREThA UMR CNRS 5113)
    Abstract: As to explore social networks influence in African informal economy, this paper fits in the conceptual framework of reticular embeddedness. By going into the analyse of ties strength, our purpose is to question the real influence of ties content. We use a recent original dataset to evaluate how entrepreneurs’ networks influence their activities economic outcomes. ‘Multiple name generators’ method provides a vast amount of information about ties content, which can be treated by factor analysis to describe and categorize networks. Finally, we show that not only business ties but the particular configuration of ties strength in networks improve informal earnings.
    Keywords: Informal economy ; embeddedness ; social networks ; informal earnings
    JEL: O17 Z13
    Date: 2008
  17. By: Balogun, Emmanuel Dele
    Abstract: This study presents an alternative reconsideration of traditional Optimum Currency Areas (OCA) macroeconomic convergence criteria as options for West African Monetary Zone (WAMZ) commencement, in the light of recent advancements in monetary theory. It presents micro-founded models, rooted in New Keynesian traditions to show that tests confirming widespread divergence from ideal macroeconomic benchmarks with unsustainable independent monetary and exchange rates pursuits and trade gravity models offer a more appropriate evaluating criterion for WAMZ than the current one, if the ultimate objective is a merger with West African Economic and Monetary Union (WAEMU). Using econometrics methods, especially pooled single equation models applied to national macroeconomic data which span 1991Q1 to 2007Q4, I evaluate the roles of past unsustainable independent national monetary and exchange rates policy pursuits as determinants of macroeconomic stabilizations (reflected by the inflation differential and output gaps/performance vis-à-vis the WAMZ area targets) and inter/intra-regional export performance. This was accompanied by the estimation of a trade gravity model. The strong convergence of aggregate output/demand pattern between WAMZ countries based on trade gravity models thus emerges as a possible positive attribute of countries participating in efficient currency areas
    Keywords: Optimum Currency Area; monetary policy; business cycles costs; exchange rates; WAM Z
    JEL: E31 E52 F33
    Date: 2008–10–31
  18. By: Takeshima, Hiroyuki
    Abstract: The welfare effects of GM (genetic modification)-led productivity growth for cassava producers are partly affected by the characteristics of individual cassava producing households. Those household characteristics include the elasticity of production and home consumption of cassava. Some studies assume the inelastic home consumption when conducting ex-ante welfare effects analysis for subsistence crops. This study modifies the estimation methods used in the past literature to estimate both elasticities using the dataset from Benin. Several assumptions are also tested regarding the heterogeneity of cassava producers. On estimation of elasticities, the paper tests the hypothesis that on-farm sellers are characteristically different from off-farm sellers by employing the double hurdle model. The findings contribute to the literatures analyzing the distributional effects of welfare effects from GM-led productivity growth for cassava, which are gaining importance in the context of the policy impacts on poverty reduction.
    Keywords: cassava, subsistence, double-hurdle, non-nested test, Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies, Q11, Q12,
    Date: 2008
  19. By: BALDWIN, Katherine L.; DEVEAU, Vanessa; FOSTER, Ken; MARSHALL, Maria
    Abstract: While many contemporary development programs with regard to Sub-Saharan Africa€ٳ pastoralists promote improved livestock marketing as a way out of poverty, they also fail to take into account the multi-functionality of livestock within these communities, and thus are doomed to failure. While livestock are a main source of income for the pastoralist household, they also serve a purpose as a store of wealth, food source, and status symbol. Furthermore, cattle and smallstock (sheep and goats) fulfill each function to a different degree. Since livestock are so multi-functional, marketing projects could better achieve their objectives if they had a more accurate picture of what motivates household livestock sale decisions. To get a better understanding of why livestock are sold in one community of Central Kenya, we regressed household offtake rate of both cattle and smallstock against certain household characteristics, including number of household members, number of children, education, and employment. Additionally, we used a logit model to determine if those same characteristics affect the overall decision to sell instead of just the offtake rate. We found that employment or self-employment of at least one household member significantly affected both offtake rate and sale decision. In addition, the number of household members and number of children in school had varying affects on cattle and smallstock offtake rates. The results regarding smallstock suggest that they are considered a more liquid asset, so perhaps future programs should target increasing the profitability of smallstock production as opposed to cattle production. Overall, our analysis shows that community livestock sales are motivated by factors other than price, and as such should be considered in the design of any future marketing programs.
    Keywords: Consumer/Household Economics, Marketing,
    Date: 2008
  20. By: Dessus, Sebastien
    Abstract: This paper uses a computable general equilibrium model to assess the welfare impact of commodity price inflation in Tanzania and possible tax policy responses in the short, medium, and long term. The results suggest that global commodity inflation since 2006 may have had a significantly negative impact on all Tanzanian households. Most of the negative impact comes from the rise in the price of oil. In contrast, food price spikes are potentially welfare improving for all Tanzanian households in the medium to long run. In comparison with nonpoor households, poor households in Tanzania may be relatively shielded from global commodity inflation because they derive a larger share of their incomes from agricultural activity and consume less oil-intensive products. Finally, the results suggest that tax policies encouraging greater agricultural production and consumption may help to reduce poverty. In contrast, policies discouraging agricultural production (such as export bans) bear the risk of increasing poverty in the long run. However, such policies would only effect at the margin (in one direction or the other) the likely impact of global commodity inflation on poverty.
    Keywords: Markets and Market Access,Economic Theory&Research,Emerging Markets,Currencies and Exchange Rates,Rural Poverty Reduction
    Date: 2008–10–01

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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