nep-afr New Economics Papers
on Africa
Issue of 2008‒12‒07
fifteen papers chosen by
Quentin Wodon
World Bank

  1. Alternative definitions of informal sector employment in South Africa By Hassan Essop; Derek Yu
  2. The Impacts of Food- and Oil Price Shocks on the Namibian Economy: the Role of Water Scarcity By Sahlén, Linda
  3. Why Do Researchers Collaborate with Industry? An analysis of the wine sector in Chile, South Africa and Italy By Elisa Giuliani; Andrea Morrison; Carlo Pietrobelli; Roberta Rabellotti
  4. The Impact of Location on Crop Choice and Rural Livelihood: Evidences from Villages in Northern Ethiopia By Nuru, Seid; Seebens, Holger
  5. Japan’s Positive Aid Sanctions Policies: Case Study of African Developing Countries By Pazim, Khairul Hanim
  6. Aid and Sectoral Labour Productivity By Pablo Selaya; Rainer Thiele
  7. Fiscal Decentralization in Kenya: The Constituency Development Fund and the Growth of Government By Bagaka, Obuya
  8. Scope and Sustainability of Cooperation in Transboundary Water Sharing of the Volta River By Bhaduri, Anik; Perez, Nicostrato; Liebe, Jens
  9. When Migrant Remittances Are Not Everlasting, How Can Morocco Make Up? By Fida Karam
  10. Trade Policy, Poverty, and Development in a Dynamic General Equilibrium Model for Zambia By Edward F. Buffie; Manoj Atolia
  11. Cooperation of developed economies and international organizations with developing economies By Majerová, Ingrid
  12. Est-ce que les subsides d'électricité diminuent la pauvreté en Guinée ? By Saikou Amadou Diallo; Paul Makdissi
  13. The Institutional Environment and the Banking - Growth Nexus: Theory and Investigation for MENA By Nabi, Mahmoud Sami; Suliman, Mohamed Osman
  14. Inequality in Human Development: An empirical assessment of thirty-two countries By Michael Grimm; Stephan Klasen; Ken Harttgen; Mark Misselhorn; Teresa Munzi; Timothy Smeeding
  15. Fertility, health and female labour force participation: there is a missing link! By Zamo-Akono, C. Zamo-Akono

  1. By: Hassan Essop (Department of Economics, University of Stellenbosch); Derek Yu (Department of Economics, University of Stellenbosch)
    Abstract: Before the introduction of the Quarterly Labour Force Survey (QLFS) in 2008, Statistics South Africa (Stats SA) has been using the same methodology to derive the informal sector employment throughout the years, focusing on the enterprise registration status to classify workers (which include both self-employed and employees) as either formal or informal sector workers. Although there are difficulties with attempting to provide any consistent trend data (Yu, 2007 & Essop & Yu, 2008), it is generally accepted that informal sector employment grew relatively more rapidly in the late 1990s, and then stabilized at about 2 million in the early 2000s before it increased (albeit more slowly) again since 2005. Nonetheless, recent papers by Devey, Skinner & Valodia (2006) as well as Heintz & Posel (2008) argue that the current classifications used by Stats SA hide a significant degree of informality in the formal economy, as some formal jobs are characterized by conditions that are typical of informal work. Therefore, they propose alternative definitions of informal sector employment, focusing on worker characteristics instead of enterprise characteristics. This paper aims to address the reliability or otherwise of these recent approaches, as well as to suggest better ways to define informal sector employment.
    Keywords: South Africa, Household survey, Labour market trends, Informal sector
    JEL: J00
    Date: 2008
  2. By: Sahlén, Linda (Department of Economics, Umeå University)
    Abstract: The recent increases in international food and oil prices have raised concerns about how these exogenous shocks will affect the economic activity as well as poverty in developing countries. In this paper, the effects of international food and oil price increases on the Namibian economy are studied by means of a Computable General Equilibrium model. As a corn and oil importing Sub-Saharan African country, Namibia is among the countries considered to be particularly vulnerable to these price shocks. Besides, since Namibia is also one of the driest Sub-Saharan countries, the role of water scarcity is explicitly addressed in this particular context. The results show that the Namibian economy will be negatively affected by the food and oil price increases. In the case where the supply of water is assumed to be constant, it is shown that there will be even less ability to adapt for the economy, thus resulting in a more significant decrease in GDP than in the case where additional water sources are assumed to be available.
    Keywords: computable general equilibrium model; food prices; oil prices; water scarcity
    JEL: D58 Q18 Q25
    Date: 2008–11–27
  3. By: Elisa Giuliani (Dipartimento di Economia Aziendale, Pisa University - Italy and SPRU, University of Sussex); Andrea Morrison (Department of Economic Geography, Utrecht University and CESPRI Bocconi University, Milan - Italy); Carlo Pietrobelli (CREI, Università Roma Tre, Roma - Italy); Roberta Rabellotti (Dipartimento di Scienze Economiche e Metodi Quantitativi, Università del Piemonte Orientale, Novara - Italy)
    Abstract: This paper explores the determinants of the linkages between industry and research organizations – including universities. We present new evidence on three wine producing areas – Piedmont, a region of Italy, Chile, South Africa - that have successfully reacted to the recent structural changes experienced in the industry worldwide. Based on an original dataset, we carry out an econometric exercise to study the microeconomic determinants of researchers’ collaborations with industry. The evidence reveals that individual researcher characteristics, such as embeddedness in the academic system, age and sex, matter more than their publishing record or formal degrees
    Keywords: University-Industry Linkages, Innovation System, Wine Sector, Emerging Economies
    JEL: O30 O38 O13
    Date: 2008–05
  4. By: Nuru, Seid; Seebens, Holger
    Abstract: This paper attempts to demonstrate how location of an agricultural economic activity in relation to urban centers determines households' decision to allot their agricultural land to the production of either staple crop or a high value but risky cash crop. Analyzing household data from villages in North Eastern Ethiopia, we find that proximity to urban centers, access to road, and education along with other factors determine the crop choice in favor of the production of high value crops. Crop choices further significantly predict levels of per capita income across villages where the farthest with no access to road are the poorest.
    Keywords: Agricultural and Food Policy, Community/Rural/Urban Development, Consumer/Household Economics, Crop Production/Industries, International Development, Productivity Analysis,
    Date: 2008–07–17
  5. By: Pazim, Khairul Hanim
    Abstract: The Japanese government has implemented various positive aid sanctions policies in African countries. There are two main reasons why the Japanese government preferred to use the positive sanctions. Firstly, the Japanese government refrained from taking strict measures against countries that maintain strong economic and diplomatic relations with Japan. Second, even if the Japanese government did take punitive measure against those countries it softened its stance as soon as a convenient pretext could be found. All this indicates that policymakers in Japanese government still give priority to Japan’s economic interests.
    Keywords: Foreign Aid; Japan
    JEL: F35
    Date: 2008–12–05
  6. By: Pablo Selaya; Rainer Thiele
    Abstract: The paper examines empirically the proposition that aid to poor countries is detrimental for external competitiveness, giving rise to Dutch disease type effects. At the aggregate level, aid is found to have a positive effect on growth of labour productivity. A sectoral decomposition shows that the effect is significant and positive both in the tradables and the nontradables sectors. The paper thus finds no empirical support for the hypothesis that aid reduces external competitiveness in developing countries. Possible reasons are the existence of large idle labour capacity and high levels of dollarization in financial liabilities at the firm level
    Keywords: Foreign aid, sectoral labour productivity, Dutch disease
    JEL: F35 O47
    Date: 2008–11
  7. By: Bagaka, Obuya
    Abstract: This paper explores the financial implications of fiscal decentralization policies on the central government's operating budget in Kenya. The paper evaluates how devolved funds under the constituency development fund (CDF) have been utilized to start healthcare capital projects (clinics) at the local level. The study finds that fiscal decentralization has promoted allocative efficiency and equity but at a cost of exporting tax burdens (operations and maintenance) to the central government emanating from capital projects implemented at the local level. The exported tax burdens have policy implications and call for reforms of the CDF program to reflect a benefit-expenditure structure.
    Keywords: fiscal decentralization; budget;devolution; constituency development fund; health care; allocative efficiency
    JEL: H77 H0 H7 H5 H2 A10
    Date: 2008–10–10
  8. By: Bhaduri, Anik; Perez, Nicostrato; Liebe, Jens
    Abstract: The paper explores the scope and sustainability of a self-enforcing cooperative agreement in the framework of a game theoretic model, where the upstream and downstream country, Burkina Faso and Ghana respectively in the Volta River Basin, bargain over the level of water abstraction in the upstream. In the model we consider the case where the downstream country, Ghana, offers a discounted price for energy export to the upstream country, Burkina Faso, to restrict its water abstraction rate in the upstream. The paper examines the benefits and sustainability of such self-enforcing cooperative arrangements between Ghana and Burkina Faso given stochastic uncertainty in the river flow. The findings of the paper suggest that at the present condition, the marginal benefit of Burkina Faso from increasing the water abstraction is much higher than that of Ghana€ٳ marginal loss. However, the paper finds that if both countries€٠water abstraction rates are at a much higher level, then the marginal loss of Ghana increases phenomenally from similar increase in water abstraction rate by Burkina Faso. Under such circumstances, there is an opportunity for Ghana to provide side payments in terms of discounted export price of power in order to motivate Burkina Faso to restrict water abstraction.
    Keywords: Bargaining, Cooperation, Transboundary, Uncertainty, Volta River Basin, Demand and Price Analysis, Environmental Economics and Policy, Risk and Uncertainty,
    Date: 2008–09–19
  9. By: Fida Karam (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: In this paper, I run a computable general equilibrium (CGE) model of the Moroccan economy to investigate the transmission channels through which remittances affect households and sectors. I give a particular attention to the investment of remittances in the real estate sector, by allowing a segmentation of the savings market. To begin with, I assess the negative impact of immigration restrictive policies and permanent migration on the future evolution of remittances. Then I ask what would be the appropriate policies to take the maximum profit from current flows. It turns out that channelling investment from real estate to productive sectors is unexpectedly harmful in terms of growth and welfare. Positive effects stem only from government ability to attract investors through an improvement in the country risk premium, and private efforts to reduce international transfer costs.
    Keywords: Sequential Dynamics; Computable General Equilibrium Model; Migration; Remittances.
    Date: 2008–02–04
  10. By: Edward F. Buffie (Department of Economics, Indiana University); Manoj Atolia (Department of Economics, Florida State University)
    Abstract: Many LDCs suffer from low levels of private investment, from acute shortages of social and physical infrastructure, and from widespread poverty and underemployment. How can trade policy help combat these problems? Neoclassical trade theory objects that the premise of the question is incorrect. According to the Principle of Targeting, it is better to use other policy instruments to counteract market imperfections and to target social objectives. Instead of interfering with free trade, the government should increase domestic taxes to pay for employment subsidies, investment subsidies, transfers to the poor, and additional public investment in infrastructure. Policy makers reject this advice as impractical. Our objective in this paper is to restart the policy dialogue. We build a dynamic general equilibrium trade model that is rich in structural detail and policy instruments but not a black box. We use the model to investigate how trade policy affects poverty, underemployment, aggregate capital accumulation, and real output in Zambia. The results consistently recommend policy packages that combine an escalated structure of protection with an escalated structure of export promotion. There is no support for the view that free trade or a low uniform tariff is approximately optimal.
    Date: 2008–01
  11. By: Majerová, Ingrid
    Abstract: The Developing world suffers from the economic delay behind developed economies which is allied with poverty, a high pace of population growth, illiteracy, malnutrition and the degradation of environment. This fact requires more and more international development aid that should lead to sustainable development, to a larger participation of dwellers on public decisions and to a deceleration of increase of population. However, the reality is often different. Since nearly half a century poor countries are smothered by big financial gifts and resources, banked by a lot of advisors, experts and administrators but the living standard in these countries has almost not increased. Development projects of various countries and international organizations are often failing in the phase of realization and financial resources are disappearing in the hands of political representatives of these states. The efficiency of development aid is in reality debatable as the level of these states is almost not changing and the question whether international aid stimulates economic growth and instigates an efficiency of the economy of receiver remains.
    Keywords: history of development aid; development cooperation; programs of development aid; Official Development Assistance; foreign development cooperation
    JEL: F35 O19
    Date: 2008–08–06
  12. By: Saikou Amadou Diallo (Department of Economics, University of Ottawa); Paul Makdissi (Department of Economics, University of Ottawa)
    Abstract: In this paper, we use consumption dominance curves, a tool developed by Makdissi and Wodon (2002) in order to assess the redistributive impact of electricity subsidies in Guinea. The data in the 'Enquête Intégrée de Base pour l'Évaluation de la Pauvreté (EIBEP) 2002-2003’ show that subsidizing electricity is not consistent with a poverty reduction objective. Dans cet article, nous utilisons des courbes de dominance de consommation développées par Makdissi et Wodon (2002) afin d'analyser l'impact distributif des subsides d’électricité instaurées par le gouvernement guinéen. L'Enquête Intégrée de Base pour l'Évaluation de la Pauvreté (EIBEP) 2002-2003 nous permet de conclure que ces subsides ne peuvent être justifiés dans un contexte de lutte à la pauvreté.
    Keywords: Subsidy, Marginal Fiscal reform, Guinea
    JEL: D12 D63 I21 I32
    Date: 2008
  13. By: Nabi, Mahmoud Sami; Suliman, Mohamed Osman
    Abstract: This paper seeks to provide some theoretical and empirical answers to the following question: Does the institutional environment affect the causality relationship between banking development and economic growth? In the theoretical part, we develop an endogenous growth model where the institutional environment is captured through two indicators: the judicial system efficiency and the easiness of informal trade. We show that an improvement of the institutional environment has two effects. First, it intensifies the causality direction from banking to economic growth through a reduction of defaulting loans. Second, it reduces the interest rate spread. In the empirical part, considering twenty-two MENA countries over the period 1984-2004, we find a bi-directional causality. The first one, which runs from banking development to economic growth, is more intense in countries with a more developed institutional environment. The second causality runs from economic growth to banking and indicates that a more developed economy has a more developed banking system.
    Keywords: Banking; Growth; Institutions; MENA.
    JEL: O41 O17 O16
    Date: 2008–04
  14. By: Michael Grimm (ISS, The Hague / The Netherlands); Stephan Klasen (Georg-August-Universität / Göttingen); Ken Harttgen (Georg-August-Universität / Göttingen); Mark Misselhorn; Teresa Munzi; Timothy Smeeding
    Abstract: One of the most frequent critiques of the HDI is that it does not take into account inequality within countries in its three dimensions. We use a simple approach, which allows to compute the three components and the overall HDI for quintiles of the income distribution. This allows to compare the level in human development of the poor with the level of the non-poor within countries, but also across countries. This is an application of the method presented in Grimm et al. (2008) to a sample of 21 low and middle income countries and 11 industrialized countries. Our results show that inequality in human development within countries is high both in developed and industrialized countries. In fact, the HDI of the lowest quintiles in industrialized countries is often below the HDI of the richest quintile in many middle income countries. We also find, however, a strong overall negative correlation between the level of human development and inequality in human development.
    Keywords: Human Development, Income Inequality, Differential Mortality, Inequality in Education
    Date: 2008–10–17
  15. By: Zamo-Akono, C. Zamo-Akono
    Abstract: Many studies report empirical relationship either between fertility and labour supply or, between health and labour market outcomes. In this paper, an extension of these ideas involves explicitly considering how fertility and health affect each other, and how they interrelate with labour force participation. A unifying framework is provided and a simultaneous three equations model developed to capture the interdependence between these variables as well as their respective determinants. The model is estimated using a cross-section data set obtained from a survey of the urban Cameroon population. The results indicate that: (i) fertility and health status are significantly interrelated, thus separate estimations of fertility (or health status) and participation will produce misleading results; (ii) working in either sector of the labour market significantly reduces fertility but, unlike many previous studies, fertility has a positive impact on the probability of labour force participation; (iii) there is strong evidence that health and disability status is a significant determinant of employment, but the reverse depend on the labour market sector and on the health indicator used.
    Keywords: Fertility; self-reported health; disability; labour supply; limited dependent variable
    JEL: J2 I1
    Date: 2008–06

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