nep-afr New Economics Papers
on Africa
Issue of 2009‒05‒02
ten papers chosen by
Quentin Wodon
World Bank

  1. Evaluating Africa’s comparative advantage in travel service exports By Johan Fourie
  2. Colonial Experience and Postcolonial Underdevelopment in Africa By Nobuhiro Mizuno; Ryosuke Okazawa
  3. Infrastructure Choices in Education: Location, Build or Repair By Armin Zeinali; Glenn Jenkins; Andrey Klevchuk
  4. Strategy Options for Angola's Agricultural Sector after 27 Years of War: A Perception Based Field Study By Cambuta, Gomes A.
  5. Changing Incentives to Sow Cotton for African Farmers: Evidence from the Burkina Faso Reform By Kaminski, Jonathan
  6. Entrepreneurship and Income Inequality in Southern Ethiopia By Kimhi, Ayal
  7. Revitalizing and Modernizing Smallholder Agriculture for Food Security, Rural Development and Demobilization in a Post-War Country: The Case of the Aldeia Nova Project in Angola By Kimhi, Ayal
  8. Heckle and Chide: Results of a Randomized Road Safety Intervention in Kenya By James Habyarimana; William Jack
  9. Wealth, Living Standards and Perceptions in a Cotton Economy: Evidence from the Cotton Reform in Burkina Faso By Kaminski, Jonathan
  10. Is Nigeria Ready for Inflation Targeting? By Aliyu, Shehu Usman Rano; Englama, Abwaku

  1. By: Johan Fourie (Department of Economics, University of Stellenbosch)
    Abstract: This paper tests the hypothesis that African countries reveal a comparative advantage in travel service exports empirically. The UNCTAD 2007 Handbook of Statistics (2008) is used to calculate revealed comparative advantage for 186 countries over 10 tradable service sectors using three different measures of the Balassa index. The results indicate that many African countries reveal a strong comparative advantage in travel service exports. Particularly, a band of countries with a vertical axis from South Africa to Ethiopia and a band of countries with a horizontal axis in the Sahel reveal promising results. If African countries are to benefit from the growth in world service exports, researchers and policy makers should note the massive potential for African travel exports, especially in the smaller destinations. Policies – including regional initiatives – to promote sustained growth in travel service exports are therefore of critical importance.
    Keywords: Tourism, international trade, revealed comparative advantage, sub-Saharan Africa
    JEL: L83 F14 N77
    Date: 2009
  2. By: Nobuhiro Mizuno (Graduate School of Economics, Kyoto University); Ryosuke Okazawa (Graduate School of Economics, Kyoto University)
    Abstract: IIn this paper, we analyze the connection between the history of colonial rule and postcolonial development in Africa. We focus on the fact that many African colonies were governed by indirect rule. Under indirect rule, indigenous people are divided into two groups: a privileged ruling group and an unprivileged ruled group. Our model assumes that the ruled group cannot observe how their deprived resources are divided between the metropolitan ruler and the ruling group. In this economy, a large level of exploitation by the metropolitan ruler yields distrust among indigenous groups and creates a negative effect on postcolonial economic and political development.
    Keywords: Africa, colonialism, indirect rule, colonial legacies, ethnic conflict
    JEL: D74 N47 O10
    Date: 2009–04
  3. By: Armin Zeinali (Department of Economics, Queen's University, Canada); Glenn Jenkins (Queen's University, Kingston, On, Canada, Eastern Mediterranean University, North Cyprus); Andrey Klevchuk (Cambridge Resources International Inc.)
    Abstract: The purpose of this study is to develop a model to arrive at a joint optimizing strategy for the use of a given capital budget for the construction of new school buildings and for the repair of the already existing schools. This is to be done in a way that will have the maximum positive impact on the enhancement of the education system. Cost effectiveness analysis is used as the main analytical tool in the analysis. A key factor of the model is that it gives one the optimal mix of repair versus new construction that should be undertaken under a fixed budget constraint. The model is simulated using a sample data set from the information available for the education sector of Limpopo Province, South Africa. It utilizes a very basic set of information that is available in all school districts across the province. Application of this model for the selection of infrastructure investments (either building or repair) in the education sector would increase the efficiency of capital expenditure in this sector. This is particularly the case for the countries that are faced with a large excess demand for school buildings.
    Keywords: education, cost effectiveness, school location, school construction, school repair, South Africa
    JEL: D61 I28 H52 H75
    Date: 2009–04
  4. By: Cambuta, Gomes A.
    Abstract: The decline in agricultural output over the years and the subsequent pervasive food crisis in most of Africa have motivated governments and international organizations to develop a variety of strategies, policy alternatives and programs aimed at promoting agricultural production and food security. Many of these strategies have been conceived and implemented by international organizations, and in some cases the strategies have fail to address the root cause of failure of the agricultural sector to perform to its potential. Therefore, this field study uses scenario analysis to engage key players in the agriculture industry to identify causes of Angolaâs loss of production capacity over the years, the factors needed to revitalize the agricultural-led economy, factors that can help stabilize the agricultural sector and conditions required for the development and coordination of the food supply chain in Angola. The framework provided in the paper was based on an evaluation of perceptions of future demand for locally produced agricultural products; the countryâs supply response capability; the role of the informal and formal markets; infrastructure needs; and the development of formal supply chains for domestic and export markets. The methodology used was an adaptation of a methodology used in Industry Strategic Planning and Coordination, and the Technological Demands Determination by Prospective Analysis. The study revealed that in spite of its high resource endowment, Angola will first need to address institutional and structural agricultural development constraints and develop systems that allow better coordination of development efforts among institutions, before it is able to produce food for export markets. The development priority for the next five years includes creating conditions that stimulate local production, help the country produce enough to become food self sufficient, and gradually reduce food imports. Nevertheless, the production for import substitution should not preclude efforts towards targeting export niche markets.
    Keywords: Agricultural and Food Policy,
    Date: 2009
  5. By: Kaminski, Jonathan
    Abstract: Over the last 10 years, Burkina Faso has experienced a reform of its cotton sector, and is now the largest African cotton producer and exporter. The cotton âboomâ consisted of a rapid expansion of cotton areas through the growth of land shares allocated to cotton (and new producers), together with an overall increase in total cultivated land. In this paper, we present an empirical framework to determine the contribution of total farmland changes in the increase of land dedicated to cotton, where both processes are represented by ordered endogenous variables. We then analyze data that we collected in rural Burkina Faso in March 2006 within this framework. From measurable indicators of farmer behavior and variables that measure farmer statements for the reasons of this behavior, we are able to identify both direct and indirect effects of the cotton reform on the extensive growth of cotton seed production. They are namely mechanization and technical assistance, labor intensification, enhanced managerial abilities (learning by doing and better environment for farmers), production incentives arising from the new local organizations of producers, guarantees and confidence stemming from the sector and an easier access to agricultural inputs.
    Keywords: parastatal, Burkina Fasoâs cotton, land extension, privatization,
    Date: 2008–12
  6. By: Kimhi, Ayal
    Abstract: This paper uses inequality decomposition techniques in order to analyze the consequences of entrepreneurial activities to household income inequality in Southern Ethiopia. A uniform increase in entrepreneurial income reduces per capita household income inequality. This implies that encouraging rural entrepreneurship may be favorable for both income growth and income distribution. Such policies could be particularly successful if directed at the low-income, low-wealth, and relatively uneducated segments of the society.
    Date: 2009–02
  7. By: Kimhi, Ayal
    Abstract: The Aldeia Nova project aimed at demobilizing ex-combatants to remote areas and settling them in modern agricultural communities. Three years since the first settlers arrived at the Waku-Kungu valley, 600 families are using modern agricultural technology to produce milk, eggs and vegetables which are marketed in the urban centers of Angola. These families earn a decent living and provide employment to hundreds of others. The entire area was revitalized with thousands of families pouring in to enjoy the benefits of the booming local economy. This paper presents the concept of the Aldeia Nova project, describes its evolution, and discusses its strengths and weaknesses. It concludes that the benefits of the project go far beyond its measureable economic impact, and that its ambitious goals are not beyond the reach of the Angolan people.
    Keywords: Smallholder agriculture, Rural development, Food security, Technology adoption, Cooperation, Demobilization, Reconciliation, Angola., Food Security and Poverty,
    Date: 2009
  8. By: James Habyarimana; William Jack
    Abstract: In economies with weak enforcement of traffic regulations, drivers who adopt excessively risky behavior impose externalities on other vehicles, and on their own passengers. In light of the difficulties of correcting inter-vehicle externalities associated with weak third-party enforcement, this paper evaluates an intervention that aims instead to correct the intra-vehicle externality between a driver and his passengers, who face a collective action problem when deciding whether to exert social pressure on the driver if their safety is compromised. We report the results of a field experiment aimed at solving this collective action problem, which empowers passengers to take action. Evocative messages encouraging passengers to speak up were placed inside a random sample of over 1,000 long-distance Kenyan minibuses, or matatus, serving both as a focal point for, and to reduce the cost of, passenger action. Independent insurance claims data were collected for the treatment group and a control group before and after the intervention. Our results indicate that insurance claims fell by a half to two-thirds, from an annual rate of about 10 percent without the intervention, and that claims involving injury or death fell by at least 50 percent. Results of a driver survey eight months into the intervention suggest passenger heckling was a contributing factor to the improvement in safety.
    Keywords: Kenya, traffic, driving regulations, matatus, safety
    Date: 2009–04
  9. By: Kaminski, Jonathan
    Abstract: The cotton economy of Burkina Faso has been characterized by a changing rural environment for farmers since late nineties, which has come with the cotton reform and the resulting cotton boost. There have been slight improvements in living standards and rural householdsâ income while the subjective feeling of wealth has significantly increased. In this paper, I explore the channels through which the elements of the changing rural environment can bridge the wedge between subjective and objective measures of wealth. In addition to the basic determinants of subjective welfare that can be found in the happiness economics literature, namely absolute and relative income measures, health and social status (and expectations of future incomes), I investigate the empirical validity of institutional and technological change as well as the perceptions about the reform. I propose a bivariate ordered Probit model to deal with endogenous covariant perceptions in the assessment of subjective wealth. I find that the significantly positive evolution of subjective wealth has been driven by the relative measure of income, the feeling of progress through institutional and technological improvements and by enthusiastic perceptions about the reformâs effects on poverty alleviation and welfare. This evolution has been altered by the beliefs about a larger input access and better agricultural abilities resulting from the reform (comparison effect).
    Keywords: subjective wealth, Burkina Faso's cotton, rural development, agricultural policy, perceptions, I32, O13, Q16, Q18,
    Date: 2008–12
  10. By: Aliyu, Shehu Usman Rano; Englama, Abwaku
    Abstract: This paper evaluates whether Nigeria is ready to adopt inflation targeting (IT), a monetary policy framework that several emerging markets have adopted over the last one decade. The paper reviewed literature on selected conditions for successful implementation of IT and then focused on whether one specific precondition of an empirically stable monetary transmission mechanism is tenable. Vector autoregressive (VAR) model was applied using select monetary policy and other macroeconomic variables to explore the various channels using the Granger causality tests, impulse responses, and variance decompositions. Results showed that inflation in Nigeria is impassive to monetary transmission variables in the model. Specifically, weak link between prices and credit and interest rate channels were established. However, evidence of strong inverse link between exchange rate and prices was found in the model. This suggests exchange rate pass-through on the level of prices in the economy. The paper, therefore, recommends the pursuance of IT lite in Nigeria.
    Keywords: Inflation targeting; vector autoregressive model; Granger causality test; monetary transmission mechanism; exchange rate pass-through.
    JEL: E31 E37
    Date: 2009–01–03

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