nep-afr New Economics Papers
on Africa
Issue of 2009‒08‒22
eleven papers chosen by
Quentin Wodon
World Bank

  1. Globalization, Financial Depth, and Inequality in Sub-Saharan Africa By Hisako KAI; Shigeyuki HAMORI
  3. "From Unpaid to Paid Care Work--The Macroeconomic Implications of HIV and AIDS on Women's Time-tax Burdens" By Rania Antonopoulos; Taun N. Toay
  4. Is Water Shedding Next? By James Blignaut; Jan van Heerden
  5. "The Unequal Burden of Poverty on Time Use" By Burca Kizilirmak; Emel Memis
  6. Aid, Spending Strategies and Productivity Effects – A Multi-sectoral CGE Analysis for Zambia By Volker Clausen; Hannah Schürenberg-Frosch
  7. Democracy and voting survey: first results from Ethiopia By Marie-Anne Valfort
  8. Disease, Institutions and Underdevelopment By Hasan, Lubna
  9. THE IMPACT OF AN ELECTRICITY GENERATION TAX ON THE SOUTH AFRICAN ECONOMY By Reyno Seymore; Philip David Adams; Margaret Mabugu; Jan van Heerden; James Blignaut
  10. Stagnation of a “Miracle”:Botswana’s Governance Record Revisited By Christian von Soest
  11. Does Positional Concern Matter in Poor Societies? Evidence from a Survey Experiment in Rural Ethiopia By Akay, Alpaslan; Martinsson, Peter; Medhin, Haileselassie

  1. By: Hisako KAI (Graduate School of International Cooperation Studies Kobe University); Shigeyuki HAMORI (Faculty of Economics Kobe University)
    Abstract: This paper examines the relationship between globalization, financial deepening, and inequality in sub-Saharan Africa between 1980 and 2002. We provide the first detailed econometric analysis in this regard covering the entire sub-Saharan African region; such an analysis has hardly been conducted owing to the lack of relevant data. We find that while globalization deteriorates inequality, its disequalizing effect depends on the level of development of the country. Further, this paper confirms that globalization deteriorates the equalizing effect of financial depth, although the latter helps to reduce inequality. We conclude that in sub-Saharan Africa, as a result of globalization, the rich have become richer and the poor have become poorer.
    Keywords: Globalization, Financial Depth, Inequality, Sub-Saharan Africa
    JEL: F40 O10
    Date: 2009–08
  2. By: Reyno Seymore (Department of Economics, University of Pretoria); Margaret Mabugu (Department of Economics, University of Pretoria); Jan van Heerden (Department of Economics, University of Pretoria)
    Abstract: The South African Government announced, in the 2008 Budget Review, the intention to tax the generation of electricity from non-renewable sources with 2c/kWh. This tax is to be collected by the producers/generators of electricity at the source. The intention of the tax is to serve a dual purpose of managing the potential electricity shortages in South Africa and to protect the environment. The primary objective of this paper is to evaluate the impact of an electricity generation tax on the international competitiveness of South Africa. Specifically, different scenarios are assessed to establish whether the loss of competitiveness can be negated through an international, multilateral electricity generation tax. The paper firstly considers the beneficial impact of environmental taxation on the competitiveness of a country. We subsequently apply the Global Trade Analysis Project (GTAP) model to evaluate the impact of an electricity generation tax on the competitiveness of South Africa, given multilateral taxes on SACU, SADC and European Union economies. We simulate the proposed tax as a 10 percent increase in the output price of electricity. We assume a closure rule that allows unskilled labour to migrate between sectors and a limited skilled workforce. As expected, a unilateral electricity generation tax in South Africa will adversely affect the competitiveness of the South African economy and slightly improve the competitiveness of the other SACU and SADC economies. However, if a multilateral tax is imposed throughout the SACU and SADC countries, South Africa will experience a marginally greater loss of competitiveness compared to a unilateral tax. At the same time the rest of the SACU and SADC countries will experience a loss of competitiveness. The benefit of emission reduction in South Africa will also be lower under these multilateral tax scenarios. The competitiveness effect on the South African economy as well as emission reduction will be more moderate under a multilateral South Africa/EU electricity generation tax than under a unilateral South African tax.
    Date: 2009–08
  3. By: Rania Antonopoulos; Taun N. Toay
    Abstract: This paper considers public employment guarantee programs in the context of South Africa as a means to address the nexus of poverty, unemployment, and unpaid work burdens--all factors exacerbated by HIV/AIDS. It further discusses the need for genderinformed public job creation in areas that mitigate the "time-tax" burdens of women, and examines a South African initiative to address social sector service delivery deficits within the government's Expanded Public Works Programme. The authors highlight the need for well-designed employment guarantee programs--specifically, programs centered on community and home-based care--as a potential way to help offset the destabilizing effects of HIV/AIDS and endemic poverty. The paper concludes with results from macroeconomic simulations of such a program, using a social accounting matrix framework, and sets out implications for both participants and policymakers.
    Date: 2009–08
  4. By: James Blignaut (Department of Economics, University of Pretoria); Jan van Heerden (Department of Economics, University of Pretoria)
    Abstract: South Africa is in the grip of an electricity crisis marked by a euphemism known as “load shedding”. The demand for electricity has grown to the point that the supply reserve margin is often under threat, necessitating the electricity supplier to cut supply to some areas for various periods of time, or to shed load. This is a condition previously unknown to South Africa since the country has enjoyed electricity security from the mid-1950s. Are we, however, heading in the same direction when considering water? Is water shedding inevitable? We ask these questions since South Africa is a country classified has having chronic water shortages, a condition exacerbated by climate change and the rapidly increasing demand for water. Can we avert a water shedding crisis by being proactive? In this paper we address this issue by applying a Computable General Equilibrium (CGE) model using an integrated database comprising South Africa’s Social Accounting Matrix (SAM) and sectoral water use balances. We refer to AsgiSA, the governments’ Accelerated and Shared Growth Initiative in South Africa, and conclude that continuing business as usual will indeed lead to a situation where water shedding will be inevitable. Unlike electricity, however, water security is much more serious from livelihood, health and socio-economic development perspectives since there are no substitutes for it, although its influence is not directly and immediately visible. This delayed effect can create a degree of comfort and ill-founded complacency leading to non-action, whereas there is an urgent need for proactive measures.
    JEL: D58 Q5
    Date: 2009–08
  5. By: Burca Kizilirmak; Emel Memis
    Abstract: This study uses the first time-use survey carried out in South Africa (2000) to examine women's and men's time use, with a focus on the impacts of income poverty. We empirically explore the determinants of time spent on different paid and unpaid work activities, including a variety of household and individual characteristics, using bivariate and multivariate Tobit estimations. Our results show asymmetric impacts of income poverty on women's and men's time use. Time-use patterns of South African women and men reveal the unequal burden of income poverty among household members. While being poor increases the amount of time women spend on unpaid work, we do not see any significant impact on men's unpaid work time. For example, women in poor households spend more time than men collecting water and fuel, as well as maintaining their homes.
    Date: 2009–08
  6. By: Volker Clausen; Hannah Schürenberg-Frosch
    Abstract: Numerous econometric studies fail to detect a signicant and robust relationship between international aid and economic growth in the recipient countries. Dutch Disease effects might be responsible for this result.This paper examines the relation between aid and its effectiveness in a multi-sector multihousehold Computable General Equilibrium (CGE)-framework. Given that international transfers to African countries increasingly take the form of general financial support to the government, different spending strategies and their macroeconomic, sectoral and distributional effects are evaluated in a two-stage simulation making a distinction between immediate direct effects and possible long-run effects from increased productivity. While the model simulates the effects of additional aid in Zambia it can be used as a blueprint for other African countries.
    Keywords: Foreign aid, applied general equilibrium, Zambia, Dutch Disease, productivity
    JEL: O19 O55 F35
    Date: 2009–07
  7. By: Marie-Anne Valfort (LEEP - Laboratoire d'econometrie de l'école polytechnique - CNRS : UMR7657 - Polytechnique - X)
    Abstract: This working paper contains the first results of a questionnaire that was conducted in May 2004 (May, 8-9) among 331 students of the Addis Ababa University to know their opinion about democracy and the political preferences they express through voting. The paper takes the form of the questionnaire itself in which we included, for each question, the corresponding first statistical results that we get. We create a synthetic table of content as well as an index at the end of the document to facilitate for the reader an easy access to the information he may be looking for.
    Keywords: Africa, Altruism, Equity, Ethiopia, Institution design, Public goods, Voting behaviour
    Date: 2009–04–15
  8. By: Hasan, Lubna
    Abstract: What explains poverty of Sub Saharan Africa and South Asia? One view holds the disease environment of these regions as the primary culprit. Others see it as a typical symptom of growth retarding institutions. We test validity of these competing assertions for a cross section of countries. Our results indicate that institutions are the prime determinant of economic performance of countries. Disease does not play a significant role in determining outcomes. On the contrary, we find support for the indirect effect of disease via institutions, as asserted by the 'institutions school'. Interestingly, the 'institutions school' contention about geography having no direct effect on income is also not validated. Our results show that being land locked can pose significant disadvantage for a country. Endowment of hydrocarbon, however, is beneficial for economic outcomes.
    Keywords: Economic Performance; Institutions; Disease
    JEL: O43 I10
    Date: 2009–08–19
  9. By: Reyno Seymore (Department of Economics, University of Pretoria); Philip David Adams (Centre of Policy Studies, Monash University); Margaret Mabugu (Department of Economics, University of Pretoria); Jan van Heerden (Department of Economics, University of Pretoria); James Blignaut (Department of Economics, University of Pretoria)
    Abstract: In the 2008 budget of the Minister of Finance, the South African Government proposed to impose a 2 cents/kilowatt-hour (c/kWh) tax on the sale of electricity generated from non-renewable sources; this tax is to be collected at source by the producers/generators of electricity. The intention of this measure is to serve a dual purpose of protecting the environment and helping to manage the current electricity supply shortages by reducing demand. The objective here is to evaluate the impact of such an electricity generation tax on the South African, SACU and SADC economies. The paper firstly considers the theoretical foundations of an electricity generation tax supported by international experiences in this regard. This section also contrasts the suitability of a permit with a tax system to achieve CO2 emission reduction. We subsequently apply the Global Trade Analysis Project (GTAP) model to evaluate the impact of an electricity generation tax on the South African, SACU and SADC economies. We simulate the proposed tax as a 10 percent increase in the output price of electricity. We assume a closure rule that allows unskilled labour to migrate and a limited skilled workforce. As expected, the electricity generation tax will reduce demand. Due to the decrease in domestic demand, export volume increases and import volume decreases, this is despite a weaker terms of trade. We also found that unemployment for unskilled labour increases and wages of skilled workers are expected to decrease. A unilateral electricity generation tax will benefit other SACU and SADC countries through an improvement in relative competitiveness, as shown by the improvement of the terms of trade for these regions. If, however, the benefits of pollution abatement are internalised, then electricity generation tax is expected to yield a positive effect on the South African economy.
    Date: 2009–08
  10. By: Christian von Soest (GIGA Institute of African Affairs)
    Abstract: Botswana has been dubbed an “African miracle.” The country has been praised not only for maintaining a multiparty system and high growth rates since independence but also for its good governance record. In contrast to other African countries, the extent of neopatrimonialism, which runs counter to good governance, is said to be low. This article aims to a) precisely assess Botswana’s neopatrimonial profile and b) put forward explanations for the comparatively low level of neopatrimonialism and for the recent “stagnation of a miracle.” The paper finds that there have always been neopatrimonial tendencies in Botswana, though they have been largely overlooked by mainstream analyses. The crucial difference is the limited nature of these tendencies relative to other African countries. This can be attributed to the independence period, characterized by the homogeneity of political, economic, and administrative interests in safeguarding private property rights through a “strong” rational-legal state, that is, by limiting neopatrimonialism. Financed by massive revenues stemming from diamonds, the Southern African Customs Union (SACU), and the Bank of Botswana, the government of the Botswana Democratic Party (BDP) was able to secure its reign through the provision of public goods and limited neopatrimonial exchange relations. However, due to decreasing electoral dominance and elite cohesion, the ruling party is now reverting to some neopatrimonial and authoritarian means in order to safeguard its rule.
    Keywords: neopatrimonialism, corruption, governance, institutions, interests, development, Botswana
    Date: 2009–04
  11. By: Akay, Alpaslan (IZA); Martinsson, Peter (University of Gothenburg); Medhin, Haileselassie (University of Gothenburg)
    Abstract: We investigated attitudes toward positionality among rural farmers in Northern Ethiopia, using a tailored survey experiment. On average, we found positional concerns neither in income per se nor in income from aid projects among the farmers. These results support the claim that positional concerns are positively correlated with absolute level of income of a country.
    Keywords: Ethiopia, positional concern, relative income
    JEL: C90 D63
    Date: 2009–08

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