nep-afr New Economics Papers
on Africa
Issue of 2009‒12‒19
sixteen papers chosen by
Quentin Wodon
World Bank

  1. South Africa’s Trade and Growth By Przemyslaw Kowalski; Ralph Lattimore; Novella Bottini
  2. Migration, Poverty Reduction Strategies and Human Development By Black, Richard; Sward, Jon
  3. Economic Development, Institutional Quality and Regional integration: Evidence from Africa Countries. By Enowbi Batuo, Michael; Fabro, Gema
  4. Human Development Impacts of Migration: South Africa Case Study By Landau, Loren B.; Segatti, Aurelia Wa Kabwe
  5. Democratisation via elections in an African 'narco state'? The case of Guinea-Bissau By Kohnert, Dirk
  6. A Model of West African Millet Prices in Rural Markets By Molly E. Brown; Nathaniel Higgins; Beat Hintermann
  7. South-South Migration and Human Development: Reflections on African Experiences By Bakewell, Oliver
  8. HUMAN CAPITAL AND GROWTH: NEW EVIDENCES FROM AFRICAN DATA By Dorothée Boccanfuso; Luc Savard; Bernice E. Savy
  9. Nonparametric Bounds on Returns to Education in South Africa: Overcoming Ability and Selection Bias By Martine Mariotti; Juergen Meinecke
  10. Testing the weak-form market efficiency and the day of the week effects of some African countries. By Batuo Enowbi, Michael; Guidi, Francesco; Mlambo, Kupukile
  11. Foreign ownership, sales to multinationals, and firm efficiency: The Case of Brazil, Morocco, Pakistan, South Africa, and Vietnam By Kinda, Tidiane
  12. Individual Ability and Selection into Migration in Kenya By Miguel, Edward; Hamory, Joan
  13. Development Assistance, Institution Building, and Social Cohesion after Civil War: Evidence from a Field Experiment in Liberia By James Fearon; Macartan Humphreys; Jeremy Weinstein
  14. Bank competition, risk taking and productive efficiency: Evidence from Nigeria's banking reform experiments By Murinde, Victor; Zhao, Tianshu
  15. The Links between Poverty and the Environment in Malawi By Bentry Mkwara; Dan Marsh
  16. Estimating the fiscal costs of implementing Ghana's single pay spine reform By Cavalcanti, Carlos

  1. By: Przemyslaw Kowalski; Ralph Lattimore; Novella Bottini
    Abstract: This paper examines key trade and trade related issues facing South Africa. It describes South Africa‘s re-entry into the global trade architecture and its economic growth in the context of its trade performance, as well as the composition and performance of South African exports at the product and sector level in the period from the early 1990s to 2006. The study also assesses South Africa‘s comparative trade performance based on a gravity model of international trade and discusses some key historical and recent trade policy developments. Finally, the study provides an econometric assessment of the impact of South Africa‘s trade liberalisation during the period from 1988 to 2003 on labour and total factor productivity across its industrial sectors. It shows that while South African trade performance has been good in recent years there is significant room to liberalise further as an adjunct to labour market reforms. Further trade policy liberalisation would bring about important equity and efficiency gains. Multilateral trade liberalisation has the potential to maximise the gains and ease the transition to freer trade for South Africa but unilateral liberalisation also deserves consideration.
    Keywords: dynamic gains from trade, gravity model, productivity, regional integration, revealed comparative advantage, South Africa, tariffs, trade network, trade performance, trade
    Date: 2009–09–07
  2. By: Black, Richard; Sward, Jon
    Abstract: This paper focuses on the specific question of how Poverty Reduction Strategy Papers (PRSPs) address migration and its potential to enhance human development at the national level. Based on a review of PRSPs completed since 1999, it argues that migration often remains poorly recognised or analysed in poorer countries in terms of its impacts on poverty reduction, whilst attitudes towards migration in these countries are often highly negative and/or based on limited evidence, especially in relation to internal migration. Analysis of how both internal and international migration are treated in PRSPs is also placed in the context of a broader understanding of the purpose of, and constraints faced by the PRS process. The paper goes on to highlight the extent to which in Sub-Saharan African countries, successive drafts of PRSPs have shown increasing attention to migration. It also considers how analysis of the problems and opportunities associated with different types of migration are converted into policy initiatives, highlighting the lack of good practice in terms of the incorporation of migration into human development policy.
    Keywords: Poverty Reduction Strategy Papers (PRSPs); internal migration; international migration; sub-Saharan Africa; analysis of migration
    JEL: O15
    Date: 2009–08–01
  3. By: Enowbi Batuo, Michael; Fabro, Gema
    Abstract: The aim of this paper is to provide new empirical evidence about the determinants of per capita income in African countries, with particular attention to the affects of governance institutional quality and sub regional integration on income level. We use a sample of 49 countries from the period 1996-2004 and the Generalized Method of Moments Estimation model for dynamic panel, proposed by Arellano and Bond (1991). The results show that African regional groups with better institutions, higher degrees of regional integration cooperation, higher rates of investment in human capital and lower rates of population growth, show a higher level of per capita income
    Keywords: Sub-Regional Integration; Institutional Quality; Economic development
    JEL: O55 O43 C33 O12
    Date: 2009–11
  4. By: Landau, Loren B.; Segatti, Aurelia Wa Kabwe
    Abstract: Controls on human mobility and efforts to undermine them continue to shape South Africa’s politics, economy, and society. Despite the need for improved policy responses to human mobility, reform is hindered by lack of capacity, misinformation, and anti-migrant sentiments within and outside of government. This report outlines these trends and tensions by providing a broad overview of the limited demographic and socio-economic data available on migration to and within South Africa. Doing so highlights the spatialised aspects of human mobility, trends centred on and around the country’s towns and cities. It also finds significant development potential in international migrants’ skills and entrepreneurialism. By enhancing remittances and trade, non-nationals may also expand markets for South African products and services. Despite these potential benefits, there are severe obstacles to immigration reform. These include a renewed South African populism; the influence of a strong anti-trafficking lobby; a European Union (EU) agenda promoting stricter border controls; poor implementation capacity; and endemic corruption among police and immigration officials. There are different, but equally significant problems in reforming frameworks governing domestic mobility including perceptions that in-migration is an inherent drain on municipal budgets. Recognising these limitations, the report concludes with three recommendations. (1) A conceptual reconsideration of the divisions between documented and undocumented migrants; between voluntary and forced migrants; and between international and domestic migration. (2) An analytical respatialisation in future planning and management scenarios involving regional and local bodies in evaluating, designing and implementing policy. (3) To situate migration and its management within global debates over governance and development and for ‘migration mainstreaming’ into all aspects of governance. The success of any of these initiatives will require better data, the skills to analyse that data, and the integration of data into planning processes.
    Keywords: migration; urbanisation; governance; South Africa; policy reform; capabilities
    JEL: J6 Z1 O15
    Date: 2009–04–01
  5. By: Kohnert, Dirk
    Abstract: Recent development cooperation with Guinea-Bissau, focussing on good governance, state-building and conflict prevention, did not contribute to democratization nor to the stabilization of volatile political, military and economic structures. Both the portrayal of Guinea-Bissau as failed ‘narco state' as well as Western aid meant to stabilize this state are based on doubtful concepts. Certainly, the impact of drug trafficking could endanger democratization and state-building if continued unchecked. However, the most pressing need is not state-building, facilitated by external aid, yet poorly rooted in the social and political fabric of the country, but nation-building by national reconciliation, as a pre-condition for the creation of viable state institutions.
    Keywords: elections; democratization; informal institutions; aid; failed states; nation-building; institution building; drug trafficking; Guinea-Bissau; Africa;
    JEL: N47 Z1 O17 E26 H76 D72 K14
    Date: 2009–12–01
  6. By: Molly E. Brown (NASA Goddard Space Flight Center, Greenbelt, MD, USA); Nathaniel Higgins (University of Maryland, College Park, MD, USA); Beat Hintermann (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)
    Abstract: In this article we specify a model of millet prices in the three West African countries of Burkina Faso, Mali, and Niger. Using data obtained from USAID’s Famine Early Warning Systems Network (FEWS NET) we present a unique regional cereal price forecasting model that takes advantage of the panel nature of our data, and accounts for the flow of millet across markets. Another novel aspect of our analysis is our use of the Normalized Difference Vegetation Index (NDVI) to detect and control for variation in conditions for productivity. The average absolute out-of-sample prediction error for 4-month-ahead millet prices is about 20 %.
    Keywords: Millet, cereal, West Africa, price forecasting, remote sensing, NDVI, regional panel data
    JEL: O13 O18 Q11 Q13 Q17 R32
    Date: 2009–11
  7. By: Bakewell, Oliver
    Abstract: This paper looks at the relationship between migration between developing countries – or countries of the global ‘South’ – and processes of human development. The paper offers a critical analysis of the concept of South-South migration and draws attention to four fundamental problems. The paper then gives a broad overview of the changing patterns of migration in developing regions, with a particular focus on mobility within the African continent. It outlines some of the economic, social and political drivers of migration within poor regions, noting that these are also drivers of migration in the rest of the world. It also highlights the role of the state in influencing people’s movements and the outcomes of migration. The paper highlights the distinctive contribution that migration within developing regions makes to human development in terms of income, human capital and broader processes of social and political change. The paper concludes that the analysis of migration in poorer regions of the world and its relationship with human development requires much more data than is currently available.
    Keywords: Migration; South-South migration; Africa; Human development
    JEL: J6 Z1 O15
    Date: 2009–04–01
  8. By: Dorothée Boccanfuso (GREDI, Faculte d'administration, Université de Sherbrooke); Luc Savard (GREDI, Faculte d'administration, Université de Sherbrooke); Bernice E. Savy (GREDI, Faculte d'administration, Université de Sherbrooke)
    Abstract: Economic theory long acknowledged a positive relation between human capital and economic growth (Smith, 1776; Becker, 1964), which was nevertheless called into question in the late 1990s (Caselli et al. 1996; Pritchett, 2001). The two primary criticisms evoked were the failure to consider diminishing returns to education and qualitative aspects of the stock of human capital. This work aims to redress inadequacies in the literature related to the usual proxy of human capital by advancing a composite indicator of human capital (PCA). This indicator allows for an integration of the qualitative aspects in question and uses the indicator of the stock of human capital (Mincer, 1974) to take diminishing returns into consideration. Adopting the methodology developed by Islam (1995) allows for the impact of human capital to become positive once again in the process of economic growth. The data also reveal a conditional convergence process for the 22 African countries considered over the period 1970 to 2000.
    Keywords: Economic growth, human capital, convergence, Africa
    JEL: O18 O47 O55
    Date: 2009–12–11
  9. By: Martine Mariotti; Juergen Meinecke
    Abstract: Our objective is to estimate the average treatment effect (ATE) of education on earnings for African men in South Africa. Estimation of the ATE in our data is difficult because of omitted ability bias and a high degree of sample selection due to low labor force participation. Manski and Pepper (2000) suggest is a promising nonparametric identification strategy but it only helps with the problem of omitted ability bias. We propose an extension of their identification strategy to deal with the sample selection problem. Accounting for ability and selection bias, we compute upper bounds on the ATE for the years 1995 and 2000. We estimate an upper bound of 12.64 percent in 1995 and 10.68 percent in 2000. Compared to parametric estimation our bounds are informative: The OLS returns to schooling equal 15.59 percent in 1995 and 15.31 percent in 2000. Our results suggest that many parametric estimates are severely upwards biased, which results from unobserved heterogeneity.
    Date: 2009–12
  10. By: Batuo Enowbi, Michael; Guidi, Francesco; Mlambo, Kupukile
    Abstract: The aims of this work are twofold. On the one hand, it aims to find evidence supporting the presence of the weak form efficiency of several emerging African stock markets by using both parametric as well as non parametric tests. The results indicate that none of the markets are characterised by random walks with the exception of the South African stock market. On the other hand, this study aims to detect the presence of the day of the week effects of these African stock markets. Results show the existence of day of the week effects, that is the typical negative Monday and Friday positive effects in several stock markets.
    Keywords: African stock markets; random walk hypothesis; day of the week effects
    JEL: G14 O55 C12 G15
    Date: 2009–08–31
  11. By: Kinda, Tidiane
    Abstract: Using a one-step stochastic frontier model for five developing countries (Brazil, Morocco, Pakistan, South Africa, and Vietnam), we show that foreign firms benefit from a better investment climate, which significantly explains why they are more efficient than local firms. Unlike former studies, this paper uses the share of each firm’s sales to multinationals located in the country to assess the importance of vertical spillovers, and it controls for the direct impact of the investment climate on efficiency. The results show that firms (particularly small local firms) that sell more of their production to multinationals are more efficient.
    Keywords: Foreign ownership; firm-level efficiency; vertical spillovers; investment climate; developing countries
    JEL: F23 F21 D24 O14
    Date: 2009
  12. By: Miguel, Edward; Hamory, Joan
    Abstract: This study exploits a new longitudinal dataset to examine selective migration among 1,500 Kenyan youth originally living in rural areas. We examine whether migration rates are related to individual “ability”, broadly defined to include cognitive aptitude as well as health, and then use these estimates to determine how much of the urban-rural wage gap in Kenya is due to selection versus actual productivity differences. Whereas previous empirical work has focused on schooling attainment as a proxy for cognitive ability, we employ an arguably preferable measure, a pre-migration primary school academic test score. Pre-migration randomized assignment to a deworming treatment program provides variation in health status. We find a positive relationship between both measures of human capital (cognitive ability and deworming) and subsequent migration, though only the former is robust at standard statistical significance levels. Specifically, an increase of two standard deviations in academic test score increases the likelihood of rural-urban migration by 17%. Accounting for migration selection due to both cognitive ability and schooling attainment does not explain more than a small fraction of the sizeable urban-rural wage gap in Kenya, suggesting that productivity differences across sectors remain large.
    Keywords: Migration; selection; human capital; ability; urban-rural wage gap; productivity
    JEL: O15 C33
    Date: 2009–09–01
  13. By: James Fearon; Macartan Humphreys; Jeremy Weinstein
    Abstract: Can brief, foreign-funded efforts to build local institutions have positive effects on local patterns of governance, cooperation, and well-being? Prior research suggests that such small-scale, externally driven interventions are unlikely to substantially alter patterns of social interaction in a community, and that the ability of a community to act collectively is the result of a slow and necessarily indigenous process. We address this question using a randomized field experiment to assess the effects of a community-driven reconstruction (CDR) project carried out by the International Rescue Committee (IRC) in northern Liberia. The project attempted to build democratic, community-level institutions for making and implementing decisions about local public goods. We find powerful evidence that the program was successful in increasing social cohesion, some evidence that it reinforced democratic political attitudes and increased confidence in local decision-making procedures, but only weak evidence that material well-being was positively affected. There is essentially no evidence of adverse effects.
    Keywords: Liberia; reconstruction; post-conflict; institution building; democracy; development; peacebuilding
    Date: 2009–12
  14. By: Murinde, Victor; Zhao, Tianshu
    Abstract: We propose a three-stage procedure for investigating the interrelationships among bank competition, risk taking and efficiency. The procedure is applied to Nigeria's banking reforms (1993-2008). Stage I measures bank productive efficiency, using Data Envelopment Analysis, and the evolution of bank competition, using Conjectural Variations (CV) methods. Stage II uses the CV estimates to test whether regulatory reforms influence bank competition. Stage III investigates the impact of the reforms and concomitant changes in competition on bank behaviour. The evidence suggests that deregulation and prudential re-regulation influence bank risk taking and bank productive efficiency directly (direct impact) and via their impact on competition (indirect impact). Further, it is found that as competition increases, excessive risk taking decreases and efficiency increases. Overall, the evidence affirms policies that foster bank competition, at least in the Nigerian context.
    Keywords: Nigeria; risk-taking; bank efficiency; bank competition
    Date: 2009–11
  15. By: Bentry Mkwara (University of Waikato); Dan Marsh (University of Waikato)
    Abstract: Deforestation arising from conversion of forest areas into agriculture is a serious problem in Malawi. Cultivation of subsistence and cash crops is often cited as a major cause of this problem. This paper applies the von Thunen model to firstly, discuss competition for agricultural land and secondly, establish why the poor are closely associated with forests. Further, a regression analysis is conducted to examine the effects of changes in crop land use on changes in forest cover. Results indicate that cultivation of different crops has varying effects on deforestation. Cultivation of maize, primarily by the poor, appears to be the principal cause of deforestation while tobacco and pulses stand at second and third positions, respectively. Finally, a simple methodology is developed to estimate the extent of poverty-driven deforestation in Malawi.
    Keywords: poverty; environment; agriculture; deforestation; Malawi
    JEL: Q15 Q23
    Date: 2009–11–30
  16. By: Cavalcanti, Carlos
    Abstract: Public sector pay policy is one of the main decisions facing a government, as it determines the ability to attract, retain, and motivate staff needed to fulfill its service delivery objectives. One option usually considered is relying on a single pay spine for all services into which jobs would be slotted, thus ensuring greater comparability of similar jobs across the public sector. This paper examines the single spine pay reform currently being considered in Ghana, highlighting the differences between the Ghanaian proposal and similarly named proposals elsewhere, and underscoring the potential cost of implementing the proposal -- which is expected to be significant. There are three main findings: (i) the implementation of the single spine pay reform would raise the base pay wage bill (salaries plus category one allowances) in Ghana to GHC2.8 billion by January 1, 2010 -- an almost 50 percent increase compared with an equivalent figures of GHC1.9 billion at end-2008; (ii) because these estimates focus narrowly on the base pay wage bill, they should be regarded as a lower bound estimate of the overall increase in the wage bill; and (iii) because these estimates are derived from assumptions regarding (1) the distribution of public sector employees across public sector services and institutions; (2) the minimum public sector wage; and the (3) the relativity of all other public sector wages with respect to this minimum wage, they are subject to changes any time these assumptions also change.
    Keywords: Public Sector Economics,Public Sector Management and Reform,Labor Markets,Economic Stabilization,Intergovernmental Fiscal Relations and Local Finance Management
    Date: 2009–12–01

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