nep-afr New Economics Papers
on Africa
Issue of 2010‒03‒13
seventeen papers chosen by
Quentin Wodon
World Bank

  1. Is There a Case for Formal Inflation Targeting in Sub-Saharan Africa? By James Heintz; Léonce Ndikumana
  2. The impact of the investment climate on employment growth : does Sub-Saharan Africa mirror other low-income regions ? By Aterido, Reyes; Hallward-Driemeier, Mary
  3. The Macroeconomic Impact of Skilled Emigration from South Africa: A CGE Analysis By Heinrich R Bohlman
  4. A Large Factor Model for Forecasting Macroeconomic Variables in South Africa By Rangan Gupta; Alain Kabundi
  5. An Economic Analysis of Sports Performance in Africa By John Luiz; Riyas Fadal
  6. The Sensitivity of South African Inflation Expectations to Surprises By Monique Reid
  7. Patterns of co-movement between a developed and emerging market economy: The case of South Africa and Germany By Alain Kabundi; Elsabé Loots
  8. Evaluating the Welfare Cost of Inflation in a Monetary Endogenous Growth General Equilibrium Model: The Case of South Africa By Rangan Gupta; Josine Uwilingiye
  9. Civil Conflicts and Regional Economic Integration Outcomes in Africa By Adama BAH; Sampawende Jules TAPSOBA
  10. African Poverty is Falling...Much Faster than You Think! By Xavier Sala-i-Martin; Maxim Pinkovskiy
  11. Border Tax Adjustments to Negate the Economic Impact of an Electricity Generation Tax By Reyno Seymore; Margaret Mabugu; Jan van Heerden
  12. Attitudes Toward Uncertainty Among the Poor: Evidence from Rural Ethiopia By Akay, Alpaslan; Martinsson, Peter; Medhin, Haileselassie; Trautmann, Stefan
  13. Analysis of the Household Economy and Expenditure Patterns of a Traditional Pastoralist Society in Southern Ethiopia. By Wassie Berhanu; Bichaka Fayissa
  14. Adaptation of Forests to Climate Change: Some Estimates By Sedjo, Roger A.
  15. Measuring Institutions: Indicators of Political Rights, Property Rights and Political Instability in Malawi By Johannes Fedderke; Julia Garlick
  16. Options for Income-Enhancing Diversification in Burkina Faso By Chandra, Vandana; Osorio Rodarte, Israel
  17. What Advertisers Want: Measuring Institutions: Indicators of Political Rights, Property Rights and Political Instability in Malawi By R. Seymore; M. Mabugu; J. H. van Heerden

  1. By: James Heintz; Léonce Ndikumana
    Abstract: <p>This working paper examines the question of whether inflation targeting monetary policy is an appropriate framework for sub-Saharan African countries. The paper presents an overview of inflation targeting, reviews the justification for the regime, and summarizes some major critiques. </p><p>Monetary policy responses to inflation depend on the source of inflationary pressures. Therefore, the determinants of inflation in African countries are<br />investigated, using dynamic panel data, and the implications for inflation targeting are discussed. These issues are examined in greater detail for the two African countries which have formally adopted inflation targeting, South Africa and Ghana. </p><p>The analysis is placed in the context of the global economic crisis. The paper concludes with a discussion of alternative approaches to monetary policies and the institutional constraints that would need to be addressed to allow central banks to play a stronger developmental role in sub-Saharan African countries.</p>
    Keywords: Sub-Saharan Africa, inflation, development, monetary policy, finance
    JEL: E31 E52 O55 O11
    Date: 2010
  2. By: Aterido, Reyes; Hallward-Driemeier, Mary
    Abstract: Using survey data from 86,000 enterprises in 104 countries, including 17,000 enterprises in 31 Sub-Saharan African countries, this paper finds that average enterprise-level employment growth rates are remarkably similar across regions. This is true despite significant differences in the quality of the investment climate in which these enterprises operate. Objective measures of investment climate conditions (including the number of outages, the share of firms with bank loans, and others) indicate that conditions are most challenging within Sub-Saharan Africa, as well as for smaller enterprises. However, enterprises’ employment in Sub-Saharan Africa is less sensitive to changes in access to infrastructure and finance relative to other low-income regions. This can be understood by looking at non-linear effects by firm size -- and the finding that these size effects are particularly strong within Sub-Saharan Africa. Although unreliable infrastructure services and inadequate access to finance generally hamper growth, in Sub-Saharan Africa they are actually associated with higher employment growth rates among micro enterprises. Although employment growth is good news in Sub-Saharan Africa, that much of the expanded employment is in small, labor-intensive, less productive enterprises raises longer-run concerns about the efficiency of the allocation of resources and aggregate productivity growth in the region.
    Keywords: Access to Finance,Banks&Banking Reform,Microfinance,Labor Policies,Investment and Investment Climate
    Date: 2010–02–01
  3. By: Heinrich R Bohlman
    Date: 2010
  4. By: Rangan Gupta; Alain Kabundi
    Date: 2009–04
  5. By: John Luiz; Riyas Fadal
    Date: 2010
  6. By: Monique Reid
    Date: 2009
  7. By: Alain Kabundi; Elsabé Loots
    Date: 2009–12
  8. By: Rangan Gupta (Department of Economics, University of Pretoria); Josine Uwilingiye (Department of Economics, University of Pretoria)
    Abstract: This paper uses the general equilibrium monetary endogenous growth model of Dotsey and Ireland (1996), in which inflation distorts a variety of marginal decisions, to evaluate the welfare cost of inflation in South Africa – a country, where, since the February of 2000, the sole objective of the central bank has been to keep the inflation rate within the target band of 3 percent to 6 percent. Although individually none of the distortions is very large, they combine to yield substantial welfare cost estimates ranging between 0.70 percent of GDP to 1.33 percent of GDP for the lower and upper limits of the target band. More importantly, the welfare costs obtained here are at least three times more than those derived previously for the South African economy based on partial equilibrium approaches. These higher estimates, thus, tend to make a case for a possibly lower and narrower target band.
    Keywords: Inflation, Growth, Welfare
    JEL: E31
    Date: 2010–02
  9. By: Adama BAH (Centre d'Etudes et de Recherches sur le Développement International); Sampawende Jules TAPSOBA (Ministère de l'Economie et des Finances [France])
    Abstract: Civil conflicts are a major challenge to the economic development of a country and its neighbors. The present article analyzes the consequences of conflicts on regional economic integration outcomes among African nations. Our findings document that civil conflicts affect the economic fate of regional economic communities through their negative substantial impact on business cycle synchronicity. Yet, contrary to the findings of previous studies on the effects of conflict on bilateral trade flows, we show that experiencing conflict increases regional trade intensities. This only holds in the short run and is explained by a decrease in the conflict country's total trade and output, as well as by an increase in its intra-regional trade flows. By assessing the effect of conflict on regional economic integration processes, this paper highlights that intrastate political events are also a major regional constraint. We therefore find an additional reason to recommend that prevention and resolution of civil conflicts might be put on the top of the political agenda of African Regional Economic Communities.
    Keywords: Africa, Civil Conflict, Regional Economic Integration
    JEL: O11 F15 D74 O55
    Date: 2010
  10. By: Xavier Sala-i-Martin; Maxim Pinkovskiy
    Abstract: The conventional wisdom that Africa is not reducing poverty is wrong. Using the methodology of Pinkovskiy and Sala-i-Martin (2009), we estimate income distributions, poverty rates, and inequality and welfare indices for African countries for the period 1970-2006. We show that: (1) African poverty is falling and is falling rapidly; (2) if present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time; (3) the growth spurt that began in 1995 decreased African income inequality instead of increasing it; (4) African poverty reduction is remarkably general: it cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic. All classes of countries, including those with disadvantageous geography and history, experience reductions in poverty. In particular, poverty fell for both landlocked as well as coastal countries; for mineral-rich as well as mineral-poor countries; for countries with favorable or with unfavorable agriculture; for countries regardless of colonial origin; and for countries with below- or above-median slave exports per capita during the African slave trade.
    JEL: O0 O1 O55
    Date: 2010–02
  11. 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: In the 2008 Budget Review, the South African government announced its intention to levy a 2c/kWh tax on the sale of electricity generated from non-renewable sources. This measure is intended to serve a dual purpose of helping to manage the current electricity supply shortages and to protect the environment (National Treasury 2008). An electricity generation tax is set to have an impact on the South African economy. However, several instruments have been proposed in the literature to protect the competitiveness and economy of a country when it imposes a green tax, one of these remedies being border tax adjustments.This paper evaluates the effectiveness for the South African case, of border tax adjustments (BTAs) in counteracting the negative impact of an electricity generation tax on competitiveness. The remedial effects of the BTAs are assessed in the light of their ability to maintain the environmental benefits of the electricity generation tax. Additionally, the the Global Trade Analysis Project (GTAP) model is used to evaluate the impact of an electricity generation tax on the South African, SACU and SADC economies and to explore the possibility of reducing the economic impact of the electricity generation tax through BTAs. The results show that an electricity generation tax will lead to a contraction in South African gross domestic product (GDP). Traditional BTAs are unable to address these negative impacts. We propose a reversedBTA approach where gains from trade are utilised to counteract the negative effects of an electricity generation tax, while retaining the environmental benefits associated with the electricity generation tax. This is achieved through a lowering of import tariffs, as this will reduce production costs and thereby restore the competitiveness of the South African economy. The reduction in import tariffs not only negates the negative GDP impact of the electricity generation tax, but the bulk of CO2 abatement from the electricity generation tax is retained.
    Date: 2010–02
  12. By: Akay, Alpaslan; Martinsson, Peter; Medhin, Haileselassie; Trautmann, Stefan
    Abstract: We looked at risk and ambiguity attitudes among Ethiopian peasants in one of the poorest regions of the world and compared their attitudes to a standard Western university student sample elicited by the same decision task. Strong risk aversion and ambiguity aversion were found with the Ethiopian peasants, and these attitudes are similar to those of the university students. Testing for the effect of socioeconomic variables on uncertainty attitudes showed that poor health increased both risk and ambiguity aversion.
    Keywords: risk attitudes, ambiguity attitudes, poverty, cultural differences
    JEL: D81 C93 O12
    Date: 2010–02–22
  13. By: Wassie Berhanu; Bichaka Fayissa
    Abstract: Some key features of the Borana household economy are explored in the changing context of growing pastoralist exposure to the exchange system. Despite past commercialization efforts, the pastoral economy has largely remained unmonetized. The average cattle off-take rate is found to be well below 10% for the sample Borana households of which only 11% of the household off-take decisions were made for the primary purpose of financing non-pastoral business. Such decisions are largely made by the actual conditions of life principally associated with the need to procure cereal grains and meeting other basic needs. The analysis of household expenditure patterns reveals income diversity as a key determinant of the growing importance of "imported" items in pastoral household budgets. The apparent elastic demand for stimulants in this connection is a critical matter for local actions in the context of eroding traditional values.
    Keywords: Pastoralism, Household expenditure, Borana, Ethiopia
    JEL: D62 I32 O13 Q18
    Date: 2010–02
  14. By: Sedjo, Roger A. (Resources for the Future)
    Abstract: This paper is based on a World Bank–sponsored effort to develop a global estimate of adaptation costs, considering the implications of global climate change for industrial forestry. It focuses on the anticipated impacts of climate change on forests broadly, on industrial wood production in particular, and on Brazil, South Africa, and China. The aim is to identify likely damages and possible mitigating investments or activities. The study draws from the existing literature and the results of earlier investigations reporting the latest comprehensive projections in the literature. The results provide perspective as well as estimates and projections of the impacts of climate change on forests and forestry in various regions and countries. Because climate change will increase forest productivity in some areas while decreasing it elsewhere the impacts vary for positive to negative by region. In general, production increases will shift from low-latitude regions in the short term to high latitude regions in the long term. Planted forests will offer a major vehicle for adaptation.
    Keywords: forests, climate change, adaptation, productivity, plantations, industrial wood, climate models
    JEL: Q20 Q23 Q55
    Date: 2010–01–26
  15. By: Johannes Fedderke; Julia Garlick
    Date: 2010
  16. By: Chandra, Vandana; Osorio Rodarte, Israel
    Abstract: One of the objectives of this CEM was to identify the most promising products and conduct competitiveness diagnostic. The products list is summarized in Table 1 below. Competitiveness, in this report, is seen as a combination of productivity and costs, and the second section of the CEM presents industry chapters that systematically benchmarks Burkina’s competitiveness performance against its main competitors. Sectoral chapters also explore reforms achieved and their impact on productivity, list remaining bottlenecks and opportunities and discuss possible emulation from other countries.
    Keywords: Burkina Faso; Exports; Product Space; Economic Diversification; Economig Growth;
    JEL: O55 O25 O33 O12
    Date: 2009–11–24
  17. By: R. Seymore; M. Mabugu; J. H. van Heerden
    Date: 2010

This nep-afr issue is ©2010 by Quentin Wodon. 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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