nep-afr New Economics Papers
on Africa
Issue of 2010‒04‒24
six papers chosen by
Quentin Wodon
World Bank

  1. Can Common Stocks Provide A Hedge Against Inflation? Evidence from African Countries By Paul Alagidede; Theodore Panagiotidis
  2. The (Evolving) Role of Agriculture in Poverty Reduction: An Empirical Perspective By Christiaensen,Luc; Demery,Lionel and Kuhl, Jesper
  3. Breaking the Net: Family Structure and Street Children in Zambia. By Francesco Strobbe; Claudia Olivetti; Mireille Jacobson
  4. Economic sanctions and trade diversions in Sudan By Siddig, Khalid
  5. The Dynamics of Women’s Labour Supply in Developing Countries By Sonia Bhalotra; Marcela Umaña-Aponte
  6. La transition des jeunes camerounais vers le marché du travail By Delphine Boutin

  1. By: Paul Alagidede (Department of Economics, University of Stirling, UK); Theodore Panagiotidis (Department of Economics, University of Macedonia, Greece)
    Abstract: The extent to which the stock market provides a hedge to investors against inflation is examined for African stock markets. By employing parametric and nonparametric cointegration procedures, we show that the point estimates of the elasticities of stock prices with respect to consumer prices range from 0.015 for Tunisia to 2.264 for South Africa, evidence of a positive long-run relationship. Further, the time path of the response of stock prices to innovations in consumer prices exhibits a transitory negative response for Egypt and South Africa, which becomes positive over longer horizons: important indication that the stock market tends to provide a hedge against rising consumer prices in African markets.
    Keywords: Stock Prices, Inflation, Fisher Effect, African Stock Markets, Cointegration
    JEL: G10 G15 C32
    Date: 2010–01
  2. By: Christiaensen,Luc; Demery,Lionel and Kuhl, Jesper
    Abstract: The role of agriculture in development remains much debated. This paper takes an empirical perspective and focuses on poverty, as opposed to growth alone. The contribution of a sector to poverty reduction is shown to depend on its own growth performance, its indirect impact on growth in other sectors, the extent to which poor people participate in the sector, and the size of the sector in the overall economy. Bringing together these different effects using cross-country econometric evidence indicates that agriculture is significantly more effective than nonagriculture in reducing poverty among the poorest of the poor (as reflected in the $1-day squared poverty gap). It is also up to 3.2 times better at reducing $1-day headcount poverty in low-income and resource-rich countries (including those in sub-Saharan Africa), at least when societies are not fundamentally unequal. However, when it comes to the better-off poor (reflected in the $2-day measure), non-agriculture has the edge. These results are driven by the much larger participation of poorer households in growth from agriculture and the lower poverty-reducing effect of non-agriculture in the presence of extractive industries.
    Keywords: agriculture, economic growth, poverty, sub-Saharan Africa
    Date: 2010
  3. By: Francesco Strobbe; Claudia Olivetti; Mireille Jacobson
    Abstract: The safety net provided by the African extended family has traditionally been the basis for the assertion that “there is no such thing as an orphan in Africa” (Foster 2000). The assumption is that even families lacking sufficient resources to properly care for existing members are predisposed to take in orphans. Chronic poverty, coupled with an increasing malaria burden and the HIV/AIDS pandemic, has put this safety-net under severe strain, giving rise to an increasing number of orphans and vulnerable children and, in the extreme, to “street children.” Drawing on original fieldwork in the slums of Ndola in Northern Zambia we study the role of family structure in caring for vulnerable children. We try to isolate those features of a child’s nuclear and extended family that put him most at risk of ending up on the streets. We find that older, male children and particularly orphaned children are more likely to wind up on the street. Families with a male household head who is in poor health are more likely to originate street children. The educational level, age and employment status of the male head of household has little impact on the likelihood the family is associated with a child who has taken to the street. In contrast, households with surviving maternal grandparents or with a male head who has many sisters are significantly less likely to originate street children. These findings support the critical role that women play in poor countries, highlighting the importance of policies aimed at empowering women. At the same time, our findings show that policies aimed at improving the health of the male head of household can also yield important benefits. A back-of-the-envelope calculation suggests that moving male heads from poor to good self-rated health status can increase the rate of GDP growth by as much as 0.20 to 0.33 of a percentage point per year.
    Date: 2010
  4. By: Siddig, Khalid
    Abstract: The latest episode of the armed conflict between Northern and Southern Sudan erupted in 1983 and ended with the signing of the "Comprehensive Peace Agreement (CPA)" in 2005. The CPA allows for a referendum on independence for South Sudan in 2011. A similar scenario is possible for Darfur, where an armed conflict broke out in 2003 over demands for greater decentralization and development in the region. The peace agreement between the central government and the Eastern Sudan region continues to be fragile and the risk of escalation of across the border spillovers of conflicts with Uganda and Chad persists. The U.S., EU, among other global players, is putting pressure on the Khartoum government to change its policies. Economic sanctions are among the tools used by the U.S. government while encouraging others follow suit. This paper investigates the response of the Sudanese economy to eliminating trade flows with the EU in the first phase and with East-Asian countries in the second. It discusses the changes in the macro-indicators, trade variables, and welfare measures that would result. Moreover, it assesses the potential trade diversion and resource reallocation due to sanctions in each phase. To simulate these scenarios, detailed economic databases for Sudan, EU, East-Asian region, MENA, COMESA, and the rest of the world are needed. For this purpose, GTAP Africa database and the standard GTAP model are employed. The 57 sectors of Africa database are aggregated to ten sectors including: grains and crops, livestock and meat products, mining and extraction, processed food, textiles and clothing, light manufacturing, heavy manufacturing, utilities and construction, transport and communication, and other services. Moreover, the database regions are aggregated to six including Sudan, the EU, East Asia, MENA, COMESA, and the Rest of the world. Results show that Sudanese trade reallocates to Asia in the first phase and to COMESA and MENA regions in the second. Sanctions exact a devastating toll on the Sudanese economy: GDP declines, trade shrinks, and welfare deteriorates. The deterioration in the country’s trade is mainly in the imports side, which justifies an improvement of the country’s balance of trade, while welfare losses are derived by a deteriorated terms of trade and allocative efficiency.
    Keywords: Sudan; sanctions; GTAP Africa database; EU; East Asia
    JEL: F16 C68 C02 D58 F51
    Date: 2010–04–11
  5. By: Sonia Bhalotra; Marcela Umaña-Aponte
    Abstract: This paper investigates cyclicality in women’s labour supply motivated by the hypothesis that it contributes to smoothing household consumption in environments characterised by income volatility. We use comparable individual data on about 1.1 million women in 63 developing and transition countries merged with country-level panel data on GDP during 1986-2006. The scope of these data is unprecedented in the small but growing literature on labour markets in developing countries. We find that the within-country relationship of women’s employment and income is, on average, negative in Asia and Latin America but positive in Africa. We suggest that amongst reasons why African women behave differently are that the conventional family structure with income pooling is less the norm, there are fewer opportunities for paid employment, and aggregate income shocks are more closely tied to rainfall variation. The findings are robust to controls for country-specific trends and potentially correlated shocks. In Asia and Latin America, characteristics that strengthen counter-cyclical responses include low education, being married, being married to men with low education, low wealth, no landownings, rural residence and fertility. These findings suggest that insurance motives underpin the dynamics of women’s work participation. Examination of cyclicality in the distribution of employment across types suggests that recessions in every region are associated with a rise in self-employment amongst women. In Asia and Latin America, there is a parallel rise in paid employment and a sharp drop in non-employment. In Africa, there is a decline in paid employment which overwhelms the rise in self-employment and this is how total employment comes to decline. The results have potentially important implications for understanding labour markets, fertility timing and child outcomes.
    Keywords: insurance, women’s labour supply, added worker effect, business cycles, dynamics, Africa, Asia, Latin America.
    JEL: O12 J2 J6 E32 I00
    Date: 2010–03
  6. By: Delphine Boutin (GED, Université Montesquieu Bordeaux IV)
    Abstract: Cette étude vise à analyser le processus d’entrée sur le marché du travail au Cameroun, et la durée de transition de l’école au travail pour les jeunes scolarisés. Nous examinons ces deux modes de transition vers le marché du travail : du système scolaire ou bien de l’inactivité (ou de l’éducation informelle) vers le monde du travail. Nous utilisons pour cela un indicateur synthétique de la transition école-travail. Pour les jeunes intégrant directement la force de travail, l’âge moyen d’accès à un premier emploi est examiné. Une attention particulière est portée sur la situation du marché du travail des jeunes ainsi que sur les facteurs clés capables d’influencer cette situation (tels que l’accumulation du capital humain). A l’aide la méthode du maximum de vraisemblance, nous utilisons un modèle probit univarié de la probabilité d’accéder à un emploi, par niveau d’éducation. Pour cette analyse, nous utilisons les données de l’enquête ECAM3, conduite en 2007 par l’Institut national de statistique (INS) au Cameroun. Les résultats suggèrent que la transition Ecole-travail au Cameroun cache d’immenses disparités entre les individus. D’autre part, les caractéristiques individuelles (le genre, le milieu de résidence, le statut marital, le statut de migration..) et celles du marché local semblent influencer la probabilité d’accéder à un emploi. L’un des apports importants de cette étude est de mettre en lumière les spécificités du marché du travail des jeunes en fonction de leur niveau d’éducation. This study aims to analyze the process of labor market entry in Cameroon and, for those who attended school, the duration of the transition from school to work. The transition to work can take two routes, through the schooling system or from inactivity (or informal schooling) to the labor force. We examine both routes, in order to identify vulnerable groups. It uses a synthetic indicator in providing an overview of the routes young people take from education to the labor force. For the group transitioning directly to the labor force, the average entry in the labor market is examined. We pay then particular attention to the labor market outcomes of young people and key factors influencing these outcomes, including human capital accumulation. To this purpose, a probit univariate model of the probability of employment by level of education was made. For this analysis, we use 2007 ECAM3 conducted by the National Statistics institute (INS) of Cameroon. Results show large differences in the school-to-work transition process. Moreover, the individuals’ characteristics and the conditions of the local labor market appear to substantially influence the probability of finding employment. One of the most interesting contributions of this study is to highlight youth labor market specificities by education’s level.(Full text in french)
    JEL: I20 J01 J21 J24 J64
    Date: 2010–03

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