nep-afr New Economics Papers
on Africa
Issue of 2010‒07‒17
twenty-six papers chosen by
Quentin Wodon
World Bank

  1. Climate change implications for water resources in the Limpopo River Basin By Zhu, Tingju; Ringler, Claudia
  2. Weathering the storm By Omilola, Babatunde; Lambert, Melissa
  3. Revisiting the âcotton problemâ: A comparative analysis of cotton reforms in Sub-Saharan Afric By Delpeuch, Claire; Vandeplas, Anneleen; Swinnen, Jo
  4. The costs of illiteracy in South Africa By Martin Gustafsson; Servaas van der Berg; Debra Shepherd; Cobus Burger
  5. International Commodity Prices, Growth, and the Outbreak of Civil War in Sub-Saharan Africa By Markus Brückner; Antonio Ciccone
  6. Banking Efficiency and Financial Development in Sub-Saharan Africa By Sandrine Kablan
  7. Wage subsidies to combat unemployment and poverty By Burns, Justine; Edwards, Lawrence; Pauw, Karl
  8. Impact of farmer field schools on agricultural productivity and poverty in East Africa By Davis, Kristin; Nkonya, Ephraim; Kato, Edward; Mekonnen, Daniel Ayalew; Odendo, Martins; Miiro, Richard; Nkuba, Jackson
  9. Foreign inflows and growth challenges for African countries By Diao, Xinshen; Breisinger, Clemens
  10. Valuation Ratios and Stock Price Predictability in South Africa: Is it there? By Rangan Gupta; Mampho P. Modise
  11. Children, education and reconciliation By Alan Smith
  12. Poverty status and the impact of social networks on smallholder technology adoption in rural Ethiopia By Liverpool, Lenis Saweda O.; Winter-Nelson, Alex
  13. Asset versus consumption poverty and poverty dynamics in the presence of multiple equilibria in rural Ethiopia By Liverpool, Lenis Saweda O.; Winter-Nelson, Alex
  14. Droughts and floods in Malawi By Pauw, Karl; Thurlow, James; van Seventer, Dirk
  15. Biofuels and economic development in Tanzania By Arndt, Channing; Pauw, Karl; Thurlow, James
  16. Mining Taxation: An Application to Mali By Saji Thomas
  17. Patterns and trends of child and maternal nutrition inequalities in Nigeria By Omilola, Babatunde
  18. Human Resource Inputs and Educational Outcomes in Botswana’s Schools: Evidence from SACMEQ and TIMMS By Tia Linda Zuze
  20. Long-term impact of investments in early schooling By Mani, Subha; Hoddinott, John; Strauss, John
  21. Rain and the Democratic Window of Opportunity By Markus Brückner; Antonio Ciccone
  22. Beyond Aid: How Much Should African Countries Pay to Borrow? By Cheikh A. Gueye; Amadou N. R. Sy
  23. An experiment on the impact of weather shocks and insurance on risky investment By Hill, Ruth Vargas; Viceisza, Angelino
  24. Agricultural Extension and Imperfect Supervision in Contract Farming: Evidence from Madagascar By Bellemare, Marc F.
  25. Effects of Global Climate Change on Nigerian Agriculture: An Empirical Analysis By Apata, T.G; Ogunyinka, A.I; Sanusi, R.A; Ogunwande, S
  26. Tax systems and tax harmonisation in the East African Community (EAC) By Hans-Georg Petersen

  1. By: Zhu, Tingju; Ringler, Claudia
    Abstract: This paper analyzes the effects of climate change on hydrology and water resources in the Limpopo River Basin of Southern Africa, using a semidistributed hydrological model and the Water Simulation Module of the International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT). The analysis focuses on the effects of climate change on hydrology and irrigation in parts of the four riparian countries within the basin: Botswana, Mozambique, South Africa, and Zimbabwe. Results show that water resources of the Limpopo River Basin are already stressed under today’s climate conditions. Projected water management and infrastructure changes are expected to improve the situation by 2030 if current climate conditions continue into the future. However, under the four climate change scenarios studied here, water supply situations are expected to worsen considerably by 2030. Assessing hydrological impacts of climate change is crucial given that expansion of irrigated areas has been postulated as a key adaptation strategy for Sub-Saharan Africa. Such expansion will need to take into account future changes in water availability in African river basins.
    Keywords: Climate change, hydrology, Irrigation, Limpopo River Basin, Water resources,
    Date: 2010
  2. By: Omilola, Babatunde; Lambert, Melissa
    Abstract: At the national level, dozens of African countries have pledged to implement the Comprehensive Africa Agriculture Development Programme (CAADP) of the New Partnership for Africa's Development (NEPAD) and the African Union (AU). This African-led plan aims to stimulate agriculture on the continent to achieve the first Millennium Development Goal (MDG1) of halving poverty and hunger by 2015. To do so, countries are expected to pursue 6 percent average annual agriculture growth at the national level, allocate 10 percent of national budgets to the agricultural sector, and improve overall policy efficiency through peer-review and accountability. The purpose of this paper is to evaluate trends in agricultural development, performance, and spending in Africa and to track corresponding progress in key poverty and hunger indicators following the recent food price crisis. The reason for tracking this information is that the recent food price crisis has the potential to derail the progress made toward reducing poverty and hunger in many African countries. This paper draws on policy research results in the literature to highlight some of the strategic policy options available to African governments for accelerating agricultural growth in line with the principles of CAADP. In this regard, the paper provides information on CAADP’s agenda by reviewing the progress of implementation and performance against a number of key benchmarks.
    Keywords: African agriculture, Comprehensive Africa Agriculture Development Programme (CAADP), expenditures, Food prices, Millennium Development Goals (MDG), trends,
    Date: 2010
  3. By: Delpeuch, Claire; Vandeplas, Anneleen; Swinnen, Jo
    Abstract: The cotton sector has been amongst the most regulated in West and Central Africa (WCA), and still is to a large extent, despite repeated reform recommendations by international donors. On the other hand, orthodox reforms in East and Southern Africa (ESA) have not always yielded the expected results. This paper uses a stylized contracting model to investigate the link between market structure and equity and efficiency in sub-Saharan cotton sectors and analyze the potential consequences of orthodox reforms in WCA. We argue that the level of the world price and of government intervention, the degree of post-reform competition, as well as the degree of parastatal inefficiency, all contribute to making reforms less attractive (but not less pressing) to farmers and governments in WCA today, as compared to ESA in the 1990s. We illustrate our arguments with empirical observations on the performance of cotton sectors across sub-Saharan Africa.
    Keywords: Sub-Saharan Africa, cotton reforms, self-enforcing contracts, International Development, Q12, L33, O12,
    Date: 2010–03–29
  4. By: Martin Gustafsson (Department of Economics, University of Stellenbosch); Servaas van der Berg (Department of Economics, University of Stellenbosch); Debra Shepherd (Department of Economics, University of Stellenbosch); Cobus Burger (Department of Economics, University of Stellenbosch)
    Abstract: In South Africa there has been a surge in publicly funded adult literacy education in recent years. There is a recognition that for the effective monitoring of adult literacy, direct measures of literacy are required. Grade attainment, self-reported ability to read and behavioural variables relating to, for instance, reading habits produce vastly different measures of adult literacy in South Africa. It is noteworthy that self-reported values change over time as people’s perceptions of what consitutes literacy shifts. A 75% literacy rate is arguably a plausible figure, though the absence of a direct measure is problematic. An education production function suggests that literacy-related parent behaviour, independently of parent years of education, influences performance of learners in school. In a multivariate employment model, self-reported literacy is a statistically significant predictor of being employed. In a cross-country growth model, poor quality schooling emerges as the variable requiring the most urgent policy attention to sustain and improve South Africa’s economic development. Both microeconomic and macroeconomic estimates suggest that with a more typical level of school performance South Africa’s GDP would be 23% to 30% higher than it currently is.
    Keywords: Literacy, Illiteracy, South Africa, Education production function, Economic growth
    JEL: C35 D23 I28 O15
    Date: 2010
  5. By: Markus Brückner; Antonio Ciccone
    Abstract: To learn more about the effect of economic conditions on civil war, we examine whether Sub-Saharan civil wars are more likely to start following downturns in the international price of countries’ main export commodities. The data show a robust effect of commodity price downturns on the outbreak of civil wars. We also find that Sub-Saharan countries are more likely to see civil wars following economic downturns in their main OECD export destinations.
    Keywords: Commodity prices, civil war, Sub-Saharan Africa
    JEL: O0 P0 Q0
    Date: 2010–05
  6. By: Sandrine Kablan
    Abstract: This study assesses the determinants of banking system efficiency in sub-Saharan Africa (SSA) and asks what, besides the degree of efficiency, explains the low level of financial development in the region. It uses stochastic frontier analysis to measure efficiency and a generalized method of moments system to explain financial development. SSA banks are found to be generally cost-efficient, but nonperforming loans undermine efficiency, which suggests that improvement in the regulatory and credit environments should improve efficiency. The political and the economic environment have held back financial development in SSA.
    Keywords: Banking systems , Banks , Cross country analysis , Development , Economic models , Financial management , Sub-Saharan Africa ,
    Date: 2010–05–17
  7. By: Burns, Justine; Edwards, Lawrence; Pauw, Karl
    Abstract: Wage or employment subsidies have been used in both developed and developing countries to raise employment levels. Various advisers to the South African government have endorsed wage subsidies as a policy measure to deal with this country’s massive unemployment problem. This paper takes stock of the international literature and conducts an economywide macro-micro analysis to obtain insights into wage subsidy design and implementation issues facing developing countries. It also investigates whether this policy measure is appropriate in dealing with South Africa’s particular sources of unemployment. We argue that although wage subsidies may be successful at creating jobs in South Africa, they should not be seen as the primary or dominant policy instrument for dealing with the broader unemployment problem. To enhance the effectiveness of wage subsidies, they should preferably be linked to structured workplace training, be targeted to industries where employment will be responsive to changes in labor costs, and be focused on the youth. In the long run, addressing unemployment in South Africa requires policies that improve economic growth and the economy’s employment absorption capacity, that raise skills of new labor market entrants, that reduce labor market rigidities, and that promote effective job search, especially among the youth.
    Keywords: Computable General Equilibrium (CGE) microsimulation modeling, Developing countries, economic growth, employment absorption capacity, labor costs, macro-micro analysis, Unemployment, wage subsidies,
    Date: 2010
  8. By: Davis, Kristin; Nkonya, Ephraim; Kato, Edward; Mekonnen, Daniel Ayalew; Odendo, Martins; Miiro, Richard; Nkuba, Jackson
    Abstract: Farmer field schools (FFSs) are a popular education and extension approach worldwide. Such schools use experiential learning and a group approach to facilitate farmers in making decisions, solving problems, and learning new techniques. However, there is limited or conflicting evidence as to their effect on productivity and poverty, especially in East Africa. This study is unique in that it uses a longitudinal impact evaluation (difference in difference approach) with quasi-experimental methods (propensity score matching and covariate matching) together with qualitative approaches to provide rigorous evidence to policymakers and other stakeholders on an FFS project in Kenya, Tanzania, and Uganda. The study provides evidence on participation in FFSs and on the effects of FFSs on various outcomes. The study found that younger farmers who belong to other groups, such as savings and credit groups, tended to participate in field schools. Females made up 50 percent of FFS membership. Reasons for not joining an FFS included lack of time and information. FFSs were shown to be especially beneficial to women, people with low literacy levels, and farmers with medium-size land holdings. FFS participants had significant differences in outcomes with respect to value of crops produced per acre, livestock value gain per capita, and agricultural income per capita. FFSs had a greater impact on crop productivity for those in the middle land area (land poverty) tercile. Participation in FFSs increased income by 61 percent when pooling the three countries. FFSs improved income and productivity overall, but differences were seen at the country level. Participation in FFSs led to increased production, productivity, and income in nearly all cases: Kenya, Tanzania, and at the project level (all three countries combined). The most significant change was seen in Kenya for crops (80 percent increase) and in Tanzania for agricultural income (more than 100 percent increase). A lack of significant increases in Uganda was likely due to Uganda’s National Agricultural Advisory Services. When disaggregating by gender, however, female-headed households benefited significantly more than male-headed households in Uganda.
    Keywords: farmer field schools, agricultural productivity, adoption, extension services,
    Date: 2010
  9. By: Diao, Xinshen; Breisinger, Clemens
    Abstract: Foreign inflows are important sources of income that many African governments use to finance public investments and to support the development of manufacturing or export-oriented service sectors. Yet the recent growth experience of many African economies shows that domestic-oriented industry (construction, utilities) and services have become the largest sectors. Using Ghana and its newly found oil as an example, we analyze the dynamic relationship between increasing foreign inflows and economic growth and structural change by developing a multisector intertemporal general equilibrium model. We find that the sudden increase in petrodollars used to finance either the government’s recurrent spending or public investment generates a substantial short-run growth shock consistent with the Dutch disease theory. Opposed short-run effects on the growth of the tradable and nontraded sectors lead the structure of the economy to become more domestic oriented. The creation of an oil fund helps reduce the negative growth and structural effect, while in the longer term, if oil spending does not enhance productivity, growth declines and the GDP share of the nontraded sector further increases. Smart use of oil revenue thus not only involves the creation of an oil fund but also spending inflows on productivity-enhancing investment. Whether public investments can help overcome Dutch disease effects also depends on the growth magnitude of the inflows. At the same level of investment-to-productivity-growth efficiency, public investments take longer to overcome the negative growth effects the higher the growth rate of inflows. This paper further shows that the structural effect of foreign inflows on economic development is a long-term challenge for Africa. The domestic-oriented economic structure can become a persistent phenomenon for countries that continue to receive foreign inflows in the form of petrodollars or in any other form.
    Keywords: Dutch disease, foreign inflows, Growth, intertemporal general equilibrium, structural change,
    Date: 2010
  10. By: Rangan Gupta (Department of Economics, University of Pretoria); Mampho P. Modise (Department of Economics, University of Pretoria and South African Treasury, Pretoria, South Africa)
    Abstract: Using monthly South African data for 1990:01-2009:10, this paper, to the best of our knowledge, is the first to examine the predictability of real stock prices based on valuation ratios, namely, price-dividend and price-earnings ratios. We cannot detect either short-horizon or long-horizon predictability; that is, the hypothesis that the current value of a valuation ratio is uncorrelated with future stock price changes cannot be rejected at both short- and long- horizons based on bootstrapped critical values constructed from linear representations of the data. We find, via Monte Carlo simulations, that the power to detect predictability in finite samples tends to decrease at long horizons in a linear framework. Though Monte Carlo simulations applied to exponential smooth-transition autoregressive (ESTAR) models of the price-dividend and price-earnings ratios, show increased power, the ability of the non-linear framework in explaining the pattern of stock price predictability in the data does not show any promise both at short- and long-horizons, just as in the linear predictive regressions.
    Keywords: Predictive regression, Monte Carlo simulation, Nonlinear mean-reversion
    JEL: C22 C32 C53 G12
    Date: 2010–07
  11. By: Alan Smith
    Abstract: This paper examines truth and reconciliation commissions that have made reference to a longer-term role for education in coming to terms with the past and contributing towards future reconciliation. The countries reviewed are Guatemala, Liberia, Peru, Sierra Leone, South Africa and Timor-Leste. Some have developed strategies for children's participation and made recommendations for inclusion in the formal school curriculum. However, recommendations regarding a role for education have usually been very general in nature, with little specification of what is expected of educators in practical terms and little follow-through by education authorities. The paper therefore identifies a number of challenges if education is to have a role in truth and reconciliation. It also identifies potential areas for educational development and recommendations for future actions.
    Keywords: children in armed conflicts; education; juvenile justice; right of self-expression; right to care and protection; transitional justice;
    JEL: K19
    Date: 2010
  12. By: Liverpool, Lenis Saweda O.; Winter-Nelson, Alex
    Abstract: Despite the promise of many new farm technologies, technology adoption rates in Ethiopia remain low. This paper studies the impact of social networks on technology adoption through social learning. In addition to geographic networks, intentional relationships are considered. The differential impacts by network type, technology, and asset poverty status are explored. We find evidence that although social learning occurs, it is more consistent for households not in poverty traps than for those that are persistently asset poor. Social learning among rural households is stronger for more complex technologies and is associated with intentional relationships rather than with geographic networks.
    Keywords: asset poverty, geographic networks, households, Poverty traps, Social networks, Technology adoption,
    Date: 2010
  13. By: Liverpool, Lenis Saweda O.; Winter-Nelson, Alex
    Abstract: Effective poverty reduction programs require careful measurement of poverty status. Several studies have shown conceptually that assets reflecting productive capacity form a more robust basis for identifying the poor than do flow variables such as expenditures or income. Nonetheless, little work has empirically compared poverty measurements based on assets and expenditures. This paper uses panel data from Ethiopia to generate an asset-based poverty classification scheme. Regression results are used to estimate an asset index and classify households into categories of structural poverty. Asset index dynamics are also explored to test for the existence of multiple asset index equilibria; evidence of potential poverty traps. Results provide evidence of multiple equilibria in the study sample as a whole as well as convergence at different levels over space, depending on commercialization opportunities and agroecological factors. The asset-based poverty classifications consistently predict future poverty status more accurately than do income-based measures, confirming that the asset-based measure could be used to more carefully target poverty interventions in rural areas and to more accurately assess the impact of those interventions.
    Keywords: asset index, asset poverty, Commercialization, expenditures, income-based measures, index equilibria, Poverty dynamics, Poverty reduction, regression,
    Date: 2010
  14. By: Pauw, Karl; Thurlow, James; van Seventer, Dirk
    Abstract: Malawi suffers frequent droughts and floods. In an economy that is heavily dependent on the agricultural sector, it is crucial to understand the implications of these extreme climate events. Not only are rural livelihoods affected due to the severe impacts on the agricultural sector, but nonfarm and urban households are also vulnerable given the strong production and price linkages between agriculture and the rest of the economy. This study uses a general equilibrium model to estimate the economywide impacts of drought- and flood-related crop production losses. Climate simulations are based on production loss estimates from stochastic drought and flood models. Model results show that the economic losses due to extreme climate events are significant: Malawi loses 1.7 percent of its gross domestic product on average every year due to the combined effects of droughts and floods. This is equivalent to almost US$22 million in 2005 prices. Given their crop choices, it is smaller-scale farmers and those in the flood-prone southern regions of the country who are worst affected. However, urban and nonfarm households are not spared. Food shortages lead to sharp price increases that reduce urban households’ disposable incomes. This study makes an important contribution by estimating the economywide impacts of extreme climate events. However, this is only the first step toward designing appropriate agricultural and development strategies that explicitly account for climate uncertainty.
    Keywords: agricultural sector, CGE Modeling, Droughts, floods, Gross Domestic Product (GDP), households, Livelihoods, Poverty,
    Date: 2010
  15. By: Arndt, Channing; Pauw, Karl; Thurlow, James
    Abstract: Biofuels provide a new opportunity to enhance economic development in Tanzania. Drawing on detailed cost estimates, we develop a dynamic computable general equilibrium model to estimate the impact of different biofuel production scenarios on growth and poverty. Our results indicate that maximizing the poverty-reducing effects of a biofuels industry in Tanzania requires engaging and improving the productivity of smallholder farmers. Evidence shows that cassava-based ethanol production is more profitable than other feedstock options. Our findings also indicate that cassava generates higher levels of pro-poor growth than do sugarcane-based systems. However, if smallholder yields can be improved rather than expanding cultivated land, then sugarcane and cassava outgrower schemes can produce similar pro-poor outcomes. We conclude that in so far as the public investments needed to establish a biofuels industry in Tanzania are in accordance with national development plans, producing biofuels will contribute to achieving the country’s overall development objectives.
    Keywords: Biofuels, Cassava, Computable general equilibrium (CGE) model, Growth, Poverty,
    Date: 2010
  16. By: Saji Thomas
    Abstract: Mali’s gold sector is an enclave with weak forward and backward linkages with the rest of the economy. Given the predominance of the fiscal transmission channel, it is important that the design of the mineral tax regime gives the state a fair share of the benefits. Using optimal control theory, this paper estimates that the optimal royalty tax in Mali is about 3.5 percent. By reducing the royalty rate from 6 percent to 3 percent, Mali’s mining code broadly ensures that the risk is shared between the state and mining companies, provides sufficient incentives to attract new exploration, and is comparable to the fiscal regimes in other sub-Saharan African countries in its mix of tax instruments and tax structure.
    Keywords: Economic models , Fiscal policy , Gold , Mali , Mining sector , Natural resources , Tax administration , Taxation ,
    Date: 2010–05–25
  17. By: Omilola, Babatunde
    Abstract: Despite the fact that nonincome dimensions of well-being such as nutrition and health are now placed on the global development agenda, substantial gaps remain in our knowledge about patterns and trends in nutrition inequalities in many developing countries. The main objective of this paper is to document a useful starting point for understanding the determinants of inequalities in nutritional status and provide some understanding of the proximate causes of inequalities in nutritional status as well as the factors responsible for inequalities in health and nutritional status of children and women in the policy debate. Using Nigeria as a case study and using data from the Nigerian Demographic and Health Survey, this paper measures and decomposes the patterns and trends of inequalities in child and maternal nutritional status in Nigeria. In particular, the paper decomposes observed nutritional inequalities into inequalities between and within demographic and socioeconomic groups to ascertain the relative contributions of the between-groups and within-group components of inequalities. To identify the most vulnerable groups in Nigeria, the paper also explores the prevalence of child and maternal malnutrition in Nigeria. The paper finds that within-group inequalities are the sources of most inequalities in the nutritional status of children and women in Nigeria. Inequalities between demographic and socioeconomic groups are less important. Child and maternal malnutrition are concentrated among the least educated households, the rural population, the north (in particular its Hausa ethnic group), and those who drink water from public wells. Malnutrition in Nigeria is a vicious cycle in that child malnutrition can be partly traced back to low birth weight (and therefore to maternal malnutrition). To interrupt this vicious cycle, the Nigerian government should take targeted and concerted actions that focus attention on addressing within-group inequalities. Intervention in the areas of primary healthcare, home-based caring practices, access to basic services (such as safe drinking water and good sanitation), education of women, and direct nutritional interventions for malnourished children seem the most appropriate.
    Keywords: Developing countries, health, Inequality, malnutrition, Nigerian Demographic and Health Survey, Nutrition, Nutritional status, rural population
    Date: 2010
  18. By: Tia Linda Zuze (Independent Researcher)
    Abstract: This study explores the important relationship between policy variables that represent a school’s human resources and product variables in the form of student performance in Botswana’s schools. A focus of particular interest is if the teaching environment is related to student success and whether it can promote equity in learning between students from different socioeconomic backgrounds. Data for the study are drawn from a rich survey of students, teachers and schools in Southern and Eastern Africa. There is modest evidence to suggest that students attending well resourced schools are likely to perform better, irrespective of their background. The results points to a clear association between teacher content preparation and student achievement. Regular assessment is associated with better performance and greater social equity between students within the same school. Policy implications related to teacher preparation programmes in Botswana are discussed.
    Keywords: Botswana, education production function, demand for schooling, teacher evaluation, teacher knowledge, teacher education
    JEL: C10 H52 I21
    Date: 2010
    Abstract: The study examined the agricultural financing policies of the government of Nigeria and effects on rural development .The study found that though the government has made serious efforts at making good agricultural policies through schemes, programmes and institutions, it has not been able to back them up with adequate budgetary allocation and financing coupled with corruption in the execution of the policies. It is recommended that for the government agricultural financing policies to achieve its target of rural development, Nigeria will need an adequate level of strategically targeted investment in agriculture, upgrade rural infrastructure, boost productivity, and increase competitiveness of the farm output, in addition to fighting corruption.
    Keywords: Agricultural financing, policies, institutions, rural, development, International Development,
    Date: 2010–03–29
  20. By: Mani, Subha; Hoddinott, John; Strauss, John
    Abstract: This paper identifies the cumulative impact of early schooling investments on later schooling outcomes in the context of a developing country, using enrollment status and relative grade attainment (RGA) as short- and long-run measures of schooling. Using a child-level longitudinal dataset from rural Ethiopia, we estimate a dynamic conditional schooling demand function where the coefficient estimate on the lagged dependent variable captures the impact of all previous periods’ schooling inputs and resources. We find that this lagged dependent variable indicates a strong positive association between current and lagged schooling. Past history matters more for girls than boys and for children from higher-income households compared with the poor.
    Keywords: panel data, Schooling, value-added,
    Date: 2010
  21. By: Markus Brückner; Antonio Ciccone
    Abstract: According to the economic approach to political transitions, transitory negative economic shocks can open a window of opportunity for democratic improvement. Testing the theory requires a source of transitory shocks to the aggregate economy. We use rainfall shocks in Sub-Saharan African countries and find that negative rainfall shocks are followed by significant improvement in democratic institutions. Instrumental variable estimates indicate that following a transitory negative income shock of 1 percent, democracy scores improve by 0.9 percentage points and the probability of a democratic transition increases by 1.3 percentage points.
    Keywords: democratization, transitory economic shocks
    JEL: O0 P0
    Date: 2010–05
  22. By: Cheikh A. Gueye; Amadou N. R. Sy
    Abstract: Post debt relief, the number of African countries considering accessing international capital markets, often to fund large infrastructure projects, is increasing. Potential risks of capital inflows are well known but the literature offers little help to estimate the cost of borrowing internationally for the first time. This paper proposes a two-step approach to estimate the sovereign credit rating and interest rate cost of a country considering borrowing externally. Estimates can be used to assess the costs and benefits of different financing options. The method can also be used to construct foreign currency as well as domestic local currency yield curves.
    Date: 2010–06–11
  23. By: Hill, Ruth Vargas; Viceisza, Angelino
    Abstract: We conduct a framed field experiment in rural Ethiopia to test the seminal hypothesis that insurance provision induces farmers to take greater, yet profitable, risks. Farmers participated in a game protocol in which they were asked to make a simple decision: whether to purchase fertilizer, and if so, how many bags. The return to fertilizer was dependent on a stochastic weather draw made in each round of the game protocol. In later rounds of the game protocol, a random selection of farmers made this decision in the presence of a stylized weather-index insurance contract. Insurance was found to have some positive effect on fertilizer purchases. Purchases were also found to depend on the realization of the weather in the previous round. We explore the mechanisms of this relationship and find that it may be the result of both changes in wealth weather brings about and changes in perceptions of the costs and benefits of fertilizer purchases.
    Keywords: Fertilizer, field experiment, hypothesis, input response, Insurance,
    Date: 2010
  24. By: Bellemare, Marc F.
    Abstract: This article tests whether agricultural extension and imperfect supervision -- conflated here into the number of visits by a technical assistant -- increase productivity in a sample of contract farming arrangements between a processing …rm and small agricultural producers in Madagascar. Production functions are estimated which treat the number of visits by a technical assistant as an input and which exploit the variation in the number of visits between the contracted crops grown on a given plot by a speci…c grower, thereby accounting for district-, grower-, and plot-level unobserved heterogeneity. Results indicate that the elasticity of yield with respect to the number of visits lies between 1.3 and 1.7.
    Keywords: Supervision; Extension; Contract Farming; Grower-Processor Contracts
    JEL: O13 L24 Q12 O14
    Date: 2010–02–02
  25. By: Apata, T.G; Ogunyinka, A.I; Sanusi, R.A; Ogunwande, S
    Abstract: This paper presents an empirical analysis of the effects of global warming on Nigerian agriculture and estimation of the determinants of adaptation to climate change. Data used for this study are from both secondary and primary sources. The set of secondary sources of data helped to examine the coverage of the three scenarios (1971-1980; 1981-1990 and 1991-2000). The primary data set consists of 1500 respondentsâ but only 1250 cases were useful. This study analyzed determinants of farm-level climate adaptation measures using a Multinomial choice and stochastic-simulation model to investigate the effects of rapid climatic change on grain production and the human population in Nigeria. The model calculates the production, consumption and storage of grains under different climate scenarios over a 10-year scenery. In most scenarios, either an optimistic baseline annual increase of agricultural output of 1.85% or a more pessimistic appraisal of 0.75% was used. The rate of natural increase of the human population exclusive of excess hunger-related deaths was set at 1.65% per year. Results indicated that hunger-related deaths could double if grain productions do not keep pace with population growth in an unfavourable climatic environment. However, Climate change adaptations have significant impact on farm productivity.
    Keywords: Climate change, Adaptation, Economic consequences, Farm level productivity, Average Rainfall, Nigeria, Food Security and Poverty, D6, D91, E21, O13, Q01, Q2,
    Date: 2010–03–29
  26. By: Hans-Georg Petersen
    Abstract: In the first part of the report of the GTZ expert group an overview on the basics of integration and tax harmonisation within a common market is given. Chapter II. concentrates on the problems of national and international tax law regarding double taxation before the harmonisation process within the EU is described in detail. This process is not a best practice example but at least the experiences made in the course of the last five decades are interesting enough and might contribute important information for regions, which more or less recently have started a similar endeavour. The harmonisation needs are discussed for value added taxation (VAT), excise taxation, and income taxation. The problems of tax administrations, procedures laws, taxpayers’ rights and obligations as well as tax compliance are also taken into consideration. The second part of the study reviews the national tax systems within the EAC member countries. Before the single taxes are described in more detail, the macroeconomic situation is illuminated by some basic figures and the current stand of the inner-community integration analysed. Then the single tax bases and tax rates are confronted to shed some light on the necessities for the development of a common market within the near future. Again the value added tax laws, excise taxes and income taxes are discussed in detail, while regarding the latter the focus is on company taxation. For a better systematic analysis the national tax laws are confronted within an overview. The chapter is closed with a summary of the tax rates applied and a rough estimation of the tax burdens within the Partner States. The third part of this report contains the policy recommendations of the expert group following the same structures as the chapters before and presenting the results for the VAT, the excises and the corporate income tax (CIT). Additionally the requirements for tax procedures and administration as well as problems of transparency and information exchange are discussed in detail before the strategic recommendations are derived in close relation to the experiences made within the EU harmonisation process. The recommendations are based on the following normative arguments: (1) Tax harmonisation is a basic requirement for economic integration. (2) Equality of taxation is an imperative of tax justice and demands the avoidance of double taxation as well as the combat of tax evasion and corruption. (3) The avoidance of harmful tax competition between the Partner States. (4) The strengthening of taxpayers’ rights in tax procedures. Hence, all kinds of income, goods and services should be taxed once and only once.
    Keywords: Centralization, decentralization, ethnic differences, fiscal federalism, fiscal planning, good governance, harmonization, integration, nation building, revenue sharing, sustainable fiscal policy, tax reform. Compliance, corruption, direct taxes, double taxation, East African Community, indirect taxes, information exchange, integration, international tax law, revenue authorities, tax administration, taxation, tax harmonization, tax system, transparency.
    JEL: H2 H7 H83 F5 F15 N47 O2
    Date: 2010–01

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