nep-afr New Economics Papers
on Africa
Issue of 2011‒04‒09
nineteen papers chosen by
Quentin Wodon
World Bank

  1. Uncovering indicators of effective school management in South Africa using the National School Effectiveness Study By Stephen Taylor
  2. Production, Inequality and Poverty linkages in South Africa By Nicholas Ngepah
  3. Productive and cognitive innovation strategy:African framework design By Nwaobi, Godwin C
  4. Discussion Sessions Coupled with Microfinancing May Enhance the Role of Women in Household Decision-Making in Burundi By Radha Iyengar; Giulia Ferrari
  5. The Allocation of Public Goods and National Elections in Ghana By André, Pierre; Mesplé-Somps, Sandrine
  6. Electricity Intensities of the OECD and South Africa: A Comparison By R. Inglesi-Lotz; J. Blignaut
  7. Gendered Trends in Poverty in the Post-Apartheid Period, 1997 - 2006 By Dorrit Posel; Michael Rogan
  8. South Africa’s Electricity Consumption: A Sectoral Decomposition Analysis By R. Inglesi-Lotz; J. Blignaut
  9. Numeric competence, confidence and school quality in the South African wage function: towards understanding pre-labour market discrimination By Gideon du Rand; Hendrik van Broekhuizen; Dieter von Fintel
  10. Number of siblings and school achievement in sub Sahara Africa By KUEPIE Mathias; TENIKUE Michel; NOUETAGNI Samuel; MISANGUMUKINI Nicaise
  11. Relative standing and subjective well-being in South Africa: The role of perceptions, expectations and income mobility By Dorrit Posel; Daniela Casale
  12. Modelling cognitive skills, ability and school quality to explain labour market earnings differentials By Cobus Burger; Servaas van der Berg
  13. Does a Diversification Motive Influence Children’s School Entry in the Ethiopian Highlands? By Lindskog, Annika
  14. Volatility Spillovers across South African Asset Classes during Domestic and Foreign By Andrew S. Duncan; Alain Kabundi
  15. The Effect of Older Siblings’ Literacy on School Entry and Primary School Progress in the Ethiopian Highlands By Lindskog, Annika
  16. Approfondir le profilage géographique de la pauvreté en RDC. L’introduction d’indices composites sur base des avoirs By Marivoet, Wim; Keje, Hugues
  17. La dynamique de la croissance est-elle pro-pauvres au Niger ? By Youssoufou Hamadou Douada
  18. Alternative indices of political freedoms, property rights, and political instability for Zambia By J.W. Fedderke; I. Lourenco; F. Gwenhamo
  19. Determinants of Stock Market Prices in Namibia By Joel Hinaunye Eita

  1. By: Stephen Taylor (Department of Economics, University of Stellenbosch)
    Abstract: For many poor South African children, who are predominantly located in the historically disadvantaged part of the school system, the ongoing low quality of education acts as a poverty trap by precluding them from achieving the level of educational outcomes necessary to be competitive in the labour market. An important question is the extent to which this low quality of education is attributable to poverty itself as opposed to other features of teaching and management that characterise these schools. The literature explaining schooling outcomes in South Africa has reached a consensus that additional educational resources are no guarantee of improved outcomes. While socio-economic status remains the most powerful determinant of educational outcomes, studies have typically struggled to isolate other school and teacher characteristics that consistently predict outcomes, leaving much of the variation in achievement unexplained. Several authors have pointed to an ineffable mix of management efficiency and teacher quality that must surely underlie this unexplained component. The National School Effectiveness Study (NSES) is the first large-scale panel study of educational achievement in South African primary schools. It examines contextually appropriate features of school management and teacher practice more thoroughly than other large sample surveys previously administered in South Africa. Using the NSES data, this paper identifies specific aspects of school organisation and teacher practice, such as the effective coverage of curriculum and completed exercises, which are associated with literacy and numeracy achievement and with the amount of learning that occurs within a year of schooling. Some suggestions are also made regarding the appropriate way to interpret these results for the purpose of policy-making.
    Keywords: National School Effectiveness Study (NSES), South Africa, education, education production function, school management, economics of education
    JEL: I20 I21 I30 O15
    Date: 2011
  2. By: Nicholas Ngepah
    Abstract: The Kuznets inequality-development hypothesis can be tested with time-series data rather than the cross-section analyses found in earlier literature. Single-country time-series analysis cannot be done without addressing endogeneity between output and inequality. South Africa has been under-researched in this area due to a lack of data. Recent data released by the Presidency of South Africa makes such analysis possible. Besides, the use of a single inequality index in such a multiracial society is likely to capture only average effects. This paper jointly estimates production, inequality (decomposed by sub-group) and poverty with 3sls using South African data. The findings suggest that production is affected negatively by between-group inequality. Credit constraints and interracial tensions are possible causes, generating significant adverse effects that stifle economic productivity. Within-group inequality enhances production, possibly due to within-group social capital. There is evidence of an inverted U-shape relationship between per capita income and between-group inequality, but a U-shaped one between per capita income and within-group inequality. However due to the effects of the active post-apartheid policies — which reduce between-group inequality, but increase within-group inequality — it is doubtful if this relationship is capturing a Kuznets process. There is a significant poverty-increasing (reducing) effect of total and between-group inequalities (output). The abjectly poor seem to suffer more from inequality than others do. Policy efforts have to focus on reducing between group inequality.
    Keywords: Production, income distribution, poverty, 3sls; South Africa
    JEL: C20 C32 D31 E23
    Date: 2011
  3. By: Nwaobi, Godwin C
    Abstract: Since the mid 1900’s, economist have come to recognize the role of innovative activity in firms productivity growth, particularly in the competitive market economies. However, the most conducive market environment for innovative activity has also become a subject of interest. Thus, a major constraint on industrial dynamism in African countries is said to be the dearth of indigenous entrepreneurs. This paper therefore argued for the provision of comprehensive innovation policy, in which the government supports the innovators by providing appropriate financial measures; removing regulatory, institutional (competitive) obstacles to innovation; and strengthening the knowledge base through investment in education, research and industrial sites in Africa.
    Keywords: innovation policy; Africa; Nigeria; investment; productivity; science parks; business clusters; economic zones; inventions; free trade zones; cognitive revolution; industrial revolution; infrastructures; technology; research and development; venture capital
    JEL: Q50 R10 L90 D20 Q3 O32 L60 Q2 O30 Q40 L26 M13 O31 Q10 L70
    Date: 2011–03–21
  4. By: Radha Iyengar; Giulia Ferrari
    Abstract: The empowerment of women within households remains a major issue around the world including in Africa. We have conducted a study in Burundi coupling discussion sessions with microfinancing to determine if they enhance the role of women in decisions regarding household purchases and the reduction of domestic violence. We compare our findings to that from a published study in South Africa that combined discussion sessions on life skills and health on reduction in domestic violence and decisions on economic issues. Both studies used randomized controlled experiments. Both studies show a trend towards increases in household authority, with the Burundi study showing statistical significance. In South Africa there was a large, albeit short lived decrease in domestic violence. In Burundi there was small reduction but trends suggest a longer duration. The effects on overall empowerment are small. These studies suggest that a more sustained use of discussion sessions may result in longer and more sustained economic and social empowerment. Future research could focus on the longer term effects of the use of discussion sessions and investigate how the observed impacts can be sustained in magnitude and duration.
    JEL: D12 G21 I12 J12
    Date: 2011–03
  5. By: André, Pierre; Mesplé-Somps, Sandrine
    Abstract: The body of literature on purely democratic countries can sometimes fail to explain the behavior of government in semi-democratic African countries. Empirical and theoretical political economic papers find that public funds target ruling party supporters and swing districts. Our results, however, suggest that the opposite was true of Ghana. We observe that pro-government districts received less public investment when the NDC was in power. We posit that this finding is partially driven by the government's will to curry favor with opposition politicians. Indeed, in addition to pursuing its electoral objectives, the government of an emerging democracy may fear political instability and keep the lid on potential unrest by bargaining with opposition leaders. Our analysis also shows that, when controlling for votes and other covariates (including wealth, urbanization and density), public goods allocation is not driven by ethnic group targeting either.
    Keywords: Public goods, elections, ethnic, Africa, Ghana
    JEL: O1 D7 R11
    Date: 2011–01
  6. By: R. Inglesi-Lotz; J. Blignaut
    Abstract: Improving a country’s electricity efficiency is considered one of the important ways to reduce its greenhouse gas emissions and to meet its commitments concerning climate change mitigation. In this paper, we conduct a comparative analysis between South Africa and OECD members’ total and sectoral electricity intensities. This is done to establish a sense of South Africa’s relative performance in this regard, to ascertain the possible scope for improvement and, if such scope exists, to determine in which of the industrial sectors
    Date: 2011
  7. By: Dorrit Posel; Michael Rogan
    Abstract: This study investigates whether trends in the extent, depth and severity of poverty in South Africa over the past decade have been gendered. We examine first whether females are more likely to live in poor households than males, and whether this has changed over time; and, second, how poverty has changed among female-headed and male-headed households. We use data provided by the 1997 and 1999 rounds of the October Household Survey and the 2004 and 2006 rounds of the General Household Survey. These surveys have the advantage of collecting information on the individual receipt of social grant income. We test whether our findings on gendered trends in poverty are robust to different poverty lines, to the possible underestimation of household income and to adjustments for household composition.
    Date: 2011
  8. By: R. Inglesi-Lotz; J. Blignaut
    Abstract: South Africa's electricity consumption has increased sharply since the early 1990s. Here we conduct a sectoral decomposition analysis of the electricity consumption for the period 1993 to 2006, to determine the main drivers of this increase. The results show that the increase was due mainly to output- or production-related factors, with structural changes playing a secondary role. While there is some evidence of efficiency improvements, indicated here as a slowdown in the rate of increase in electricity intensity, it was not nearly sufficient to offset the combined production and structural effects that propelled electricity consumption higher.
    Date: 2011
  9. By: Gideon du Rand (Department of Economics, University of Stellenbosch); Hendrik van Broekhuizen (Department of Economics, University of Stellenbosch); Dieter von Fintel (Department of Economics, University of Stellenbosch)
    Abstract: Highly convex estimates of average returns to education commonly found in South Africa are usually rationalised as being the result of a surplus of unskilled workers and a shortage of skilled workers in the economy (Keswell & Poswell, 2004). However, due to the absence of appropriate micro level data in the past, unbiased estimation of these returns has been difficult. This paper investigates potential sources of estimation bias using the NIDS 2008 survey, one of the first to contain concurrent information on individual labour market outcomes, numeric proficiency and quality of education received (which is highly diverse and unequal across the population). We compare naïve estimates in all relevant sub-samples with estimates that attempt to correct for the sample selection on numeracy (as the test was voluntary), as well as selection into employment. We also correct for (and exploit information on) the choice of test difficulty given to respondents, an option which was not intended in the design stage of the survey. This feature allows rough estimates of the influence of respondents’ confidence in their abilities on wages. More importantly, the sample selection adjustments allow us to control for numeracy and school quality, which influence the classic problem of ability bias in returns to education. We estimate the bias in returns to education as well as the extent of racial labour market discrimination that can be accounted for by schooling outputs rather than other features of the labour market. We assess whether convex returns to education can be explained by an unequal distribution of school quality, or whether conventional explanations (such as labour demand) remain the main explanation. Suggested remedies for selection on the endogenous numeracy measure include instrumental variables and a “Double Heckman” approach. Typical instrumental variables used in labour market analysis are poorly captured and restrict sample sizes to the extent that estimates often become nonsensical. The latter (non-standard) adjustments for sample selection issues show some promise but further evaluation and tests are required to fully rely on these results. Convex returns to education remain strongly present in the African population (after accounting for inequalities in schooling outputs), while they are concave for the white population. Bias in these returns is unreliably estimated for whites and Asians, but is highest for the more educated at a peak of 4.55 and 5.84 percentage points for the African and coloured populations respectively. Returns to numeracy, when more reliably identified, are convex. School outputs (measured in numeracy test scores and historical school performance) constitute a sizable part of discrimination estimates, accounting for between 18% and 36% of unexplained racial wage premia.
    Keywords: School quality, Labour Market Discrimination, Returns to Education, South Africa, Affirmative Action, Cognitive Skills
    JEL: C21 I21 J78
    Date: 2011
  10. By: KUEPIE Mathias; TENIKUE Michel; NOUETAGNI Samuel; MISANGUMUKINI Nicaise
    Abstract: This paper uses biographical data from Dakar and Yaounde, two big African cities, to study the link between the number of siblings and school attainment. The data describe all fertility events meet by parents and the sibling’s size structure of every child over time. The average sibling size effect is estimated first. Then, the sibling’s size at given age effect is estimated. The results show that, in Dakar, both the overall and age specific siblings size effect on education are negative and statistically significant. In Yaounde, the overall effect is not significant, but we observed negative effects at some schooling ages (between 14 and 16). This paper uses biographical data from Dakar and Yaounde, two big African cities, to study the link between the number of siblings and school attainment. The data describe all fertility events meet by parents and the sibling’s size structure of every child over time. The average sibling size effect is estimated first. Then, the sibling’s size at given age effect is estimated. The results show that, in Dakar, both the overall and age specific siblings size effect on education are negative and statistically significant. In Yaounde, the overall effect is not significant, but we observed negative effects at some schooling ages (between 14 and 16).
    Keywords: Education; siblings; Dakar; Yaounde
    Date: 2011–03
  11. By: Dorrit Posel; Daniela Casale
    Abstract: Most studies that explore the impact of relative standing on subjective well-being use objective measures of the individual’s relative position, such as the mean income of the reference group or the individual’s ranking in the relevant income distribution. In this paper, using a new household survey from South Africa, we are able to derive subjective measures of relative standing, as information is collected on individuals’ perceptions of where they rank in the income distribution. We find considerable differences between objective and subjective measures of an individual’s relative ranking. Furthermore, our results suggest that an individual’s perceived relative status has a significantly larger effect on subjective well-being than objective measures of relative status based on reported income. We also examine the effects on subjective well-being of how individuals perceive their relative position in the income distribution to have changed since childhood, and what they expect their relative position to be in the future. We find that future upward mobility has a smaller effect than upward mobility compared to one’s past, suggesting that life satisfaction is influenced more by what has been achieved than by anticipated achievements.
    Keywords: subjective well-being, relative standing, perceptions, expectations, income mobility, South Africa
    JEL: I31 D31
    Date: 2011
  12. By: Cobus Burger (Department of Economics, University of Stellenbosch); Servaas van der Berg (Department of Economics, University of Stellenbosch)
    Abstract: Attempts to explain wage differences between race groups in South Africa are constrained by the fact that quality of education is known to differ greatly between groups, thus the unexplained portion of the wage gap may be much affected by such differences in education quality. Using a simulation model that utilises school-leaving (matric) examination results and educational attainment levels to generate estimates of education quality, we find that much of the wage gap can indeed be explained by differences in education quality. Thus the unexplained residual, often identified with labour market discrimination, usually greatly over-estimates such discrimination. This emphasises even more strongly the need for greater equity in educational outcomes, particularly in the often unobserved quality of education.
    Keywords: South Africa, education quality, wages, labour market, Oaxaca-Blinder decomposition, discrimination, economics of education
    JEL: J7 J24 J31
    Date: 2011
  13. By: Lindskog, Annika (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Household-level diversification of human capital investments is investigated. A simple model is developed, followed by an empirical analysis using 2000-2007 data from the rural Amhara region of Ethiopia. Diversification would imply negative siblings’ dependency and be more important in more risk-averse households. Hence it is investigated if older siblings’ literacy has a more negative (smaller if positive) impact on younger siblings’ school entry in more risk-averse households. Results suggest diversification across brothers, but are not statistically strong, and with forces creating positive sibling dependency dominating over diversification.<p>
    Keywords: Diversification; Education; Ethiopia; Uncertainty
    JEL: D13 D81 I21
    Date: 2011–04–01
  14. By: Andrew S. Duncan; Alain Kabundi
    Abstract: This paper studies domestic volatility transmission in an emerging economy. Daily volatility spillover indices, relating to South African (SA) currencies, bonds and equities, are estimated using variance decompositions from a generalised vector autoregressive (GVAR) model (Pesaran and Shin 1998). The results suggest substantial time-variation in volatility linkages between October 1996 and June 2010. Typically, large increases in volatility spillovers coincide with domestic and foreign financial crises. Equities are the most important source of volatility spillovers to other asset classes. However, following the 2001 currency crisis, and up until mid-2006, currencies temporarily dominate volatility transmission. Bonds are a consistent net receiver of volatility spillovers. In comparison to similar research focussing on the United States (Diebold and Yilmaz 2010), volatility linkages between SA asset classes are relatively strong.
    Keywords: Asset Market Linkages, Dynamic Correlation, Financial Crisis, Generlised Vector Autoregression, Variance Decomposition, Volatility Spillover.
    JEL: G1 F3
    Date: 2011
  15. By: Lindskog, Annika (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The effects of older sisters’ and brothers’ literacy on the annual school entry and primary school grade progress probabilities of boys and girls are estimated using within-household variation. Older siblings’ literacy has positive effects, especially for same-sex siblings. The literacy of older sisters appears to be more beneficial than that of older brothers, not least since it has positive effects on school entry among both boys and girls, and since it has positive effects also when the sister has left the household. There are positive effects both from literate older siblings who left school and from literate older siblings who are still in school. This suggests that within-household education spillovers, rather than time-varying credit constraints, explain the positive sibling-dependency, since with credit constraints children in school would compete over scarce resources. The positive effects on school progress are limited to same-sex siblings who are still present in the household, suggesting every-day interactions to be important.<p>
    Keywords: Primary education; Ethiopia; Within-Household; Spillovers; Credit-Constraints
    JEL: D13 I21
    Date: 2011–04–01
  16. By: Marivoet, Wim; Keje, Hugues
    Abstract: Par nécessité ainsi qu’à cause de leur valeur intrinsèque et complémentaire, les méthodes synthétiques sur base des avoirs (en anglais: « asset-based approaches ») ont dernièrement regagné en importance dans l’évaluation de la pauvreté. Dans ce papier de recherche, on va appliquer l’une de ces méthodes statistiques sur les données de l’Enquête 1-2-3 (2004-5), en complétant ainsi le profil de la pauvreté monétaire en RDC. Les résultats de cette étude montrent que les ménages dans le milieu urbain disposent d’un ensemble d’avoirs plus important, de telle sorte qu’ils sont moins vulnérables aux chocs et plus capables de poursuivre une meilleure vie que leurs homologues ruraux. Ceci compte d’autant plus pour la province urbanisée de Kinshasa par rapport, à l’autre bout de l’échelle, aux provinces du Bandundu, du Maniema, Orientale et de l’Equateur. Par conséquent, et après avoir examiné les dimensions ‘budget’ et ‘capital’, on constate que la pauvreté urbaine en RDC est moins structurelle que celle de la campagne, ce qui nécessite donc des interventions d’un autre type. By necessity as well as because of their intrinsic and complementary value, the asset-based approaches have recently regained importance in the field of poverty measurement. In this study, we apply one of these statistical methods based upon the findings of Survey 1-2-3 (2004-5), thus completing the profile of monetary poverty within the DRC. The results of this survey indicate that households from urban areas possess an aggregate of more important assets, which makes them less vulnerable to shocks and enables them to lead a better life than those in rural areas. This actually holds more true for the province of Kinshasa than for the provinces of Bandundu, Maniema, Oriental and Equateur. As a result, after having considered the ‘budget’ and ‘capital’ dimensions, we conclude that urban poverty within the DRC is less structural than poverty in the countryside, which necessitates interventions of another kind.
    Date: 2011–03
  17. By: Youssoufou Hamadou Douada (GED, Université Montesquieu Bordeaux IV)
    Abstract: Ce papier tente de cerner la configuration de la croissance et de la pauvreté en relation avec la dynamique des privations. Dans ce contexte, deux orientations seront poursuivies. D’une part, l’étude propose d’examiner les spécificités de la croissance pro-pauvres en fonction du bien-être selon le pays, les régions et le milieu de résidence. D’autre part, un exercice de simulation est proposé pour mesurer l’impact des différents niveaux de croissance sur la réduction de la pauvreté. Dans le premier cas, il ressort globalement que la croissance économique nigérienne est pro-pauvres, sauf dans les villes (Niamey notamment) où la croissance semble être pro-riches – l’interférence négative de l’inégalité a plus que contrebalancé l’effet positif de la croissance. Dans le second cas, si le rôle de la croissance dans la réduction de la pauvreté est sans conteste, l’exercice de simulation montre que les efforts à fournir afin de parvenir à réduire de moitié la pauvreté, d’ici à 2015, sont importants. Il faut, en réalité, un taux de croissance économique à deux chiffres pour que le Niger arrive à un tel résultat, toute chose étant égale par ailleurs. This paper tries to determine the configuration of the growth and poverty in relation to the dynamics of the deprivations. In this context, two orientations will be continued. On the one hand, the study proposes to examine specificities of the growth the pro-poor according to the wellbeing according to the country, the areas and the residence. On the other hand, a simulation is proposed to measure the impact of different levels of growth on poverty reduction. In the first case, it arises overall that the economic growth of Niger is pro-poor, except in the cities (Niamey in particular) where the growth seems to be pro-rich – the negative interference of the inequality more than counterbalanced the positive effect of the growth. In the second case, if the role of the growth in the reduction of poverty is undoubtedly, the simulation shows that the efforts required in order to reduce poverty by half, from here at 2015, are important. It is necessary to obtain a rate of economic growth with two digits so that Niger arrives at such a result, all things being equal.(Full text in french)
    JEL: O12 O15
    Date: 2011–03
  18. By: J.W. Fedderke; I. Lourenco; F. Gwenhamo
    Abstract: This paper presents new institutional measures for Zambia. Coverage is of political rights and freedoms, of property rights, and of political instability. The sample period is from 1947 to 2007. Comparison of the indices with directly comparable Zimbabwean and Malawian series, shows strong sources of divergence in institutional conditions. The paper also considers interaction amongst the institutional measures, and between the institutional measures and measures of economic development. We find that there is an association among the institutional variables, with the various rights dimensions moving together, and being negatively associated with political instability. The evidence further suggests that the institutional measures are associated benevolently with economic development. In this sense the indicators of the present paper therefore conform to the precepts of the new institutional economics
    Keywords: Institutions, Political freedom, Property rights, Political Instability and Zambia
    JEL: K00 N4 O1
    Date: 2011
  19. By: Joel Hinaunye Eita
    Abstract: This paper investigates the macroeconomic determinants of stock market prices in Namibia. The investigation was conducted using a VECM econometric methodology and revealed that Namibian stock market prices are chiefly determined by economic activity, interest rates, inflation,money supply and exchange rates. An increase in economic activity and the money supply increases stock market prices, while increases in inflation and interest rates decrease stock prices. The results suggest that equities are not a hedge against inflation in Namibia, and contractionary monetary policy generally depresses stock prices. Increasing economic activity promotes stock market price development
    Keywords: stock market prices; arbitrage pricing theory; cointegration; impulse reponses; Namibia
    JEL: G10 G11 C23 C32
    Date: 2011

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