nep-afr New Economics Papers
on Africa
Issue of 2011‒05‒30
eleven papers chosen by
Quentin Wodon
World Bank

  1. The Taxation of Gambling In Africa By Francois Vaillancourt
  2. Recent business transformation in intermediate-sized cities in South-Africa By Geyer, M.; Coetzee, H.C.; Plessis, D. du; Donaldson, R.
  3. Does School Education Reduce the Likelihood of Societal Conflict in Africa? By Julius Agbor
  4. What are the Distributional Implications of Halving Poverty in South Africa when Growth Alone is not Enough? By Fiona Tregenna
  5. "Public Job-creation Programs: The Economic Benefits of Investing in Social Care. Case Studies in South Africa and the United States" By Rania Antonopoulos; and Kijong Kim
  6. How applicable are the new keynesian DSGE models to a typical low-income economy? By Senbeta , Sisay
  7. Aftercare of inward foreign direct investment: A case study of South Africa By Benjamin Manasoe; Ronald Mears
  8. HIV/AIDS and Conflict: Micro Evidence from Burundi By Matthias Rieger
  9. Continental vs. Intercontinental Migration: An Empirical Analysis of the Impacts of Immigration Reforms on Burkina Faso By Fleur Wouterse
  10. Dépenses publiques d'éducation et pauvreté au Burkina Faso: une approche en Équilibre Général Calculable By Lacina Balma; W. Francine Alida Ilboudo; Adama Attara; Roméo Kabore; Kassoum Zerbo; T. Samuel Kabore
  11. Dynamic Effects of Monetary Policy Shocks in Malawi By Harold Ngalawa; Nicola Viegi

  1. By: Francois Vaillancourt (University of Montreal)
    Abstract: The taxation of gambling in Africa as a whole appears to have been the object of little attention. In this paper, we first present the importance of gambling for Africa from a world perspective then disaggregate that within Africa. We then turn to the nature and importance of taxation of gambling, focusing on the major markets identified in the first part of the paper. In the third part we present the available evidence on the incidence of gambling in Africa which is limited to South Africa.
    Date: 2011–05–10
  2. By: Geyer, M.; Coetzee, H.C.; Plessis, D. du; Donaldson, R.
    Date: 2011
  3. By: Julius Agbor
    Abstract: This paper empirically tests the hypothesis that education, as measured by the average schooling years in the population aged 15 and above, reduces the likelihood of societal conflicts in Africa. It focuses on a sample of 31 African countries during 1960-2000 and uses both panel ordered probit and multinomial logistic estimation models. Using an aggregated measure of all intrastate major episodes of political violence obtained from the Political Instability Task Force (PITF) as proxy for conflict, and controlling for the extent of political participation, income inequality, labour market conditions, neighborhood e¤ects, different income levels, natural resource revenues, youth bulge, inflation, ethno-linguistic and religious fractionalisation and urbanisation; the results suggests that education e¤ectively reduces the likelihood of intra-state conflicts in Africa. This finding is robust to alternative model specifications and to alternative time frames of analysis. The evidence also suggests that, sound macroeconomic policies, by way of rapid per capita GDP growth, better export performance and lower in‡ation are means of effectively reducing the likelihood of conflicts while neighborhood effects are a significant driver of internal conflicts in African states. Therefore, in the battle to reduce the frequency of intrastate conflicts, African governments should complement investments in education with sound macroeconomic policies while seeking mutually beneficial solutions to all major internal conflicts, with a view to minimising their spill-over effects..
    Keywords: School Education, Intra-state Con‡ict, Economic Development, Africa
    Date: 2011
  4. By: Fiona Tregenna
    Abstract: The South African government has set a target of halving poverty by 2014. Using microdata from the 2005/6 Income and Expenditure Survey, this article frames government’s stated target of halving poverty by 2014 in terms of specific measures of the poverty gap and poverty headcount ratio. With the poverty line as defined here, about half the South African population is classified as poor. Even so, the aggregate poverty gap is only about 3% of GDP. Projections of poverty in 2014 under various growth scenarios indicate that growth alone will be insufficient to halve poverty by then. It would take average annual growth of 8.7% between 2006 and 2014 to halve both the poverty gap and poverty headcount ratio with the current distribution of income and expenditure. However, projections of the effects of a range of growth and distributional scenarios on poverty, using a new method for simulating pro-poor distributional change, indicate that halving poverty appears feasible with moderate growth rates and fairly mild pro-poor distributional change. The results are indicative as to the scale of distributional changes necessary to halve poverty under various growth scenarios
    JEL: D30 D31 I32
    Date: 2011
  5. By: Rania Antonopoulos; and Kijong Kim
    Abstract: This paper demonstrates the strong impacts that public job creation in social care provisioning has on employment creation. Furthermore, it shows that mobilizing underutilized domestic labor resources and targeting them to bridge gaps in community-based services yield strong pro-poor income growth patterns that extend throughout the economy. Social care provision also contributes to promoting gender equality, as women—especially from low-income households-constitute a major workforce in the care sector. We present the ex-ante policy simulation results from two country case studies: South Africa and the United States. Both social accounting matrix–based multiplier analysis and propensity ranking–based microsimulation provide evidence of the pro-poor impacts of the social care expansion.
    Keywords: Social Care; Job Creation; Gender Equality; Pro-Poor Growth
    JEL: C15 C67 D33 E24 J48
    Date: 2011–05
  6. By: Senbeta , Sisay
    Abstract: This paper assesses the applicability of new Keynesian DSGE models to a typical low income economy like those in Sub Saharan Africa. To this effect, we first review the development, criticisms and recent advances in DSGE modeling. Then we assess the implications of the assumptions of the standard open economy New Keynesian DSGE model within the context of the economic environment of a typical low income economy. Our assessment shows the following two points. First, though there are many criticisms to these models, most recent advances seem to have addressed most of these criticisms. However, there are still some outstanding criticisms that are serious challenges not only to DSGE models but also to all conventional economic models. Second, the current tendency of applying these models to explain or predict economic phenomenon in low income countries without incorporating the structural specificities of these countries cannot be justified. In stead, for these models to be helpful to understand the economic events in low income countries, most of their components must be changed or modified so that these models capture some salient specificities of low income economies. In this study we identify some of these components and suggest the possible changes or modifications.
    Keywords: New Keynesian DSGE, Open economy macroeconomics, Fluctuations, Sub-Saharan Africa
    JEL: E32 O55 F41
    Date: 2011–05–16
  7. By: Benjamin Manasoe; Ronald Mears
    Abstract: Attraction of new inward foreign direct investment (FDI) globally, especially in the developing countries, is problematic. Economic development practitioners have recently started to prioritise the retention and growing of existing investments to enhance their economic development agenda. The purpose of this paper is to analyse and investigate the relationship between inward FDI and investment aftercare in South Africa (SA). Only a few studies have been carried out on the topic at the global level and none on SA as far as could be ascertained. A structured questionnaire was used to collate data, and 30 face-to-face interviews were conducted with 16 investment aftercare practitioners and 14 executives from the investment promotion agencies (IPAs) in seven of the nine provinces of SA. The main finding of the study is that although investment aftercare services are essential, they receive limited funding, staff and attention, and have not yet been developed in SA.
    JEL: P45
    Date: 2011
  8. By: Matthias Rieger (IHEID, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: This paper studies the relationship between civil war and HIV/AIDS in Burundi. It contributes to the empirical literature by providing micro level evidence using an identification strategy based on original data on the dynamics of rebel movements. The presence of exit and entry points from and to rebel safe havens is used to generate exogenous variation in conflict intensity. These points are plausibly assumed to serve as starting or end points for rebel attack, but are not directly related to HIV/AIDS or correlated with unobservables. The case of Burundi provides fruitful grounds of analysis, as seroprevalence rates are heterogeneous across the country, the serological and conflict data for Burundi is of good quality and conclusions are likely to serve as valuable insights in Burundi and other fragile countries with similar HIV/AIDS policy agendas. OLS, instrumental variable and binary response model results indicate that within provinces in Burundi there is no clear-cut relationship between local conflict intensity and seroprevalence, condom knowledge and use, knowledge of test opportunities and actual test taking, or rape. Findings suggest that although HIV/AIDS is a general development priority, it is not as urgent a post-conflict priority as commonly assumed.
    Keywords: HIV, AIDS, Civil War, Instrumental Variables, Burundi
    Date: 2011–05–25
  9. By: Fleur Wouterse
    Abstract: This working paper uses an agricultural household model to explore the impact of potential immigration policy reforms on the welfare of rural households in Burkina Faso. Simulation results demonstrate that, in contrast to continental migration, increased intercontinental migration has strong positive household welfare effects. Similarly, an increase in the stay abroad of intercontinental migrants impacts positively on welfare. Findings lend support to the introduction of a Temporary Migration Programme (TMP) which, by lowering the cost involved, would enable poorer households to engage in intercontinental migration. The temporary nature of such a program ensures that ‚Dutch disease? effects are mitigated through eventual migrant return. Granting of legal status to migrants already abroad through a temporary work and residence permit is also recommended if the objective is to improve the welfare of migrant-sending households. Legalisation can be granted under the same TMP so that the eventual return of migrants would be encouraged.<BR>Ce document de travail repose sur un modèle décrivant des ménages agricoles pour étudier l’impact de réformes potentielles des politiques migratoires sur le bien-être en zone rurale au Burkina Faso. Les résultats des simulations démontrent qu’à la différence des migrations continentales, l’effet des migrations intercontinentales est plus important sur le bien-être du ménage. De même, une durée plus longue de séjour à l’étranger des migrants intercontinentaux a un impact positif sur le bien-être. Les résultats constituent un argument en faveur de la mise en place d’un programme de migrations temporaires (PMT) qui en abaissant le coût des migrations intercontinentales permettrait aux ménages les plus pauvres de recourir aux migrations intercontinentales. La nature temporaire d’un tel programme permet d’atténuer les effets liés au « syndrome hollandais » de par un retour éventuel des migrants. Accorder un statut légal aux migrants qui sont déjà à l’étranger avec un permis de travail temporaire et un permis de résidence est aussi recommandé si l’objectif est d’améliorer le bien-être des ménages de migrants. La légalisation peut être accordée selon le même PMT afin d’encourager le retour éventuel des migrants.
    Keywords: migration, labour supply, remittances, immigration policy, Burkina Faso, offre de travail, migration, transferts d’argent, politiques d’immigration, Burkina-Faso
    JEL: F22 J08 J61 O55
    Date: 2011–05
  10. By: Lacina Balma; W. Francine Alida Ilboudo; Adama Attara; Roméo Kabore; Kassoum Zerbo; T. Samuel Kabore
    Abstract: Un modèle d’équilibre général calculable multisectoriel est construit afin d’évaluer les répercussions directes et indirectes des politiques publiques en matière d’éducation sur le bien-être, la pauvreté et la distribution des revenus au Burkina Faso. Il spécifie une dotation en main-d’œuvre qualifiée et non qualifiée flexible pour chaque ménage. Le système d’éducation est scindé en deux : L’éducation de base et l’éducation supérieure. Le volume d’éducation supérieure est exogène alors que l’éducation de base est demandée par les ménages à des fins d’investissement et permet de « transformer » les travailleurs non qualifiés en travailleurs qualifiés. Les simulations indiquent qu’une augmentation uniforme de 40 % des subventions publiques en éducation de base, financée par une augmentation de l’impôt sur le revenu des ménages et de la taxe de vente, se traduirait non seulement par une augmentation du bien-être mais par une baisse de l’incidence de la pauvreté pour tous les ménages.
    Keywords: Modèle EGC, dépenses publiques d'éducation, pauvreté, Burkina Faso
    JEL: C68 H52 I21 I32 J24 O55
    Date: 2011
  11. By: Harold Ngalawa; Nicola Viegi
    Abstract: This paper sets out to investigate the process through which monetary policy affects economic activity in Malawi. Using innovation accounting in a structural vector autoregressive model, it is established that monetary authorities in Malawi employ hybrid operating procedures and pursue both price stability and high growth and employment objectives. Two operating targets of monetary policy are identified, viz., bank rate and reserve money, and it is demonstrated that the former is a more effective measure of monetary policy than the latter. The study also illustrates that bank lending, exchange rates and aggregate money supply contain important additional information in the transmission process of monetary policy shocks in Malawi. Furthermore, it is shown that the floatation of the Malawi Kwacha in February 1994 had considerable effects on the country’s monetary transmission process. In the post-1994 period, the role of exchange rates became more conspicuous than before although its impact was weakened; and the importance of aggregate money supply and bank lending in transmitting monetary policy impulses was enhanced. Overall, the monetary transmission process evolved from a weak, blurred process to a somewhat strong, less ambiguous mechanism.
    JEL: E52 E58
    Date: 2011

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