nep-afr New Economics Papers
on Africa
Issue of 2011‒07‒21
ten papers chosen by
Quentin Wodon
World Bank

  1. Why only one individual tests for HIV/AIDS among Sub-Saharan African Couples? By Olivier STERCK
  2. Nation-Building and Conflict in Modern Africa By Sanghamitra Bandyopadhyay; Elliott Green
  3. Aid Absorption and Spending in Africa: A Panel Cointegration Approach By Pedro M. G. Martins
  4. Rainfall, Financial Development, and Remittances: Evidence from Sub-Saharan Africa By Rabah Arezki; Markus Bruckner
  5. Transportation Infrastructure and Development in Ghana By Rémi Jedwab; Alexandre Moradi
  6. Do Capital Inflows Hinder Competitiveness? The Real Exchange Rate in Ethiopia By Pedro M. G. Martins
  7. Fiscal Dynamics in Ethiopia: The Cointegrated VAR Model with Quarterly Data By Pedro M. G. Martins
  8. Monetary Policy Rules in the BRICS: How Important is Nonlinearity? By Fredj Jawadi; Sushanta K. Mallick; Ricardo M. Sousa
  9. L'éducation des femmes et le développement en Afrique subsaharienne By Caroline Fink
  10. Assessing strategies to achieve MDGs goals: Evidence from Senegal By François Joseph Cabral; Anne-Sophie Robilliard; Fatou Cissé; Abdoulaye Diagne

  1. By: Olivier STERCK (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: Voluntary Testing and Counseling (VTC) is a popular method for fighting the epidemic of HIV/AIDS. The purpose of VTC is to reduce the incidence of the virus in a twofold manner. First, testing provides access to health care and antiretroviral therapies (ARV) that diminish the transmission rate of the virus. Second, counseling would encourage safer behavior for both individuals who test HIV-negative and want to avoid a dangerous disease, and altruistic individuals who test HIV-positive and want to protect the others. Surprisingly, empirical evidence from DHS surveys in Sub-Saharan Africa shows that testing services are underused. Moreover, it is rare that both partners of a couple test for HIV. In this paper, I construct a behavioral model explaining how misperceptions of the riskiness of HIV/AIDS may induce, at most, one individual in the couple to test. I show that the correction of wrong beliefs thanks to specific information campaigns may be sufficient to induce testing of both partners.
    Keywords: HIV/AIDS, transmission rate, testing, prevention, risk perception, condom, beliefs, observability
    JEL: I10 I18 O12
    Date: 2011–07–05
  2. By: Sanghamitra Bandyopadhyay; Elliott Green
    Abstract: Nation-building has long been seen as an important focus for postcolonial African governments. However, up until now there has been no empirical analysis of either the origins or consequences of these policies. Here we compile an original dataset measuring nine different types of nation-building policies. Using Ordinary Least Squares regressions, we first show that nation-building policies are correlated with larger states and British colonialism. We then use logistic regressions to test the effect of such policies on civil wars using two different datasets of civil wars, and find no evidence that such policies have helped to prevent civil war.¬«À
    Keywords: conflict, nation building, Africa, Sub-Saharan AfricaS
    Date: 2011–06
  3. By: Pedro M. G. Martins (Institute of Development Studies (IDS), University of Sussex)
    Abstract: This paper focuses on the macroeconomic management of large inflows of foreign aid. It investigates the extent to which African countries have coordinated fiscal and macroeconomic responses to aid surges. In practice, we construct a panel dataset to investigate the level of aid ‘absorption’ and ‘spending’. This paper departs from the recent empirical literature by utilising better measures for aid inflows and by employing cointegration analysis. The empirical short-run results suggest that, on average, Africa’s low-income countries have absorbed two-thirds of (grant) aid receipts. This suggests that most of the foreign exchange provided by the aid inflows has been used to finance imports. The other third has been used to build up international reserves, perhaps to protect economies from future external shocks. In the long-run, absorption increases but remains below its maximum (‘full absorption’). Moreover, we also show that aid resources have been fully spent, especially in support of public investment. There is only weak evidence that a share of aid flows have been ‘saved’, i.e. substituted domestic borrowing. Overall, these findings suggest that the macroeconomic management of aid inflows in Africa has been significantly better than often portrayed in comparable exercises. The implication is that African countries will be able to efficiently manage a gradual scaling up in aid resources.
    Keywords: Macroeconomic Management, Foreign Aid, Panel Data, Africa
    JEL: C23 F35 O23 O55
    Date: 2010–10
  4. By: Rabah Arezki; Markus Bruckner
    Abstract: We use annual variation in rainfall to examine the effects that exogenous, transitory income shocks have on remittances in a panel of 42 Sub-Saharan African countries during the period 1960-2007. Our main finding is that these income shocks have a significant positive effect on remittances, but that the effect is significantly decreasing in the share of domestic credit to GDP. So much so, that at high levels of credit to GDP transitory increases in income had a significant negative effect on remittances. Our findings are consistent with the view that remittances take advantage of unexploited domestic investment opportunities that can exist due to domestic credit market frictions. Our findings also support the view that when barriers to financial flows are low, remittances effectively provide insurance against transitory income shocks.
    Date: 2011–07–05
  5. By: Rémi Jedwab (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, LSE - London School of Economics and Political Science - LSE); Alexandre Moradi (Sussex University - Sussex University)
    Abstract: We study the impact of transportation infrastructure on agriculture and development in colonial Ghana. Two railway lines were built between 1901 and 1923 to connect the coast to mining areas and the large hinterland city of Kumasi. This unintendedly opened vast expanses of tropical forest to cocoa cultivation, allowing Ghana to become the world's largest producer. This attracted migrants to producing areas and the economic surplus drove urbanization. Using data at a very fine spatial level, we find a strong effect of railroad connectivity on cocoa production due to reduced transportation costs. We then show that the economic boom in cocoa-producing areas was associated with demographic growth and urbanization. We _nd no spurious effect from lines that were not built yet, and lines that were planned but never built. We show that our results are robust to considering nearest neighbor estimators. Lastly, railway construction has durably transformed the economic geography of Ghana, as railway districts are more developed today, despite thirty years of marked decline in rail transportation.
    Keywords: Railroads ; Trade Costs ; Urbanization ; Africa
    Date: 2011–07
  6. By: Pedro M. G. Martins (Institute of Development Studies (IDS), University of Sussex)
    Abstract: This paper investigates the determinants of the real exchange rate (RER) in Ethiopia. In particular, it assesses whether large capital inflows (e.g. foreign aid and remittances) have an impact on the RER. This empirical exercise tries to improve the current literature in a number of ways: (i) the use of quarterly data provides a larger sample size and enables the modelling of important intra-year dynamics, which should lead to better model specifications; (ii) the use of several cointegration approaches allows interesting methodological comparisons; and (iii) the use of a time series model (Unobserved Components) provides a new empirical approach and a robustness check on the econometric models. The results suggest two main (long-run) determinants of the RER in Ethiopia: trade openness is found to be correlated with RER depreciations, while a positive shock to the terms of trade tends to appreciate the RER. Foreign aid is not found to have a statistically significant impact, while there is only weak evidence that workers’ remittances could be associated with RER appreciations. The lack of empirical support for the Dutch disease hypothesis suggests that Ethiopia has been able to effectively manage large capital inflows, thus avoiding major episodes of macroeconomic instability.
    Keywords: Real Exchange Rate, Foreign Aid, Time Series Models, Africa
    JEL: C22 F35 O24 O55
    Date: 2010–10
  7. By: Pedro M. G. Martins (Institute of Development Studies (IDS), University of Sussex)
    Abstract: This paper uses the cointegrated vector autoregressive (CVAR) model to assess the dynamic relationship between foreign aid inflows, public expenditure, revenue and domestic borrowing in Ethiopia. It departs from the existing literature by using a unique quarterly fiscal dataset (1993-2008) and providing new insights into the formulation of testable fiscal hypotheses. The paper also derives and interprets structural shocks and places a strong focus on model specification. The results suggest the presence of three long-run relationships: the government budget constraint, a donor disbursement rule, and a financing trade-off. Foreign aid grants adjust to the level of development spending, which can be seen as an indication of (procyclical) aid conditionality. Moreover, domestic borrowing often compensates for lower levels of revenue and grants, highlighting the cost of aid unpredictability and revenue volatility. The policy implication is that if foreign aid flows are to be made more effective, they should be provided in a predictable and countercyclical fashion in order to smooth exogenous shocks.
    Keywords: Fiscal Response, Foreign Aid, Time Series Models, Africa
    JEL: C32 F35 O23 O55
    Date: 2010–10
  8. By: Fredj Jawadi (University of Evry Val d?Essone & Amiens School of Management); Sushanta K. Mallick (Queen Mary University of London); Ricardo M. Sousa (Universidade do Minho - NIPE)
    Abstract: Given limited research on monetary policy rules in emerging markets, this paper estimates monetary policy rules for five key emerging market economies: Brazil, Russia, India, China and South Africa (BRICS) analysing whether the monetary authority reacts to changes in financial markets, in monetary conditions, in the foreign exchange sector and in the commodity price. To get a deeper understanding of the central bank’s behaviour, we assess the importance of nonlinearity using a smooth transition (STAR) model. Using quarterly data, we find strong evidence that the monetary policy followed by the Central Banks in the BRICS varies from one country to another and that it exhibits nonlinearity. In particular, considerations about economic growth (in the cases of Brazil and Russia), inflation (for India and China) and stability of financial markets (in South Africa) seem to be the major drivers of such nonlinear monetary policy behaviour. Moreover, the findings suggest that the monetary authorities pursue, with the exception of India, a target range for the threshold variable rather than a specific point target. In fact, the exponential smooth transition regression (ESTR) model seems to be the best description of the monetary policy rule in these countries.
    Keywords: monetary policy, emerging markets, smooth transition.
    JEL: E37 E52
    Date: 2011
  9. By: Caroline Fink (USTV - Université du Sud-Toulon-Var - UFR Sciences économiques et de gestion - Université du Sud - Toulon - Var)
    Abstract: Les hommes et les femmes sont inégaux face au développement, et d'autant plus dans les PED. En Afrique subsaharienne, le développement des femmes à travers l'éducation est indispensable afin de converger, voire de dépasser les OMD.
    Keywords: femmes, Afrique subsaharienne, éducation, développement, OMD, Objectifs du millénaire pour le développement, Pays en développement
    Date: 2011–06–15
  10. By: François Joseph Cabral (Faculté des sciences économiques et de gestion (FASEG), Université Cheikh Anta Diop de Dakar (UCAD); Consortium pour la Recherche Economique et Sociale (CRES); Groupe de recherche sur le développement international (GREDI), Université de Sherbrooke); Anne-Sophie Robilliard; Fatou Cissé; Abdoulaye Diagne
    Abstract: Progress towards the MDGs is expected to slow as a consequence of the global economic downturn. This study applies an economy-wide framework to analyze the impact of the crisis on MDG achievement in six Latin American countries. It finds significant setbacks towards the goals and, in the case of the region’s low-income countries, the cost of achieving these would rise between 1.6 and 3.4 per cent of GDP per year between 2010 and 2015 as compared with a no-crisis scenario. The additional public spending would contribute to economic growth though not sufficiently for full recovery to pre-crisis growth.
    Keywords: computable general equilibrium models, distribution, welfare and poverty, foreign aid, macroeconomic analyses of economic development
    JEL: C68 D3 I3 F35 O11
    Date: 2011–07–08

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