nep-afr New Economics Papers
on Africa
Issue of 2011‒09‒22
seventeen papers chosen by
Quentin Wodon
World Bank

  1. The Africa-Dummy in Growth Regressions By Max Köhler; Stefan Sperlich; Julian Vortmeyer
  2. Nationalising South African mines: Back to a prosperous future, or down a rabbit hole? By Stan du Plessis
  3. Socio-economic conditions, young men and violence in Cape Town By Kai Thaler
  4. Financial Deepening, Property Rights and Poverty: Evidence from Sub-Saharan Africa By Yifei Huang; Raju Jan Singh
  5. Weapons, Violence and the Perpetrator-Victim Nexus in South Africa By Kai Thaler
  6. External Sustainability of Oil-Producing Sub-Saharan African Countries By Misa Takebe; Robert C. York
  7. Do institutions and social cohesion enhance the effectiveness of aid? New Evidence from Africa By Mina Baliamoune-Lutz
  8. Cargo dwell time in Durban : lessons for Sub-Saharan African ports By Kgare, Tshepo; Raballand, Gael; Ittmann, Hans W.
  9. Food sovereignty and agricultural trade policy commitments: How much leeway do West African nations have? By Catherine Laroche Dupraz; Angèle Postolle
  10. De Jure versus De Facto Exchange Rate Regimes in Sub-Saharan Africa By Slavi T Slavov
  11. South Africa: The Cyclical Behavior of the Markups and its Implications for Monetary Policy By Nir Klein
  12. Socio-economic conditions, young men and violence in Cape Town By Jeremy Seekings; Kai Thaler
  13. Surviving the Turbulence Is Not Enough: Can Côte d'Ivoire Flourish Again? By Constant, Amelie F.; Tien, Bienvenue N.
  14. The Cyclicality of Fiscal Policies in the CEMAC Region By Robert C. York; Sampawende J Tapsoba; Gaston K Mpatswe
  15. Burkina Faso - Policies to Protect the Poor from the Impact of Food and Energy Price Increases By Isabell Adenauer; Javier Arze del Granado
  16. Chad: rural policy note By Loening, Josef L.
  17. Qualité des Institutions et Commerce International: Évidence à Partir des Exportations de l'UEMOA By FE, Doukouré Charles

  1. By: Max Köhler (Georg-August-University Göttingen); Stefan Sperlich (Université de Genéve); Julian Vortmeyer (Georg-August-University Göttingen)
    Abstract: The Africa-Dummy has been identfied and different explanations for its appearance have been published. In this paper, the issue of the empirical identifcation of the Africa-Dummy is addressed. We introduce a fixed effects regression model to identify the Africa-Dummy in one regression step so that its correlations to other coeffcients can be estimated. A semiparametric extension of this model checks whether the Africa-Dummy is a result of misspecification of the functional structure. Furthermore, we show that sub-Saharan African countries have a positive return to the population growth and when adding interaction effects, the Africa-Dummy is even positive. Moreover, we show that the Africa-Dummy changes dramatically over time and the punishment for sub-Saharan African countries decreases incrementally since the mid-nineties. According to the Augmented Solow Growth model, it was even insignificant since the end-nineties.
    Date: 2011–09–06
  2. By: Stan du Plessis (Department of Economics, University of Stellenbosch)
    Abstract: Nationalisation is high on the policy agenda in South Africa. This paper considers the case for nationalising the local mining sector from an evidence-based perspective. The relevant evidence is derived from theoretical considerations and related to the known features of the South African mining sector and economy. A strong case against nationalisation emerges, which can be summarised as follows: The mining sector is competitive and therefore a poor candidate for public ownership. Further, the resources sector does not dominate the South African economy nor does it create the risk of Dutch Disease. Nationalising the mining sector will cost the government more than it receives. This is not only a bad idea in itself, but it will limit the scope for distributive policies on the national budget. The contemporary international experience demonstrates the risks of fiscal imprudence. Finally, nationalising the resources sector will undermine support for those very market-based institutions required to achieve a higher long-run growth trajectory.
    Keywords: Nationalisation, South Africa, mining sector
    JEL: L22 L52 L71
    Date: 2011
  3. By: Kai Thaler
    Abstract: This paper examines the drivers of male perpetration of violence against adult family members and intimate partners in Cape Town, South Africa. Data on 1,369 young men from the Cape Area Panel Study are analyzed and significant causal pathways are examined for the full sample and for disaggregated samples of African and coloured respondents. Socioeconomic disadvantage plays a role in a culture of patriarchal violence, but its effects are largely mediated by behavioural factors such as routine alcohol consumption and having concurrent sexual partners, and norms of acceptance of violence against women. Different factors emerge as predictors of violence in the African and coloured samples. The findings of the quantitative analysis are illustrated with evidence from 45 qualitative interviews that address the role of violence in family and gender relations in Cape Town. Economic interventions are of uncertain efficacy given South Africa's difficulties since the end of apartheid in improving economic opportunities for the poor; thus interventions targeting norms and behaviour hold the most promise for reducing family and intimate partner violence in the near term.
    Date: 2011
  4. By: Yifei Huang; Raju Jan Singh
    Abstract: Recent studies on the relationship between financial development and poverty have been inconclusive. Some claim that, by allowing more entrepreneurs to obtain financing, financial development improves the allocation of capital, which has a particularly large impact on the poor. Others argue that it is primarily the rich and politically connected who benefit from improvements in the financial system. This paper looks at a sample of 37 countries in sub-Saharan Africa from 1992 through 2006. Its results suggest that financial deepening could narrow income inequality and reduce poverty, and that stronger property rights reinforce these effects. Interest rate and lending liberalization alone could, however, be detrimental to the poor if not accompanied by institutional reforms, in particular stronger property rights and wider access to creditor information.
    Keywords: Access to capital markets , Cross country analysis , Development , Household credit , Income distribution , Poverty reduction , Private sector , Sub-Saharan Africa ,
    Date: 2011–08–12
  5. By: Kai Thaler
    Abstract: Given the high levels of crime and violence in South Africa, there may be a temptation for citizens to arm themselves for protection. Using quantitative survey data from the Cape Area Panel Study and qualitative interviews with residents of high-violence neighborhoods, this paper examines the question of who carries weapons outside the home in Cape Town and what the effects of weapon carrying may be. Multiple regression analysis is used to test the significance of possible drivers of weapon carrying and the results are discussed in the South African social context. Weapon carrying is found to be associated with both assault perpetration and victimization, suggesting that it is part of a violent lifestyle in which weapon carriers are likely to use their weapons both offensively and defensively. Possible weapon-related policies for violence reduction are also discussed.
    Date: 2011
  6. By: Misa Takebe; Robert C. York
    Abstract: In the extensive empirical work carried out across the IMF on oil-producing sub-Saharan African (SSA) countries, the notion of "sustainability" is often directed toward fiscal policies, and, in particular, views on the "optimal" non-oil primary fiscal deficit. The bulk of this work does not, however, address external sustainability, which is a concern especially for those SSA oil producers operating under a fixed exchange rate regime. A couple of recent papers have extended the existing methodologies to assess external sustainability for some oil-producing countries but they do not focus on those in sub-Saharan Africa. In this paper, we bolster this empirical work by providing a range of estimates for the long-run external current external account balance for each of the SSA oil-producing countries, based on three widely used methodologies in the IMF. Our research strategy is to apply these models to the eight countries in the subregion - Angola, Cameroon, Chad, Côte d’Ivoire, Equatorial Guinea, Gabon, Nigeria, and the Republic of Congo - using similar simplifying assumptions so that we are using the same lens to view how they do and do not differ.
    Date: 2011–08–25
  7. By: Mina Baliamoune-Lutz
    Abstract: Using the Arellano-Bond dynamic panel GMM estimator, this paper explores the effects of aid, institutions, and social cohesion on per-capita income growth in 34 African countries, focusing in particular on the interplay of aid and institutions and the interplay of aid and social cohesion. The empirical results indicate that social cohesion enhances the growth effects of aid but there is a threshold effect, suggesting that aid becomes effective in enhancing growth in countries with higher social cohesion. Surprisingly, the results show that beyond a certain level of improvements in institutional quality, institutions (political rights and civil liberties) reduce the effectiveness of aid. We discuss the implications of these results.
    Keywords: Growth; aid effectiveness; institutions; social cohesion; Africa
    JEL: F35 F43 O17
    Date: 2011–09
  8. By: Kgare, Tshepo; Raballand, Gael; Ittmann, Hans W.
    Abstract: Based on quantitative and qualitative data, this paper attempts to identify the main reasons why cargo dwell time in Durban port has dramatically reduced in the past decade to a current average of 3-4 days. A major customs reform; changes in port storage tariffs coupled with strict enforcement; massive investments in infrastructure and equipment; and changing customer behavior through contractualization between the port operator and shipping lines or between customs, importers, and brokers have all played a major role. The main lesson for Sub-Saharan Africa that can be drawn from Durban is that cargo dwell time is mainly a function of the characteristics of the private sector, but it is the onus of public sector players, such as customs and the port authority, to put pressure on the private sector to make more efficient use of the port and reduce cargo dwell time.
    Keywords: Transport Economics Policy&Planning,Transport and Trade Logistics,Common Carriers Industry,Ports&Waterways,Airports and Air Services
    Date: 2011–09–01
  9. By: Catherine Laroche Dupraz; Angèle Postolle
    Abstract: The 2008 food crisis has challenged the political legitimacy and economic efficiency of the liberalization of international agricultural trade. An alternative vision defended by the food sovereignty movement is that long-term food security cannot rely on dependency on food imports, but must be built on the development of domestic production with enough barrier protection to shelter it from world price fluctuations and unfair trading. The purpose of this paper is to look into whether the West African nations can achieve food sovereignty given their various trade commitments and other external constraints. The particularity of our approach is to combine a historical economic analysis with a political approach to food sovereignty and trade commitments. Our results suggest that external brakes on the development of food sovereignty policies are marginal, as the countries still have unused room for manoeuvre to protect their smallholder agriculture under the terms of draft World Trade Organization agreements and Economic Partnership Agreements and under the international financial institutions’ recommendations. Rather, the international environment seems to be instrumented by West African states that do not manage to secure a national political consensus to drive structural reforms deemed vital and further the food security of the urban populations over the marginalized rural populations. Recently, the regional integration process has made headway with a common agricultural support and protection policy project that could herald an internal political balance more conducive to food-producing agriculture.
    Keywords: food sovereignty, West Africa, protection, agricultural policy, WTO negotiations
    JEL: O10 O13 F13 F50
    Date: 2011
  10. By: Slavi T Slavov
    Abstract: There are 22 countries in Sub-Saharan Africa (SSA) with floating exchange rate regimes, de jure. Some target the money supply or the inflation rate; others practice "managed floating." Statistical analysis on monthly data for the past decade reveals that in most cases these exchange rate regimes can be approximated surprisingly well by a soft peg to a basket dominated by the US dollar. The weight on the dollar appears to have fallen somewhat across the continent in the aftermath of the global financial crisis. Replicating the model with weekly data for The Gambia suggests that the focus on the dollar might be even more pronounced at higher data frequencies. While there might be strong arguments in favor of limiting exchange rate volatility in SSA countries, soft-pegging to the dollar does not appear to be the best fit for them, given the currency structure of their external trade and finance. The paper concludes by discussing some policy options for SSA countries with flexible exchange rates, in the context of an illustrative recent country case.
    Keywords: Cross country analysis , Currency pegs , Economic models , Exchange rate regimes , Floating exchange rates , Reserves , Sub-Saharan Africa ,
    Date: 2011–08–16
  11. By: Nir Klein
    Abstract: The study looks at the cyclical behavior of the markups and assesses its impact on inflation dynamics. The analysis finds that the aggregate level of the private sector’s markup is relatively high, thus pointing to the lack of strong competition in South Africa’s product markets. Additionally, the results suggest that the markups tend to move in a countercyclical manner, with a short-term positive impact on inflation. This implies that the countercyclical pattern of the markups is one factor among others that contribute to the relatively weak output gap-inflation co-movement. In the context of South Africa’s inflation targeting framework, the counter-cyclical markups may also generate an asymmetric response of monetary policy to the fluctuations in economic activity.
    Date: 2011–08–22
  12. By: Jeremy Seekings; Kai Thaler
    Abstract: People in violent neighbourhoods attribute violence in public spaces to, especially, poverty and unemployment, but agree that social disintegration, disrespect, drinking and drugs and the weaknesses of the criminal justice system also contribute substantially. However, data from a panel of young men in Cape Town provide little support for the hypothesis that unemployment and poverty are direct causes of violence against strangers. Growing up in a home where someone drank heavily or took drugs is, however, a strong predictor of violence against strangers in early adulthood. A history of drinking (or taking drugs) correlates with perpetration of violence, and might also serve as a mechanism through which conditions during childhood have indirect effects. Living in a bad neighbourhood and immediate poverty are associated with violence against strangers, but being unemployed is not. Overall, heavy drinking – whether by adults in the childhood home or by young men themselves – seems to be a more important predictor of violence than economic circumstances in childhood or the recent past. Heavy drinking seems to play an important part in explaining why some young men have been more violent than others in circumstances that seem to have been generally conducive to rising violence, for reasons that remain unclear. It seems likely that few young people in South Africa in the early 2000s come from backgrounds that strongly predispose them against the use of violence.
    Date: 2011
  13. By: Constant, Amelie F. (DIW DC, George Washington University); Tien, Bienvenue N. (DIW DC)
    Abstract: Côte d'Ivoire is the world’s largest producer and exporter of cocoa beans, it accounts for 40% of the WAEMU's output, and 11% of its population are immigrant workers. Any political instability in the country will not only affect the domestic economy, but it will also affect the international trading markets. In addition, it will affect the West Africa region through trading of goods, through migration and the financial and banking sectors. With the new President sworn in on May 21, 2011, the political crisis is officially over. Real national reconciliation, however, will take much longer to happen. Serious economic issues need to be addressed, the country has high public debt, and its small and medium enterprises – the backbone of the economy – are severely hit. Côte d'Ivoire lags behind other developing countries in its preparedness and economic performance towards the Knowledge Economy, its educational sector is underperforming and powerless in producing a competitive labor force. Can the new President heal wounds and make the country flourish again?
    Keywords: immigra, regional economics, Africa, economic development, education, national budget, public economics, government policy and regulation, international relations, conflict resolution, macroeconomic policy, trade, international migration, remittances
    JEL: D7 E6 F1 F2 F5 G38 H1 H63 I2 O55 R10 J61
    Date: 2011–09
  14. By: Robert C. York; Sampawende J Tapsoba; Gaston K Mpatswe
    Abstract: This paper examines fiscal cyclicality in the CEMAC region during 1980-2008. The issue has attracted very little empirical interest but is important if fiscal policies are to play a role in mitigating external shocks that exacerbate economic cycles across the region. We assess whether fiscal policies across these six countries have been procyclical using panel data to elaborate our analysis. Like in other sub-Saharan countries, total public expenditure in the CEMAC is found to be strongly procyclical. This is most pronounced for public investment, which overreacts to output growth with elasticity above 1. We further find that institutional weaknesses and poor governance partly explain this behavior. In contrast, the existence of an IMF-supported program can be a counterbalancing influence in attenuating this bias.
    Keywords: Business cycles , Central African Economic and Monetary Community , Cross country analysis , Economic integration , Economic models , External shocks , Fiscal policy , Governance , Government expenditures , Public investment ,
    Date: 2011–08–23
  15. By: Isabell Adenauer; Javier Arze del Granado
    Abstract: This paper assesses the effectiveness of policies taken by the Burkinabè authorities to protect the poor from the adverse impact of a combined food and oil price shock in 2008. Estimates of the impact based on household survey data and a price pass-through model suggest that these policies were not well-targeted, benefiting the wealthier groups of the population rather than the poor. More effective policy measures, such as a conditional cash transfer system, which is already being implemented on a pilot basis in urban areas, are discussed as an alternative policy option.
    Keywords: Agricultural prices , Burkina Faso , Energy prices , Fiscal policy , Price increases , Price stabilization , Social safety nets ,
    Date: 2011–08–19
  16. By: Loening, Josef L.
    Abstract: The Chad Rural Policy Note builds on the findings of a rural sector stocktaking exercise. An initial draft of the note was prepared as a just-in-time study designed to contribute to the preparation of the Chad Interim Strategy Note. This finalized version of the note intended mainly to establish a knowledge baseline. In that context, the objectives of the note are to summarize existing information about the rural sector in Chad, identify knowledge gaps, and highlight key policy issues around which the dialogue in the rural sector might focus, with the objective of improving rural growth prospects and reducing poverty.
    Keywords: Chad; poverty; public expenditures; rural development; finance; research and extension; markets; irrigation; climate change; livestock; cotton
    JEL: I30 O55 Q18
    Date: 2010–10–07
  17. By: FE, Doukouré Charles
    Abstract: This study shows the role of institutions quality in expanding international trade within WAEMU member states. Analyzing all WAEMU member states and their main export partners from 1996 to 2007, I find two results. First, institution quality according to corruption level, government effectiveness and rule of law are becoming worst and worst in WAEMU on the period. Second, taking into account a sequential behavior of exporters, they decide to export according to their perception of institutional environment, then they choose the amount of their shipment considering economic variables, I show that this poor quality of institutions is not an obstacle to expanding exports within WAEMU member states. Particularly, corruption encourages exports flows.
    Keywords: Bilateral trade; Institutions; Gravity model
    JEL: C23 F14
    Date: 2011–07–07

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