nep-afr New Economics Papers
on Africa
Issue of 2011‒12‒13
27 papers chosen by
Quentin Wodon
World Bank

  1. Working Paper 140 - Development Aid and Access to Water and Sanitation in sub-Saharan Africa By AfDB
  2. The Determinants of African Tourism By Johan Fourie; Maria Santana-Gallego
  3. The SADC's infrastructure : a regional perspective By Ranganathan, Rupa; Foster, Vivien
  4. Is Sex Like Driving? Risk Compensation Associated with Randomized Male Circumcision in Kisumu, Kenya By Nicholas Wilson; Wentao Xiong; Christine Mattson; Christine Mattson
  5. Finance and inequality: exploring pro-poor investment channels in Africa By Simplice A., Asongu
  6. Remittances and the Dutch disease in Sub-Saharan Africa. A Dynamic Panel Approach By Francis M. Kemegue; Reneé van Eyden; Emmanuel Owusu-Sekyere
  7. The Marginal Cost of Public Funds and Tax Reform in Africa. By Auriol, Emmanuelle; Warlters, Michael
  8. Rainfall, Financial Development, and Remittances: Evidence from Sub-Saharan Africa By Rabah Arezki; Markus Bruckner
  9. ECOWAS's infrastructure : a regional perspective By Ranganathan, Rupa; Foster, Vivien
  10. Population growth and forest sustainability in Africa By Simplice A, Asongu; Brian A, Jingwa
  11. Deforestation and welfare : evidence from Africa By Simplice A, Asongu
  12. The Long-Run Effects of the Scramble for Africa By Stelios Michalopoulos; Elias Papaioannou
  13. Slaves as capital investment in the Dutch Cape Colony, 1652-1795 By Johan Fourie
  14. Evidence on the impact of minimum wage laws in an informal sector: Domestic workers in South Africa By Dinkelman, Taryn; Ranchhod, Vimal
  15. Giving Up Job Search During a Recession: The Impact of the Global Financial Crisis on the South African Labour Market By Verick, Sher
  16. Investment and inequality in Africa: which financial channels are good for the poor? By Simplice A., Asongu
  17. Forecasting Key Macroeconomic Variables of the South African Economy Using Bayesian Variable Selection By Mirriam Chitalu Chama-Chiliba; Rangan Gupta; Nonophile Nkambule; Naomi Tlotlego
  18. Talking to the inattentive Public: How the media translates the Reserve Bank’s communications By Monique Reid; Stan du Plessis
  19. How important is the efficiency of government investment ? The case of the Republic of Congo By Nielsen, Hannah; Lofgren, Hans
  20. Intergenerational transmission of self-employed status in the informal sector: a constrained choice or better income prospects? Evidence from seven West-African countries By Laure Pasquier-Doumer
  21. Measuring the indirect costs associated with the establishment of a wind farm: An application of the Contingent Valuation Method By M. du Preez; G. Menzies; M.C. Sale; S.G. Hosking
  22. Cotton, biotechnology, and economic development By Baffes, John
  23. Trade patterns and trade clusters: China, India, Brazil and South Africa in the global trading By Silvia Nenci; Pierluigi Montalbano
  24. Innovative business models for sustainable biofuel production: the case of Tanzanian smallholder jatropha farmers in the global biofuel chain By Annelies J. Balkema; Henny A. Romijn
  25. Convergence of Information and Communication Technology (ICT) sectors in the East African Community (EAC): Challenges for the current legislative and regulatory frameworks and lessons from the European Union experience By Kariuki Nyaga, Joseph
  26. A Robust Multi-Dimensional Poverty Profile for Uganda By Sebastian Levine; James Muwonge; Yele Maweki Batana
  27. Informal Sector Dynamics In Times Of Fragile Growth: The Case Of Madagascar By Michael Grimm; Jann Lay; François Roubaud; Julia Vaillant

  1. By: AfDB
    Date: 2011–11–28
  2. By: Johan Fourie; Maria Santana-Gallego
    Abstract: Using a standard panel gravity equation of 175 origin/destination countries between 1995 and 2008, 37 of which are African, we identify the factors that drive African-inbound (arrivals to Africa from other continents) and within-African tourism (arrivals from and to an African country). We find that the determinants of African-inbound and within-African tourism are not all that different from global tourism flows; repeat tourism, income, distance, land area and the standard dummy variables not only drives global or OECD tourism, but also tourism within Africa, disproving the belief that African tourists "differ substantially". Not only does the growth in tourism over the last decade provide encouraging signs for the continent, but these results show that policy makers can now play an active role in promoting African tourism, both from outside but especially from within the continent's
    Keywords: sub-Saharan, Africa, gravity model, cause, trade, VFR
    Date: 2011
  3. By: Ranganathan, Rupa; Foster, Vivien
    Abstract: Infrastructure improvements boosted growth in the Southern African Development Community (SADC) by 1.2 percentage points per capita per year during 1995-2005, mainly from access to mobile telephony. Road network improvements made small growth contributions, while power sector inadequacy had a negative impact. Infrastructure improvements that matched those of Mauritius, the regional leader, could boost regional growth performance by 3 percentage points. SADC's 15 member countries include small, isolated economies with island states, a mix of low- and middle-income countries, and larger countries with potentially large economies. The economic geography reinforces the importance of regional infrastructure development to create a larger market and greater economic opportunities. The region's infrastructure indicators are high for Africa. The regional road network is well-developed, and surface transport is comparatively cheap, but subject to delays and long-haul fees. An extensive railway system competes directly with road transport. With integration and improvements, SADC's ports could form an effective transshipment network. Air transport, dominated by South Africa, is the best in Africa. Electricity in southern Africa is well developed; the region leads Africa in generation capacity and low rates, but access is limited. ICT services are the most accessible among the regions, though expensive. Landlocked countries still need to be connected, and greater competition is needed to reduce costs. Completing and maintaining SADC's infrastructure will require $2.1 billion annually for a decade. For small countries, and large countries with small revenues, the burden may be insurmountable without external assistance.
    Keywords: Transport Economics Policy&Planning,Airports and Air Services,Infrastructure Economics,Transport and Trade Logistics,Roads&Highways
    Date: 2011–12–01
  4. By: Nicholas Wilson (Williams College); Wentao Xiong (Williams College); Christine Mattson; Christine Mattson (University of Illinois at Chicago School of Public Health)
    Abstract: Mass adult male circumcision campaigns for HIV prevention are underway across much of Sub-Saharan Africa. However, concern remains about risk compensation associated with the reduction in the probability of HIV transmission per risky act. This paper examines the behavioral response to male circumcision using experimental data from Kisumu, Kenya. Contrary to the presumption of risk compensation, we find that the response due to the perceived reduction in HIV transmission appears to have been a reduction in risky sexual behavior. We suggest a mechanism for this finding: circumcision reduces fatalism about acquiring HIV and increases the salience of the tradeoff between engaging in additional risky behavior and living longer. We also find what appears to be a competing effect that does not operate through the circumcisioncrecipient's belief about the reduction in the risk of acquiring HIV.
    Keywords: HIV/AIDS, male circumcision, risk compensation, beliefs, Kenya
    JEL: D81 D84 I18
    Date: 2011–08
  5. By: Simplice A., Asongu
    Abstract: Hitherto very few studies on the inequality-finance(investment) nexus have focused on the African continent owing to lack of relevant data. This paper integrates previously missing investment and financial components in the assessment of how finance affects pro-poor investment channels. Findings reveal, but for the case of foreign investment, financial development dynamics of depth, efficiency, activity and size have an equalizing effect on income distribution through private, public and domestic investment channels. As a policy implication investment-targeted financial reforms that aim to curb poverty should take account of the disequalizing income-effect of foreign investment in undeveloped countries.
    Keywords: Finance; Investment; Poverty; Inequality; Africa
    JEL: I30 E25 O55 D60 G20
    Date: 2011–11–25
  6. By: Francis M. Kemegue; Reneé van Eyden; Emmanuel Owusu-Sekyere
    Abstract: This paper investigates the effect of remittance inflows on the real exchange rate in Sub-Saharan Africa (SSA) using annual data from 1980 to 2008 for 34 SSA countries, generalised method of moments by Arellano and Bover (1995) andfeasible generalised least squares by Parks (1967) and Kmenta (1971, 1986). We find that when cross-sectional dependence and individual effects are controlled for, remittances to SSA as a whole appreciate the underlying real exchange rate ofrecipient countries. However the Dutch-disease effect is not experienced via the loss of export competitiveness, because the exchange rate appreciation is mitigated by monetary policy positioning and overdependence on imports due to low levels of domestic production in these countries. We also find reverse causality between remittances and the real exchange rate.
    Keywords: Dutch disease, remittances, real exchange rate, Sub-Saharan Africa
    JEL: C33 F24 F31 O55
    Date: 2011
  7. By: Auriol, Emmanuelle; Warlters, Michael
    JEL: D43 H25 H26 H60
    Date: 2012–01
  8. By: Rabah Arezki (International Monetary Fund (IMF)); Markus Bruckner (School of Economics, University of Adelaide)
    Abstract: We use annual variations in rainfall to examine the effects that exogenous, transitory income shocks have on remittances in a panel of 41 Sub-Saharan African countries during the period 1970-2007. Our main finding is that on average rainfall shocks have an insignificant contemporaneous effect on remittances. However, the marginal effect is significantly decreasing in the share of domestic credit to GDP. So much so, that at high levels of credit to GDP rainfall shocks have a significant negative effect on remittances, while at low levels of credit to GDP the effect of rainfall on remittances is significantly positive.
    Keywords: Transitory Income Shocks, Remittances, Financial Development
    JEL: F24 F30 O10
    Date: 2011–09
  9. By: Ranganathan, Rupa; Foster, Vivien
    Abstract: Infrastructure improvements boosted growth in the Economic Community of West African States (ECOWAS) by one percentage point per capita per year during 1995-2005, primarily thanks to growth in information and communication technology. Deficient power infrastructure held growth back by 0.1 percent. Raising the region's infrastructure to the level of Mauritius could boost growth by 5 percentage points. Overall, infrastructure in the 15 ECOWAS countries ranks consistently behind southern Africa across many indicators. However, there is parity in access to household services -- water, sanitation, and power. ECOWAS has a well-developed regional road network, though sea corridors and ports need attention. Surface transport is expensive and slow, owing to cartelization, restrictive regulations, and delays. There is no regional rail network. Air transport has improved despite the lack of a strong hub-and-spoke structure. Safety remains a concern. Electrical power, the most expensive and least reliable in Africa, reaches 50 percent of the population but meets just 30 percent of demand. Regional power trading would bring substantial benefits if Guinea could become a hydropower exporter. Prices for critical ICT services are relatively high. Recent panregional initiatives have improved roaming. New projects are underway to provide access and improved services to unconnected countries. Completing and maintaining ECOWAS's infrastructure will require sustained spending of $1.5 billion annually for a decade, with one-third going to power. Although the necessary spending is only 1 percent of regional GDP, some countries'share is between 5 and 25 percent of national GDP. Clearly, external assistance will be needed.
    Keywords: Transport Economics Policy&Planning,Airports and Air Services,Infrastructure Economics,Transport and Trade Logistics,Roads&Highways
    Date: 2011–12–01
  10. By: Simplice A, Asongu; Brian A, Jingwa
    Abstract: Recent distressing trends in climate change, population explosion and deforestation inspired this paper, which completes existing literature by providing empirical justification to hypothetical initiatives on the impact of population growth on forest sustainability in Africa. Using three moment conditions of forest exploitation, the study shows how rural, agricultural and national population growths affect forest-area and agricultural-land. Findings indicate moment conditions of forest exploitation do not explain changes in forest-area and agricultural-land beyond population growth mechanisms. As a policy implication in activities of forest exploitation, a balanced approach is needed to take account of the interests of both rural communities and timber companies.
    Keywords: Demography; Forestry; Agriculture; Environment; Africa
    JEL: Q23 L73 J10 N50 O13
    Date: 2011–12–04
  11. By: Simplice A, Asongu
    Abstract: This paper examines the effects of deforestation on the welfare of rural communities in the Congo Basin. Using moment conditions of agricultural and forest exploitations, findings indicate deforestation significantly improves welfare both at overall-rural and agricultural household per capita income levels. As a policy implication, in the process of forest exploitation a balanced approach is needed to take account of the interests of both rural communities, timber companies and international forest-sustainability standards. This should require among other things, the development and implementation of sustainable forest management plans by timber companies, exclusion from harvesting species that are important to local communities, compensation of timber companies for compliance with management plans as well as involvement of rural communities in monitoring the activities of timber companies.
    Keywords: Demography; Forestry; Agriculture; Welfare; Africa
    JEL: Q23 L73 J10 N50 O13
    Date: 2011–11–16
  12. By: Stelios Michalopoulos; Elias Papaioannou
    Abstract: We examine the long-run consequences of the scramble for Africa among European powers in the late 19th century and uncover the following empirical regularities. First, using information on the spatial distribution of African ethnicities before colonization, we show that borders were arbitrarily drawn. Apart from the land mass and water area of an ethnicity's historical homeland, no other geographic, ecological, historical, and ethnic-specific traits predict which ethnic groups have been partitioned by the national border. Second, using data on the location of civil conflicts after independence, we show that partitioned ethnic groups have suffered significantly more warfare; moreover, partitioned ethnicities have experienced more prolonged and more devastating civil wars. Third, we identify sizeable spillovers; civil conflict spreads from the homeland of partitioned ethnicities to nearby ethnic regions. These results are robust to a rich set of controls at a fine level and the inclusion of country fixed effects and ethnic-family fixed effects. The uncovered evidence thus identifies a sizable causal impact of the scramble for Africa on warfare.
    JEL: N17 N47 O10 Z10
    Date: 2011–11
  13. By: Johan Fourie (Department of Economics, University of Stellenbosch)
    Abstract: The Cape Colony of the eighteenth century was one of the most prosperous regions in the world. This paper shows that Cape farmers prospered, on average, because of the economies of scale and scope achieved through slavery. Slaves allowed farmers to specialise in agricultural products that were in high demand from the passing ships – notably, wheat, wine and meat – and the by-products from these products, such as tallow, skins, soap and candles. In exchange, farmers could import cheap manufactured products from Europe and the East. Secondly, the paper investigates why the relative affluence of the early settlers did not evolve into a high growth trajectory. The use of slaves as a substitute for wage labour or other capital investments allowed farmers to prosper, but it also resulted in severe inequality. It was this high inequality that drove the growth-debilitating institutions posited by Engerman and Sokoloff (2000). The immigration of Europeans was discouraged after 1717, and again during the middle of the century, while education was limited to the wealthy. Factor endowments interacted with institutions to create a highly unequal early South African society, with long-term development consequences.
    Keywords: Slavery, Settler, Proto-industry, Eighteenth century, South Africa
    JEL: N57 N27
    Date: 2011
  14. By: Dinkelman, Taryn; Ranchhod, Vimal
    Abstract: What happens when a previously uncovered labour market is regulated? We exploit the introduction of a minimum wage in South Africa and variation in the intensity of this law to identify increases in wages for domestic workers and find no statistically significant effects on the intensive or extensive margins of work. These large, partial responses to the law are somewhat surprising, given the lack of monitoring and enforcement in this informal sector. We interpret these changes as evidence that strong external sanctions are not necessary for new labour legislation to have a significant impact on informal sectors of developing countries, at least in the short-run.
    Keywords: africa; domestic workers; informal sector; minimum wage
    JEL: J08 J23 J38
    Date: 2011–12
  15. By: Verick, Sher (ILO International Labour Organization)
    Abstract: The global financial crisis deeply impacted the South African labour market resulting in the shedding of almost 1 million jobs over 2009 and 2010. Reflecting longer term structural problems, this employment loss translated into a much larger rise in the number of discouraged individuals rather than those defined as 'narrowly' unemployed. Drawing on estimates using the micro-data, this paper shows that this state of non-searching unemployment or discouragement has increased more during the recent crisis for uneducated African males. Moreover, individuals who have given up job search during the recession are statistically different than those who continue searching. At the same time, searching is a transitory state for some of the jobless with considerable movements between the two categories of unemployment. These findings from the first post-Apartheid recession underscore the importance in the South African context of analysing a broad measure of unemployment, which includes discouraged workers. In response to these labour market challenges, the government should further reduce barriers to job search through such measures as training for the low-skilled and transport subsidies, along with other interventions that boost demand and job creation in rural areas.
    Keywords: global financial crisis, unemployment, discouraged workers, South Africa
    JEL: G01 J21 J64
    Date: 2011–11
  16. By: Simplice A., Asongu
    Abstract: This paper examines how domestic, foreign, private and public investments affect income-inequality through financial intermediary dynamics of depth, efficiency, activity and size. With the exception of financial allocation efficiency, financial channels of depth and activity are good for the poor as they diminish estimated household income-inequality. Financial size does not have a significant income-redistributive effect. Financial allocation efficiency has a disequalizing effect on income-distribution; implying policies designed to improve the allocation of mobilized funds to economic agents only benefit the rich to the detriment of the poor. The use of financial and investment dimensions previously missing in the literature provide new insights into the two contrasting theories in the finance-inequality nexus.
    Keywords: Finance; Investment; Poverty; Inequality; Africa
    JEL: I30 E25 O55 D60 G20
    Date: 2011–11–21
  17. By: Mirriam Chitalu Chama-Chiliba (Department of Economics, University of Pretoria); Rangan Gupta (Department of Economics, University of Pretoria); Nonophile Nkambule (Department of Economics, University of Pretoria); Naomi Tlotlego (Department of Economics, University of Pretoria)
    Abstract: We compare the forecasting performances of the classical and the Minnesota-type Bayesian vector autoregressive (VAR) models with those of linear (fixed-parameter) and nonlinear (time-varying parameter) VARs involving a stochastic search algorithm for variable selection, estimated using Markov Chain Monte Carlo methods. In this regard, we analyze the forecasting performances of all these models in predicting one- to eight-quarters-ahead of the growth rate of GDP, the consumer price index inflation rate and the three months Treasury bill rate for South Africa over an out-of-sample period of 2000:Q1-2011:Q2, using an in-sample period of 1960:Q1-1999:Q4. In general, we find that variable selection, whether imposed on a time-varying VAR or a fixed parameter VAR, and non-linearity in VARs play an important part in improving predictions when compared to the linear fixed coefficients classical VAR. However, we do not observe marked gains in forecasting power across the different Bayesian models, as well as, over the classical VAR model, possibly because the problem of over parameterization in the classical VAR is not that acute in our three-variable system.
    Keywords: Forecasting, time varying parameters, variable selection, Bayesian vector autoregression
    JEL: C11 C32 C52 E37
    Date: 2011–12
  18. By: Monique Reid (Department of Economics, University of Stellenbosch); Stan du Plessis (Department of Economics, University of Stellenbosch)
    Abstract: Central bank communication is widely recognised as crucial to the implementation of monetary policy. This communication should enhance a central bank’s management of the inflation expectations of the financial markets as well as the general public – the latter being a part of the central bank’s audience that has received relatively little research attention. In this paper, the role of the media in transmitting the SARB’s communication to the general public is explored, with the aim of improving our understanding of its impact on the expectations channel of the monetary policy transmission mechanism. A deliberate evaluation of this channel could aid the design of future strategies to communicate with the general public.
    Keywords: South Africa, central bank communication, consistency, monetary policy transmission mechanism, transparent monetary policy
    JEL: E42 E52 E58
    Date: 2011
  19. By: Nielsen, Hannah; Lofgren, Hans
    Abstract: The Republic of Congo, an oil rich country in Central Africa, has made substantial progress in the past decade in stabilizing the economy and achieving high growth rates. However, despite reaching middle-income country status in 2006, the economy is not diversified, poverty remains pervasive, and social indicators are well below the average for countries with a similar income level. This paper analyzes aspects of an ambitious investment program on which the government has embarked to improve the provision of basic services and promote private sector development. The success of this program, however, is questionable given the low absorptive capacity of the country and in particular the poor efficiency of public investment management. The analysis is based on simulations with an economy-wide model for analysis of development strategies and government policies, MAMS (Maquette for MDG Simulations). The results of the simulations show that slightly delaying large investment projects, while simultaneously improving the efficiency of the investment program, would lead to significantly higher growth rates and lower poverty levels. The analysis therefore confirms the importance of efficient public investment management for the optimal use of the country's resources.
    Keywords: Economic Theory&Research,Labor Policies,Debt Markets,Access to Finance,Non Bank Financial Institutions
    Date: 2011–12–01
  20. By: Laure Pasquier-Doumer (DIAL, IRD, Paris)
    Abstract: Social reproduction is the highest for self-employed as shown by an extensive literature from developed and developing countries. Very few studies however document the reason for this high intergenerational correlation of the self-employed status. The rare studies that have been done concern the US and show that children of self-employed benefit from an advantage when they are themselves self-employed. The purpose of this paper is to test if the second-generation of self-employed has an advantage related to the first-generation in the African context. It aims at highlighting the debate on firms heterogeneity in the informal sector, and seeks to contribute to understand the intergenerational transmission of inequalities. Using 1-2-3 surveys collected in the commercial capitals of seven West African countries in 2001-2002, this paper shows that the second-generation of informal selfemployed does not have better outcomes than the first one, except when they choose a familial tradition in the same sector of activity. Thus, in the African context, having a self-employed father does not provide any advantage in terms of profit or sales and is not sufficient for the transmission of valuable skills. On the other hand, informal entrepreneurs who have chosen a specific enterprise based on familial tradition have a competitive advantage. Their competitive advantage is partly explained by the transmission of enterprise-specific human capital, acquired through experiences in the same type of activity and by the transmission of social capital. _________________________________ Très peu d’études documentent les raisons la très forte reproduction sociale observée parmi les entrepreneurs, aussi bien dans les pays développés que dans les pays en développement. Les rares études, portant sur les E.U, montrent que les enfants d’entrepreneurs ont de meilleures performances quand ils sont eux-mêmes entrepreneurs que les enfants de salariés. Cet article teste si ce résultat se vérifie dans le contexte du secteur informel ouest-africain et cherche à en comprendre les raisons. Il vise par conséquent à éclairer le débat portant sur l’hétérogénéité des entreprises informelles, en identifiant des facteurs de succès, mais il cherche aussi à mieux comprendre les mécanismes à l’origine de la transmission intergénérationnelles des inégalités en Afrique. En se basant sur les enquêtes 1-2-3 collectées dans sept capitale ouest-africaines, cet article montre que la seconde génération d’entrepreneurs informels ne bénéficient pas d’un avantage comparatif, sauf s’ils bénéficient d’une tradition familiale dans leur secteur d’activité. Ainsi, dans le contexte ouest-africain, avoir un père entrepreneur ne suffit pas à la transmission de compétences managériales. En revanche, les entrepreneurs qui ont choisi leur secteur d’activité par tradition familiale ont un avantage qui s’explique principalement par la transmission de compétences spécifiques au secteur d’activité et par la transmission d’un capital social.
    Keywords: Informal sector, entrepreneurship, intergenerational link, human capital,Secteur informel, entreprenariat, lien intergénérationnel, capital humain.
    JEL: L26 J24 J62
    Date: 2011–09
  21. By: M. du Preez; G. Menzies; M.C. Sale; S.G. Hosking
    Abstract: Although a green energy source, the location of electrical generating windmills may cause a disamenity effect (negative externality). The establishment of a wind farm is known as a locally undesirable land use (LULU) and leads to the not-in-my-backyard syndrome (NIMBY). In an application of the contingent valuation method, a willingness-to-accept framework was used to estimate the aggregate annual compensation required to allow the construction of a wind farm near Jeffrey’s Bay, South Africa. This compensation amounted to R490 695. A binary choice logit analysis found that retirement status, concern about climate change, concern about view-shed impacts and the offer amount are important predictors of voting for or against the project.
    Keywords: Contingent Valuation Method, indirect cost, wind farm
    Date: 2011
  22. By: Baffes, John
    Abstract: During the past decade, cotton prices remained considerably below other agricultural prices (although they recovered toward the end of 2010). Yet, between 2000-04 and 2005-09 world cotton production increased 13 percent. This paper conjectures that biotechnology-induced productivity improvements increased supplies by China and India, which, in addition to keeping cotton prices low, aided these countries to cap-ture market share from (and cause losses to) non-users of biotechnology. By contrast, with a single exception, Africa has not adopted biotechnology and, not coincidentally, its cotton output declined by more than 20 percent between the first and second half of the past decade. The paper concludes that the development implications of biotechnology go beyond cotton and Africa. High energy prices have been an important driver of the recent commodity price boom. Therefore, investment and policy strategy responses to a cost-driven boom should be consistent with cost-saving alternatives. Biotechnology clearly meets this challenge.
    Keywords: Crops&Crop Management Systems,Markets and Market Access,E-Business,Emerging Markets,Economic Theory&Research
    Date: 2011–12–01
  23. By: Silvia Nenci; Pierluigi Montalbano
    Abstract: The present paper analyzes the evolution of the specialization and trade patterns of China, India, Brazil and South Africa (CIBS) and other WTO countries. It aims to provide an answer to the following questions: is there a tendency to a multi-polarization of trade patterns? If so, is CIBS’ rise leading to new clusters with or among CIBS or other emerging countries? Also, ultimately, does this multi-polarization have a regional element to it? The paper deals with the above questions by presenting: i) a world map of trade clusters involving WTO countries and CIBS; ii) a comparison of the above clusters and their key characteristics in the last decade; and iii) the key drivers of clusters’ trends. The novelty of this study is twofold: first, it adopts a more comprehensive dataset for a wide range of countries and trade dimensions; second, it provides an evolutionary look at the clusters’ trends. The empirical results do not show neither a remarkable phenomenon of multi-polarization, nor evidence of CIBS as a significant separate group and/or regional agglomeration
    Keywords: CIBS, trade patterns, trade specialization, cluster
    JEL: F10 F14 F15 C38
    Date: 2011–02
  24. By: Annelies J. Balkema; Henny A. Romijn
    Abstract: This paper focuses on the smallholder outgrower model for jatropha biofuel cultivation in Tanzania. This model is based on seed production by small farmers who sell to a processing company that presses the bio-oil from the seeds locally, either for the local market or for export. This model has been implemented by a foreign investor in Tanzania, the social business model combines profit making with social and environmental objectives. This paper describes the trends and developments of this innovative business model in a global cultivation, production and usage chain, exploring the trade-offs between the people, planet, profit objectives (triple P) and how the business model adapts to survive through the different stages of the innovation process. The three stages that are distinguished in the innovation process are: (1) learning to be effective, (2) learning to be efficient and (3) up-scaling and diffusion. The observed trend is that in the different stages different roles are played by the company as it aims at shifting from subsidy funds to profit making. In the process of becoming efficient and starting to upscale, it seems harder to ensure the implementation of the social and environmental objectives. Therefore, other actors will have to play a more active role in capacity building and market regulation and additional funding has to be made available to the company for the social benefits it is generating for society.
    Keywords: business models, sustainability, biofuel, innovation
    Date: 2011–10
  25. By: Kariuki Nyaga, Joseph
    Abstract: The East African Community (EAC)'s Information and Communication Technology (ICT) sector has been confronted with the convergence phenomenon. This is a concept that describes the trend of blurring boundaries between the traditionally distinct ICT sectors, namely: Information Technology (IT), broadcasting and telecommunications. This is significant for the EAC since the driving force behind this convergence phenomenon is that of efficiency. It necessitates the need to rethink the current legislative and regulatory frameworks in the ICT sector in order to cope with this phenomenon. The need to address this is pertinent since adapting to legislative and regulatory frameworks that are fully converged will expand access to ICT, stimulate economic growth, technological advancement, and also faster integration process of the EAC. Therefore this paper aims to demonstrate the following: Implications and challenges of this trend for the EAC legislative and regulatory frameworks; the need for a common legislative and regulatory framework that is fully converged. It therefore focuses on the inadequacies of the existing legislative and regulatory frameworks and reveals the lacunae in the present frameworks and how they fail to adequately address convergence phenomenon. The paper recommends effective, workable and consistent proposals on how to address the inadequacies. This brings awareness and deepens the understanding of the regulatory convergence issues to the ICT stakeholders in the region and the challenges of convergence on the existing frameworks. This will contribute to better legislative and regulatory frameworks in the EAC ICT market. It will therefore enable the region to enjoy the benefits of convergence and minimise instances of inefficiency in regulation of these converged ICT markets. --
    Keywords: East African Community (EAC),Legislative and Regulatory Harmonization,Convergence,Information and Communication Technology (ICT),Regulation
    Date: 2011
  26. By: Sebastian Levine; James Muwonge; Yele Maweki Batana
    Abstract: In this paper we compute a multi-dimensional poverty index (MPI) for Uganda following the approach proposed by Alkire and Forster (2007). Using household survey data we show how the incidence of multi-dimensional poverty has fallen in recent years and we use the decomposability features of the index to explain the drivers of reduction in multi-dimensional poverty. We also compare the results from Uganda with other countries for which the MPI has been computed and we note some caveats in such a comparison. The robustness of our estimates is tested in a stochastic dominance framework and using statistical inference. Notably, we extend the one-dimensional analysis of stochastic dominance to take into account household size in a second dimension, which is particularly important as some of the MPI indicators are sensitive to the number of household members. By exploiting a unique subsample of the integrated household survey programme in Uganda, which has not previously been analysed, we are also able to match the data-set used for the MPI with data used to compute the conventional estimates of monetary poverty. This enables a more robust assessment of the complementarities of the two types of poverty measures than has been previously possible.
    Keywords: multidimensional poverty, counting approach, Uganda, household size, robustness analysis, international comparisons.
    JEL: C12 D31 D63 I3 I32 O10
    Date: 2011
  27. By: Michael Grimm (Institute of Social Studies, The Hague, DIW and DIAL); Jann Lay (German Institute of Global and Area Studies,Hamburg); François Roubaud (DIAL, IRD, Paris); Julia Vaillant (Université Paris Dauphine, LEDa UMR 225 DIAL, IRD)
    Abstract: (english) This paper investigates the dynamics of the informal sector in Madagascar during a period of fragile growth. Overall, the behavior of informal firms in terms of earnings, employment and capital accumulation points to a degree of heterogeneity which goes beyond a simple dualistic model and even a more refined model that would distinguish between an upper entrepreneurial and a lower subsistence tier within the informal sector. However, in line with the dualistic model, the informal sector indeed fulfils a labor absorbing function in times of crisis. During the growth period we see capital accumulation in most of the sectors and lots of evidence that households expand their activities. However, this happens mainly through the creation of new firms instead of the expansion of existing ones, which is consistent with much higher returns at very low levels of capital. More rapid expansion can be observed in sectors that operate with lower capital intensity, which is also consistent with risk or credit constraints as major deterrents to expansion. While there is some indication that total factor productivity increased over time, returns to capital and labor where not higher at the end of the observation period than at the beginning. Returns are also rather low at high levels of capital. These findings point to a limited growth potential of the informal sector as a whole. The heterogeneity in capital returns hints at large inefficiencies in allocating capital across informal firms. _________________________________ (français) Cet article examine la dynamique du secteur informel à Madagascar pendant une période de croissance fragile. Le comportement des firmes informelles en termes de revenus, d’emploi et d’accumulation du capital suggère un degré d’hétérogénéité allant au-delà du modèle dualiste classique, et même d’un modèle plus fin distinguant, au sein du secteur informel, un segment entrepreneurial et un segment de subsistance. Cependant, conformément au modèle dualiste, le secteur informel a absorbé le surplus de travail en temps de crise. Pendant la période de croissance, on constate une accumulation de capital dans la plupart des secteurs d’activité et une expansion des activités des ménages. Ceci se traduit pourtant principalement par la création de nouvelles firmes plutôt que par la croissance de firmes existantes, en lien avec des rendements beaucoup plus élevés à des faibles niveaux de capital. Une expansion plus rapide peut être observée dans les secteurs à faible intensité capitalistique, ce qui tend également à confirmer que le risque et les contraintes de crédit sont des obstacles à l’expansion. Alors que les résultats montrent que la productivité totale des facteurs a augmenté, les rendements du capital et du travail ne sont pas plus élevés à la fin de la période étudiée qu’au début. Les rendements sont également plutôt faibles à des niveaux élevés de capital. Ces résultats indiquent un potentiel de croissance globalement limité des firmes informelles. Enfin, l’hétérogénéité des rendements du capital plaide en faveur d’une allocation sous-optimale du capital dans le secteur informel.
    Keywords: Informal sector, microenterprise, firm growth, capital returns, Madagascar, Secteur informel, micro-entreprises, croissance des firmes, rendement du capital, Madagascar.
    JEL: O12 O17 L26 D22
    Date: 2011–09

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