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on Africa |
| By: | Mina Baliamoune-Lutz; Zuzana Brixiová; Léonce Ndikumana |
| Abstract: | Limited access of entrepreneurs to credit constrains the creation and growth of private firms. In Africa, access to credit is particularly limited for small and medium enterprises (SMEs) due to unclear property rights and the lack of assets that can be used as collateral. This paper presents a model where firm creation and growth hinge on matching potential entrepreneurs with productive technologies, while firm growth depends on acquired capital. The shortage of collateral creates a binding credit constraint on borrowing by SMEs and hence private sector growth and employment, even though the banking sectors have ample liquidity, as is the case in many African countries. The model is tested using a sample of 20 African countries over the period 2005-09. The empirical results suggest that policies aimed at easing the binding credit constraints (e.g., the depth of credit information and the strength of legal rights pertaining to collateral and bankruptcy) would stimulate productive entrepreneurship and private sector employment in Africa. |
| Keywords: | credit constraints; productive entrepreneurship; employment, policies |
| JEL: | G21 L26 D24 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:icr:wpicer:23-2011&r=afr |
| By: | Denis Cogneau; Alexander Moradi |
| Abstract: | When European powers partitioned Africa, individuals of otherwise homogeneous communities were divided and found themselves randomly assigned to one coloniser. This provides for a natural experiment: applying a border discontinuity analysis to Ghana and Togo, we test what impact coloniser’s policies really made. Using a new data set of men recruited to the Ghana colonial army 1908-1955, we find literacy and religious beliefs to diverge between British and French mandated part of Togoland as early as in the 1920s. We attribute this to the different policies towards missionary schools. The British administration pursued a ”grant-in-aid” policy of missionary schools, whereas the French restricted missionary activities. The divergence is only visible in the Southern part. In the North, as well as at the border between Ghana and Burkina Faso (former French Upper Volta), educational and evangelization efforts were weak on both sides and hence, did not produce any marked differences. Using contemporary survey data we find that border effects originated at colonial times still persist today. |
| Keywords: | Economic History, Africa, Colonization, Education |
| JEL: | O12 R12 P52 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2011-21&r=afr |
| By: | WALTHER Olivier |
| Abstract: | To date, most of the literature on economic networks in West Africa has considered networks in a metaphorical way. The aim of this paper is to go one step further by showing how network analysis may be applied to the study of regional trade in West Africa. After a brief review of the literature, this exploratory paper investigates two main issues related to regional trade. We start by discussing how recent developments in regional trade in West Africa, brought on by urbanization, liberalization, and globalization, have contributed to challenging the social structure of traders. We then discuss the changes that have affected the spatiality of regional trade by looking at the influence of spatial location and geographic scale on traders’ abilities to trade. In both cases, we argue that the value of social network analysis in exploring how traders have progressively adapted to social and spatial changes in economic activities has been greatly underestimated. Through the combination of social and spatial ties, we ultimately show that the structural position of economic actors can be used to reassess the centrality of places. By doing so, the relational approach developed in this paper invites scholarship to reconsider the geographic organization of West African societies. |
| Keywords: | regional trade; economic networks; social network analysis; border markets; West Africa |
| JEL: | F15 L26 N77 N97 R12 Z13 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2012-07&r=afr |
| By: | Kenneth Harttgen (University of Zürich, Nadel); Stephan Klasen (Georg-August-University Göttingen); Sebastian Vollmer (University of Hannover) |
| Abstract: | Using changes in the possession of household assets over the past 20 years, several recent papers have argued that economic performance in Arica was substantially better than suggested by national income data and income poverty statistics, who suffer from well-known weaknesses. We scrutinize these claims and first argue that trends in assets provide biased proxies for trends in incomes or consumption. In particular we show that the relationship between growth in assets and growth in incomes or consumption is extremely weak; instead, we find evidence of asset drift using macro and micro data, which is consistent with the claims we make about possible biases in the use of asset indices. As a result, we find no evidence supporting the claim of an African growth miracle that extends beyond what has been reported in GDP/capita and consumption figures. |
| Keywords: | Asset index; GDP growth; Africa |
| JEL: | O47 O11 O12 |
| Date: | 2012–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:got:gotcrc:109&r=afr |
| By: | Charl Jooste (Department of Economics, University of Pretoria); Guangling "Dave" Liu (Department of Economics, University of Stellenbosch); Ruthira Naraidoo (Department of Economics, University of Pretoria) |
| Abstract: | This paper is the first one to analyse the effect of aggregate government spending and taxes on output for South Africa using three types of a calibrated DSGE model and more data driven models such as a structural vector error correction (SVEC) model and a time-varying parameter VAR (TVP-VAR) to capture possible asymmetries and time variation of fiscal impulses. The impulse responses indicate first, that increases in government expenditure have a positive impact, albeit (at times) less than unity, on GDP in the short run; second, over the long run, the impact of government expenditure on GDP is insignificant; and third, increases in taxes decreases GDP over the short run, while having negligible effects over longer horizons. |
| Keywords: | rule-of-thumb consumers, fiscal multiplier, government spending, TVP-VAR, SVECM |
| JEL: | C54 D58 E32 E62 H31 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201206&r=afr |
| By: | Pascaline Dupas; Sarah Green; Anthony Keats; Jonathan Robinson |
| Abstract: | Most people in rural Africa do not have bank accounts. In this paper, we combine experimental and survey evidence from Western Kenya to document some of the supply and demand factors behind such low levels of financial inclusion. Our experiment had two parts. In the first part, we waived the fixed cost of opening a basic savings account at a local bank for a random subset of individuals who were initially unbanked. While 63% of people opened an account, only 18% actively used it. Survey evidence suggests that the main reasons people did not begin saving in their bank accounts are that: (1) they do not trust the bank, (2) service is unreliable, and (3) withdrawal fees are prohibitively expensive. In the second part of the experiment, we provided information on local credit options and lowered the eligibility requirements for an initial small loan. Within the following 6 months, only 3% of people initiated the loan application process. Survey evidence suggests that people do not borrow because they do not want to risk losing their collateral. These results suggest that, while simply expanding access to banking services (for instance by lowering account opening fees) will benefit a minority, broader success may be unobtainable unless the quality of services is simultaneously improved. There are also challenges on the demand side, however. More work needs to be done to understand what savings and credit products are best suited for the majority of rural households. |
| JEL: | D14 G21 O16 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17851&r=afr |
| By: | Aggarwal, Shilpa; Klapper, Leora; Singer, Dorothe |
| Abstract: | This paper evaluates how microfinance performed in providing business financing in 27 Sub-Saharan African countries. It uses data from the 2009 and 2010 Gallup World Poll, a nationally-representative survey of at least 1,000 individuals per country, conducted in up to 157 countries per year. The data, supported by rigorous statistical evidence in related literature on the use of microcredit around the world, demonstrate that economic gains from microcredit have been more modest than what was once believed. On the other hand, the analysis suggests that the poor save in order to start new businesses and that the introduction of formal products for small savings can be a key financial innovation. The authors also analyze the challenges the poor face in setting money aside to save, and discuss what policymakers can do to promote savings. |
| Keywords: | Access to Finance,Banks&Banking Reform,Debt Markets,Financial Intermediation,Emerging Markets |
| Date: | 2012–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5975&r=afr |
| By: | Margarida Chagas Lopes |
| Abstract: | One of the leading mismatches brought about by globalization has to do with the severe opposition between the national frameworks in which qualifications and skills are being developed and the wider international contexts in which they are increasingly utilized and reproduced. This gulf becomes almost impossible to overcome and imposes a growing inequality in the access to knowledge in the global economy as the prevalent forms of economic regulation are rendered obsolete. The limitations displayed by national systems of education and training interact with the growing insufficiencies in the performance of labor market and innovation hetero regulators. As a result, increasing flows of excluded workers have been paving the ways between the new global development centers and the emerging new peripheries. |
| Keywords: | Education and economic development, quality of education, new North-South divide, Sub-saharan Africa |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:soc:wpaper:wp102011&r=afr |
| By: | Augustin Kwasi Fosu; Yoseph Yilma Getachew; Thomas Ziesemer |
| Abstract: | How much does public capital matter for economic growth? How large should it be? This paper attempts to answer these questions, taking the case of SSA countries. It develops and estimates a model that posits a nonlinear relationship between public investment and growth, to determine the growth-maximizing public investment GDP share. It empirically also accounts for the crowding-in and crowding-out effects between public and private investment, with equations estimated separately and simultaneously, using System GMM. The paper further runs simulation and examines the public investment GDP share that maximizes consumption. This is estimated to be between 8.4 percent and 11.0 percent. The results from estimating the growth model are in the middle of this range, which is larger than the observed value of 7.2 percent at the end of the sample period. These outcomes suggest that, on average, there has been public under-investment in Africa, contrary to previous findings. |
| Keywords: | Public investment; Economic Growth; Nonlinearity |
| JEL: | O4 H4 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2011-22&r=afr |
| By: | Arthur Foch (Centre d'Economie de la Sorbonne) |
| Abstract: | Thirty years after its implementation by the World Bank (WB) in Sub-Saharan Africa (SSA), the empirical evidences point out the very mixed results privatization has produced, particularly in the infrastructures sector. Despite of this, the WB has intensified its support to infrastructures privatization in SSA. Whereas several reasons can explain the WB attitude, this paper argues that it can also be partly explained by financial motivations. Indeed, by creating important business opportunities in the infrastructure sectors, privatization is an efficient mean to satisfy the financial interest of foreign investors, notably those of the main WB donors. An empirical analysis based on 270 infrastructures privatization cases in SSA shows that foreign investors benefit more from privatization when it is supported by the WB. Moreover, the WB provides greater support to privatization in infrastructures sectors that benefit the most to those investors. Based on these results, several political recommendations are provided to increase the acceptability of privatization in SSA in order to resolve the financing problem of infrastructures development in SSA. |
| Keywords: | Privatization, infrastructures, World Bank, Sub-Saharan Africa. |
| JEL: | O16 O18 O19 O55 F35 F39 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:12004&r=afr |
| By: | Augustin Kwasi Fosu (UNU-WIDER); Yoseph Yilma Getachew (Durham Business School); Thomas Ziesemer (Maastricht University) |
| Abstract: | How much does public capital matter for economic growth? How large should it be? This paper attempts to answer these questions, taking the case of SSA countries. It develops and estimates a model that posits a nonlinear relationship between public investment and growth, to determine the growth-maximizing public investment GDP share. It empirically also accounts for the crowding-in and crowding-out effects between public and private investment, with equations estimated separately and simultaneously, using System GMM. The paper further runs simulation and examines the public investment GDP share that maximizes consumption. This is estimated to be between 8.4 percent and 11.0 percent. The results from estimating the growth model are in the middle of this range, which is larger than the observed value of 7.2 percent at the end of the sample period. These outcomes suggest that, on average, there has been public under-investment in Africa, contrary to previous findings |
| Keywords: | Public investment; Economic Growth; Nonlinearity |
| JEL: | H4 |
| Date: | 2012–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:dur:durham:2012_03&r=afr |
| By: | KOISSY KPEIN Sandrine |
| Abstract: | This work uses MVPROBIT model and MICS surveys from rural areas of 8 sub-Saharan African countries to highlight the link between household wealth and child labor. It opposes “wealth paradox” approach of Bhalotra and Heady (2003) to “luxury axiom” approach of Basu and Van (1998). Our analysis is based on the assumption of differences in the wealth’s effect according to the gender and the type of labor. The results suggest that heterogeneity among children (gender) and labor activities leads to heterogeneous rules concerning the link between child labor and household wealth. |
| Keywords: | child labor; schooling; luxury axiom; wealth paradox |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:irs:cepswp:2012-08&r=afr |
| By: | Fenske, James |
| Abstract: | The conventional view is that an increase in the value of a natural resource will lead private property to emerge. Many Igbo groups in Nigeria, however, curtailed private rights over palm trees in response to the palm produce trade of the nineteenth and early twentieth centuries. I present a simple game between a property owner and a potential thief in which an increase in the price of a natural resource makes it possible to introduce regulated communal tenure. This makes the property owner better off, leaving the thief as well off as under private property. I use this model along with colonial court records to explain the political economy of property disputes in interwar Igboland. |
| Keywords: | Property rights; trade; commons; Nigeria; Igbo |
| JEL: | N57 O10 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:36759&r=afr |