nep-afr New Economics Papers
on Africa
Issue of 2012‒03‒28
37 papers chosen by
Quentin Wodon
World Bank

  1. Working Paper 146 - Bank Financing to Small and Medium Enterprises in East Africa: Findings of a Survey in Kenya, Tanzania, Uganda and Zambia By AfDB
  2. Nigeria: Mapping the Shari`a Restorationist Movement By Lubeck, Paul M
  3. Halving Poverty in South Africa: Growth and Distributional Aspects By Tregenna, Fiona
  4. Race, Poverty, and Deprivation in South Africa By Carlos Gradín
  5. Aid and Agency in Africa: Explaining Food Disbursements Across Ethiopian Households, 1994-2004 By Broussard, Nzinga H; Dercon, Stefan; Somanathan, Rohini
  6. Should Africa Industrialize? By Page, John
  7. Political crises and risk of financial contagion in developing countries: Evidence from Africa By Simplice A , Asongu
  8. Measuring the Carbon Content of the South African Economy By Arndt, Channing; Makrelov, Konstantin; Thurlow, James
  9. The Long-Run Effects of the Scramble for Africa. By Stelios Michalopoulos; Elias Papaioannou
  10. Efficiency of Commercial Banks in Sub-Saharan Africa: A Comparative Analysis of Domestic and Foreign Banks By Kiyota, Hiroyuki
  11. Emerging Evidence on the Relative Importance of Sectoral Sources of Growth in Sub-Saharan Africa By Ogunleye, Eric Kehinde
  12. Slave numeracy in the Cape Colony and comparative development in the eighteenth century By Jörg Baten; Johan Fourie
  13. Wealth, Credit Conditions and Consumption: Evidence from South Africa By Aron, Janine; Muellbauer, John
  14. Trade causes growth in Sub-Saharan Africa By Brückner, Markus; Lederman, Daniel
  15. Environmental and Gender Impacts of Land Tenure Regularization in Africa By Ayalew Ali, Daniel; Goldstein, Markus
  16. REAL Exchange Rate Misalignment and Economic Performance of WEST AFRICAN MONETARY ZONE:Implications for macroeconomic unionisation By Raji, Rahman Olanrewaju
  17. Political Connections and Social Networks in Targeted Transfer Programs: Evidence from Rural Ethiopia By Caeyers, Bet; Dercon, Stefan
  18. Comparing the Determinants of Internet and Cell Phone Use in Africa : Evidence from Gabon By Thierry Pénard; Nicolas Poussing; Gabriel Zomo Yebe; Philémon Nsi Ella
  19. The Legacy of Historical Conflict: Evidence from Africa By Besley, Timothy J.; Reynal-Querol, Marta
  20. Poverty and Land Distribution: Evidence from a Natural Experiment By Keswell, Malcolm
  21. Contingent Valuation of Community Forestry Programs in Ethiopia: Observing Preference Anomalies in Double-Bounded CVM By Dambala Gelo; Steven F Koch
  22. Price and Income Elasticities of Demand for Oil Products in African Member Countries of OPEC: A Cointegration Analysis By Suleiman , Sa’ad; Muhammad, Shahbaz
  23. Policy Mix Coherence: What Does it Mean for Monetary Policy in West Africa? By Nasser Ary Tanimoune; Jean-Louis Combes; Rene Tapsoba
  24. Movers or Stayers? Understanding the Drivers of IDP Camp Decongestion during Post-Conflict Recovery in Uganda By Carlos Bozzoli; Tilman Brück; Tony Muhumuza
  25. A Dynamic General Equilibrium Analysis of Adaptation to Climate Change in Ethiopia By Robinson, Sherman; Willenbockel, Dirk
  26. A Re-examination of the Relation between Democracy and International Trade The Case of Africa By Balding, Christopher
  27. The law's majestic equality ? the distributive impact of litigating social and economic rights By Brinks, Daniel M.; Gauri, Varun
  28. Financial Sector Competition in West African Economic and Monetary Union By Florian LEON
  29. Seasonal Migration and Risk Aversion By Bryan, Gharad; Chowdhury, Shyamal; Mobarak, Ahmed Mushfiq
  30. Awareness and AIDS: A Political Economy Perspective By Gani Aldashev; Jean-Marie Baland
  31. Agriculture and Trade Opportunities for Tanzania: Past Volatility and Future Climate Change By Ahmed, Syud Amer; Hertel, Thomas W.; Martin, William J.
  32. The prospects of developing Biofuels in Mali By Dorothée Boccanfuso; Massa Coulibaly; Govinda R. Timilsina; Luc Savard
  33. Power Ahead: Meeting Ethiopiaâ..s Energy Needs under a Changing Climate By Block, Paul
  34. Current Climate Variability and Future Climate Change: Estimated Growth and Poverty Impacts for Zambia By Thurlow, James; Diao, Xinshen
  35. Climate Change, Agriculture, and Food Security in Tanzania By Arndt, Channing; Strzepek, Ken; Thurlow, James
  36. Seeds of Distrust: Conflict in Uganda By Rohner, Dominic; Thoenig, Mathias; Zilibotti, Fabrizio
  37. Climate Change and Infrastructure Investment in Developing Countries: The Case of Mozambique By Arndt, Channing; Strzepek, Kenneth; Thurlow, James

  1. By: AfDB
    Abstract: Bank Financing to Small and Medium Enterprises in East Africa: Findings of a Survey in Kenya, Tanzania, Uganda and Zambia
    Date: 2012–03–16
  2. By: Lubeck, Paul M
    Keywords: Nigeria, Shari`a, Muslim, politics, africa, African Studies, Politics and Social Change, Regional Sociology
    Date: 2011–04–01
  3. By: Tregenna, Fiona
    Abstract: The United Nations Millennium Declaration commits to halving extreme poverty between 2000 and 2015. The South African government has set a goal of halving poverty by 2014, although the meaning of this goal has not yet been defined. This article specifies government.s stated target of halving poverty by 2014 in terms of specific measures of the poverty gap and poverty headcount ratio, using income and expenditure survey microdata. With the poverty line as defined here, approximately half the South African population falls below the poverty line. Despite this, the aggregate poverty gap is surprisingly small at about 3 per cent of GDP. Projections of the effects of distributional scenarios on poverty indicate that halving poverty appears feasible with moderate growth rates and fairly mild pro-poor distributional change.
    Keywords: income distribution, poverty, inequality, South Africa
    Date: 2011
  4. By: Carlos Gradín
    Abstract: The aim of this paper is to explain why poverty and material deprivation in South Africa are significantly higher among those of African descent than among whites. To do so, we estimate the conditional levels of poverty and deprivation Africans would experience had they the same characteristics as whites. By comparing the actual and counterfactual distributions, we show that the racial gap in poverty and deprivation can be attributed to the cumulative disadvantaged characteristics of Africans, such as their current level of educational attainment, demographic structure, and area of residence, as well as to the inertia of past racial inequalities. Progress made in the educational and labor market outcomes of Africans after Apartheid explains the reduction in the racial poverty differential.
    Keywords: poverty, deprivation, race, decomposition, South Africa, households’ characteristics.
    JEL: D31 D63 I32 J15 J71 J82 O15
    Date: 2011–12
  5. By: Broussard, Nzinga H; Dercon, Stefan; Somanathan, Rohini
    Abstract: We study the distribution of food aid in Ethiopia between 1994 and 2004 using data from the Ethiopian Rural Household Survey. Over this period village leaders had considerable discretion in disbursing aid subject to official guidelines and periodic monitoring. We use a principal-agent model and household panel data for approximately 940 households to understand biases in the allocation of aid. The model shows that correlations between aid and observed measures of need are not a good measure of targeting because agents have incentives to distort allocations within targeted classes. Consistent with the model, we find that the aid recipients match official criteria but disbursements are negatively correlated with determinants of need that are not easily observable by monitoring agencies, namely pre-aid consumption, self-reported power and involvement in village-level organizations. Our results suggest informal structures of power within African villages influence the extent to which food aid insulates some of the world's poorest families from agricultural shocks but also that policy guidelines do constrain permissible deviations from need-based allocations.
    Keywords: Africa; food aid; political economy
    JEL: H53 I38 O11
    Date: 2012–02
  6. By: Page, John
    Abstract: Africa should industrialize. Without structural change it cannot sustain recent growth. Economies with more diverse and sophisticated industrial sectors tend to grow faster. But since 1980 Africa has deindustrialized. The paper shows that between 1975 and 2005 the size, diversity and sophistication of industry in Africa have all declined. An industrialization strategy containing two elements is needed. The first is straightforward: refocusing current investment climate reforms on infrastructure, skills, and regional integration. These actions alone will not be sufficient, however. Africa must also learn to compete through strategies to create an export push, develop industrial clusters, and attract task-based production.
    Keywords: Africa, industry, industrial policy, growth, sophistication, exports
    Date: 2011
  7. By: Simplice A , Asongu
    Abstract: The recent waves of political crises in Africa and the Middle East have inspired the debate over how political instability could pose a risk of financial contagion to emerging countries. With retrospect to the Kenyan political crisis, our findings suggest stock markets in Lebanon, Mauritius were contaminated while Nigeria experienced a positive spillover. Our results have two major implications. Firstly, we have confirmed existing consensus that African financial markets are increasingly integrated. Secondly, we have also shown that international financial market transmissions not only occur during financial crisis; political crises effects should not be undermined.
    Keywords: Political crisis; contagion; developing countries; equity markets
    JEL: O55 F50 F30 G15 G10
    Date: 2011–07–01
  8. By: Arndt, Channing; Makrelov, Konstantin; Thurlow, James
    Abstract: We estimate the carbon intensity of industries, products, and households in South Africa. Direct and indirect carbon usage is measured using multiplier methods that capture inter-industry linkages and multi-product supply chains. Carbon intensity is found to be high for exports but low for major employing sectors. Middle-income households are the most carbon-intensive consumers. These results suggest that carbon pricing policies (without border tax adjustments) would adversely affect export earnings, but should not disproportionately hurt workers or poorer households. 7per cent of emissions arise though marketing margins, implying that carbon pricing should be accompanied by supporting public policies and investments.
    Keywords: greenhouse gas emissions, carbon use, input-output analysis, South Africa
    Date: 2011
  9. 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 ethicities 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 spill overs; 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.
    Keywords: Africa, Borders, Ethnicities, Conflict, Development.
    JEL: O10 N17 N97 Z10
    Date: 2011
  10. By: Kiyota, Hiroyuki
    Abstract: Utilizing the stochastic frontier approach, this study conducts a comparative analysis of profit efficiency and cost inefficiency of commercial banks operating in 29 sub-Saharan African (SSA) countries by bank ownership (domestic bank, SSA foreign bank or non-SSA foreign bank), as well as by the bank size during 2000-07. Tobit regressions are employed to assess the impact of environmental factors on the efficiency of commercial banks. The key findings of this empirical analysis suggest that foreign banks tend to outperform domestic banks in terms of profit efficiency. In terms of efficiency by bank size, the smaller the bank, the more profit efficient the bank will be; medium or relatively large banks tend to be the most cost efficient.
    Keywords: banking, stochastic frontier, Tobit regression, Africa
    Date: 2011
  11. By: Ogunleye, Eric Kehinde
    Abstract: Purposeful, well-targeted and successful transformation policies will be elusive for a country or region that does not understand the relative importance of its sectoral sources of growth. This study aims at eliciting our understanding in this respect by providing an assessment of the relative importance of the major sectors as sources of growth in sub-Saharan African (SSA) countries. Our findings reveal that, contrary to the general belief that agriculture is the most important contributor to economic growth in SSA countries, rather it is the service sector that leads, followed by agriculture and manufacturing. While not discounting policies aimed at strengthening all sectors, the service sector particularly needs to be better positioned to foster sustainable economic growth in SSA countries.
    Keywords: Economic growth, sectoral drivers, Arellano-Bond
    Date: 2011
  12. By: Jörg Baten; Johan Fourie
    Abstract: The lack of accurate measures of human capital formation often constrain investigations into the long-run determinants of growth and comparative economic development, especially in regions such as Africa. Using the reported age of criminals in the Courts of Justice records in the Cape Archive, this paper documents, for the first time, the levels of and trends in numeracy for inhabitants of the Cape Colony born between the seventeenth and early nineteenth centuries. Cape inhabitants included the native Khoe and San, European settlers, and imported slaves from other African regions and Asia. This hodgepodge of individuals allows a unique comparison between contemporaneous levels of 18th century development across three continents. By isolating those slaves born at the Cape, we also provide a glimpse into the dynamics of human capital transfer in colonial settings.
    Keywords: Education, Human Capital, South Africa, Whipple, Age-heaping, Africa, Asia
    JEL: N37 O15 I25
    Date: 2012
  13. By: Aron, Janine; Muellbauer, John
    Abstract: There is widespread disagreement about the role of housing wealth in explaining consumption. This paper exploits liquid and illiquid wealth time series from household balance sheet data for South Africa, previously constructed by the authors, to explain fluctuations in the ratios of consumption and household debt to income in South Africa, from 1971 to 2005. The paper emphasizes the role of substantial credit liberalization and of wealth, treating credit conditions as a latent variable with key interactions with drivers of consumption and debt. Credit conditions are proxied by a spline function entering jointly estimated consumption, debt and income expectations equations in a 'latent interactive variable equation system' (LIVES). The empirical results corroborate the theory in the paper, confirming that consumption relative to income is driven by credit liberalization, fluctuations in a range of asset values and asset accumulation, uncertainty and income expectations, inter alia. The paper confirms a collateral interpretation of housing wealth on consumption as opposed to a life-cycle interpretation. The paper also throws important light on the monetary policy transmission mechanism in South Africa.
    Keywords: consumption; credit conditions; credit market liberalisation; household debt; housing collateral; housing wealth; liquid and illiquid wealth
    JEL: C52 E21 E27 E32 E44 E51 E52 E58
    Date: 2012–02
  14. By: Brückner, Markus; Lederman, Daniel
    Abstract: In the 1990s the mainstream consensus was that trade causes growth. Subsequent research shed doubt on the consensus view, as evidence suggested that the identification of the effect of trade on growth was problematic in the existing literature. This paper contributes to this debate by focusing on growth in Sub-Saharan Africa. It estimates the effect of openness to international trade on economic growth with panel data. Employing instrumental variables techniques that correct for endogeneity bias, the empirical evidence suggests that within-country variations in trade openness cause economic growth: a 1 percentage point increase in the ratio of trade over gross domestic product is associated with a short-run increase in growth of approximately 0.5 percent per year; the long-run effect is larger, reaching about 0.8 percent after ten years. These results are robust to controlling for country and time fixed effects as well as political institutions.
    Keywords: Economic Theory&Research,Achieving Shared Growth,Free Trade,Trade Policy,Trade Law
    Date: 2012–03–01
  15. By: Ayalew Ali, Daniel; Goldstein, Markus
    Abstract: Although recent developments greatly increased interest in African land tenure, few models to address these issues at the required scale have been identified or evaluated. Rwanda.s nation-wide land tenure regularization programme is of great interest. A discontinuity design with spatial fixed effects that is used to evaluate the pilot for this programme points to three main effects; namely, (i) improved land access for legally married women and better recordation of inheritance rights; (ii) significant and large investment impacts that are particularly pronounced for women; and (iii) a reduction in land market activity rather than distress sales. Implications for programme design and policy are discussed.
    Keywords: gender, agricultural investment, land administration, Rwanda
    Date: 2011
  16. By: Raji, Rahman Olanrewaju
    Abstract: The study assessed the real exchange rate misalignment and economic performance of WAMZ economies to determine its implications on economic unionization. The study uses Generalised Method of Moment of Dynamic Panel Estimation Method and supported with Cross Country Correlation Approach which comprises Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone covering the period from 2000 commencement of the zone to 2010 from international financial statistics of international monetary fund. The study discovered that the zone experiences asymmetrical correlations between real exchange rate misalignment and economic performance while the inclusion of equilibrium real exchange rate revealed a symmetrical relationship with economic performance. Further revelation in the study happened to be the cross country correlations which unveiled that four countries emerged to have a moderate degree of symmetrical relationship using some macroeconomic variables such real exchange rate, misaligned real exchange rate, openness, inflation and output. The study concluded by admonishing the zone to commence with four promising economies such as a Gambia, Ghana, Nigeria and Sierra Leone.
    Keywords: WAMZ; misalignment real exchange rate; currency union
    JEL: C33 F31 F43 F36
    Date: 2012–03–15
  17. By: Caeyers, Bet; Dercon, Stefan
    Abstract: Despite increasingly large scale social protection programs in Africa, we have limited evidence on the local political economy of their allocation. We investigate community-based processes for food aid allocation and the role of political and social networks, using the case of Ethiopia in the aftermath of a serious drought in 2002. Local political authorities are in charge of food transfers, in terms of free food aid or food-for-work programs. We find that although targeting is clearly imperfect, free food aid is responsive to need, as well as targeted to households with less access to support from relatives or friends. We also find a strong correlation with political connections: households with close associates in official positions have more than 12 % higher probability of obtaining free food than households that are not well connected. This effect is large: someone without political connections has the same probability of getting food aid than someone more than twice as rich, but with these connections. The correlation with political connections is specifically strong in the immediate aftermath of the drought. Payment for food-for-work is also about a third higher for those with political connections. Although these programs appear to be responsive to need, in future it is crucial to look more closely at the local political economy of these programs.
    Keywords: Africa; food aid; political economy; targeting; transfers
    JEL: H53 I38 O11
    Date: 2012–02
  18. By: Thierry Pénard (University of Rennes 1 - CREM, (UMR 6211 CNRS) & M@rsouin); Nicolas Poussing (CEPS/INSTEAD (LUXEMBOURG) & CREM-CNRS, UMR 6211); Gabriel Zomo Yebe (Université Omar Bongo de Libreville (Gabon)); Philémon Nsi Ella (Université Omar Bongo de Libreville (Gabon))
    Abstract: Within developed countries, the market penetration of cell phones and the Internet has progressed in tandem and the point of market saturation is nearly to be reached in both markets. In contrast, the African continent has been characterized by a more uneven level of progress, with the penetration of cell phones (41% in 2010) considerably outpacing the penetration of the Internet (9.6% in 2010). The question is then raised as to whether cell phone and Internet services in Africa are following the same path towards widespread diffusion, yet with a several-year time delay, or alternatively has the expansion of Internet use been constrained by the presence of specific obstacles? The objective of this article is to compare the determinants and hindrances of both Internet and cell phone use in Gabon, based on individual survey data. Our econometric results show that the primary factors stimulating Internet use consist of a high level of education and computer skill. Social neighborhood also plays a major role in the Internet adoption process. As regards cell-phone use, the main obstacles would be economic in nature. Finally, an individual's age has a positive impact on cell phone use and negative impact on Internet use. The differences identified in both penetration and user profiles between Internet and cell phone service should motivate African governments to develop digital policies more heavily focused on a wider dissemination of cell phones in order to make innovative services and applications (e.g. in the field of health or education) available to as broad a population as possible.
    Keywords: Internet Use, Cell-phone Use, IT Diffusion, Digital Divide, Africa
    JEL: L5 L9 O14 O33 O57
    Date: 2012–03
  19. By: Besley, Timothy J.; Reynal-Querol, Marta
    Abstract: There is a great deal of interest in the causes and consequences of conflict in Africa, one of the poorest areas of the world where only modest economic progess has been made. This paper asks whether post-colonial conflict is, at least in part, a legacy of historical conflict by examining the empirical relationship between conflict in Africa since independence with recorded conflicts in the period 1400 to1700. We find evidence of a legacy of historical conflicts using between- country and within-country evidence. The latter is found by dividing the continent into 120kmm-20km grids and measuring the distance from 91 documented historical conflicts.We also provide evidence that historical conflict is correlated with lower levels of trust, a stronger sense of ethnic identity and a weaker sense of national identity.
    Keywords: conflict; identity; trust
    JEL: N47 O43 O55
    Date: 2012–02
  20. By: Keswell, Malcolm
    Abstract: While land reforms have long been motivated as a potential policy lever of rural growth and development, there is remarkably little evidence of the direct impacts of such reforms. In an effort to fill this lacunae, this paper examines South Africa's Land Redistribution for Agricultural Development (LRAD) program. We show that the implementation of this program operates as a natural experiment in which self-selected and administratively-filltered LRAD applicants receive land transfers at random points in time. This random exit from the application pipeline creates creates exogenous variation in treatment assignment as well as treatment duration. Exploiting both sources of exogenous variation, we estimate average and long-run treatment effects that imply a discounted gain in monthly per capita consumption of about fifty per cent after three years of exposure to the program.
    Keywords: land reform, poverty, impact evaluation
    Date: 2011
  21. By: Dambala Gelo; Steven F Koch
    Abstract: This study examines the potential for anomalous response behaviour effects within the context of double-bounded contingent valuation applied to community forestry programs in rural Ethiopia. Anomalous responses considered include shift effects, framing effects, anchoring effects, and others closely related to these. The results confirmed the presence of anomalous responses, especially shift and framing effects; anchoring effects are not uncovered. After controlling for these biases, the analysed community forestry program is shown to offer a welfare gain ranging from Ethiopian Birr (ETB) 20.14 to 22.80 annually, per household. In addition to uncovering limited welfare benefits, the results raise questions regarding the validity of previous double-bounded contingent valuation welfare estimates in developing countries, suggesting that future studies should control for incentive incompatibility and framing effects bias.
    Keywords: Double-bounded contingent valuation, shift bias, anchoring bias
    JEL: Q26 Q23 Q28
    Date: 2012
  22. By: Suleiman , Sa’ad; Muhammad, Shahbaz
    Abstract: This paper analyses the demand for petroleum products in African member countries of OPEC namely Algeria, Angola, Libya and Nigeria over the period of 1980-2007. For this purpose, econometric models based on time series data are generated for individual products so as to capture product specific factors affecting demand. In doing so, the ARDL bounds testing approach to cointegration is applied to examine the long run relationship among the variables. Four specifications such as total petroleum product demand function, gasoline demand function, diesel demand function and kerosene demand functions have been estimated. The review of trends in the consumption and real prices of the various products suggest that demand for oil products has risen fast due to fast rise in income levels of individuals in these countries as compared to price level. Furthermore, results of estimation show mixed evidence about cointegration between the variables in all the countries studied. The evidence from the estimates show that the diesel demand specification provided satisfactory results in terms of producing expected signs than other specifications. The results for the kerosene model was the least satisfactory as most of the coefficients were found with unexpected signs. Finally the overall result indicates that demand for oil products are more responsive to changes in income than the real prices, both in the short and long run. This result is consistent with the previous studies on developing countries. Finally, the policy implication for result show the need for diversification, increase refining capacity and demand management policies in these countries to promote energy efficiency, conservation as well as discourage cross border smuggling of products and encourage private investment into the oil sector.
    Keywords: Petroleum product demand; ARDL procedure
    JEL: Q43
    Date: 2012–01–03
  23. By: Nasser Ary Tanimoune (School of International Development and Global Studies - School of International Development and Global Studies - University of Ottawa); Jean-Louis Combes (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Rene Tapsoba (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: This article examines the influence of Policy Mix coherence in Economic Community of West African States (ECOWAS). The paper innovates in two ways. First, through an interaction between the monetary conditions index and the primary structural fiscal balance, we highlight coherence-type complementarities between monetary policy and fiscal policy with regard to their effects on economic activity. Second, we show that the influence of the coherence of policy mix on the effect of monetary policy is different according to the stance of the economy within the four possible regimes of policy mix, mostly in the WAEMU subsample, where integration is deeper than in the non-WAEMU countries, thanks to the common currency (the Franc CFA) they share. The analysis is based upon a panel dataset from 1990 to 2006 and remains robust to alternative specifications used to calculate the monetary conditions index. Our results contribute to the debate regarding the prospect of an ECOWAS-wide common currency. Indeed, given the heterogeneity in the economic structure of its members States, more policy mix coherence seems necessary to avoid unexpected impacts of monetary policy on economic activity.
    Keywords: Policy Mix;Structural Fiscal Balance;Monetary Conditions Index;Economic Community of West African States.
    Date: 2012–03–13
  24. By: Carlos Bozzoli; Tilman Brück; Tony Muhumuza
    Abstract: The paper explores factors that influence the household decision to leave internal displacement camps in the immediate aftermath of violent conflict. Our analysis is based on two sources of information: household survey data collected in northern Uganda for households that were displaced by the civil conflict, and geo-referenced data on armed conflict events, with which we construct our developed index of recent conflict exposure. We compare households that moved out of camps with those that remained in the camps after the region was declared safe from rebel incursions. The study covers the first few months of the end of conflict, when return was regarded as largely voluntary. We find that a history of conflict both at the place of residence, and at the expected place of return reduces the likelihood of return. Access to camp services overall encourages households to stay in camps, although the effect varies with the proportion of young household members. Results also show that a history of economic skills poses varying effects on return decisions. While experience in cultivation is associated with a high likelihood of moving out of the camp, households with members with recent experience in trading are less inclined to return. From a policy perspective, the results point to the need for recovery initiatives to ensure access to adequate infrastructures in return locations in order to fast-track reintegration.
    Date: 2012
  25. By: Robinson, Sherman; Willenbockel, Dirk
    Abstract: This study links a multi-sectoral regionalized dynamic computable general equilibrium model of Ethiopia with a system of country-specific hydrology, crop, road and hydropower engineering models to simulate the economic impacts of climate change towards 2050. In the absence of externally funded policy-driven adaptation investments Ethiopiaâ..s GDP in the 2040s will be up to 10 percent below the counterfactual no-climate change baseline. Suitably scaled adaptation measures could restore aggregate welfare to baseline levels at a cost that is substantially lower than the welfare losses due to climate change.
    Keywords: CGE analysis, global warming, growth, adaptation costs, development
    Date: 2011
  26. By: Balding, Christopher
    Abstract: Scholars and policy makers believe that democracy will bring prosperity through integration into the global economy via increased international trade. This study tests two theories as to why democracies might trade more. First, political freedom may be correlated with economic freedom, thus prompting higher levels of economic activity, thereby driving states to trade more. Second, democracy implies higher quality governance either through institutions or policy-making procedures. I utilize a bilateral gravity trade model covering approximately 150 countries from 1950 to 1999, with fixed effects for time, importers and exporters. I find the theory that democracy, and many of its components, promotes international trade unconvincing. Economic freedom does not have the expected impact on international trade levels, but quality of governance variables have broad economic and statistical significance.
    Keywords: trade, democracy, governance, Africa, gravity model
    Date: 2011
  27. By: Brinks, Daniel M.; Gauri, Varun
    Abstract: Optimism about the use of laws, constitutions, and rights to achieve social change has never been higher among practitioners. But the academic literature is skeptical that courts can direct resources toward the poor. This paper develops a nuanced account in which not all courts are the same. Countries and policy areas characterized by judicial decisions with broader applicability tend to avoid the potential anti-poor bias of courts, whereas areas dominated by individual litigation and individualized effects are less likely to have pro-poor outcomes. Using data on social and economic rights cases in five countries, the authors estimate the potential distributive impact of litigation by examining whether the poor are over or under-represented among the beneficiaries of litigation, relative to their share of the population. They find that the impact of courts varies considerably across the cases, but is positive and pro-poor in two of the five countries (India and South Africa), distribution-neutral in two others (Indonesia and Brazil), and sharply anti-poor in Nigeria. Overall, the results of litigation are much more positive for the poor than conventional wisdom would suggest.
    Keywords: Health Monitoring&Evaluation,Judicial System Reform,Population Policies,Gender and Law,Labor Policies
    Date: 2012–03–01
  28. By: Florian LEON
    Abstract: This paper investigates the degree of competition in the WAEMU financial industry over the period 2002-2007 using firm-level data (591 year-firm observations). Market structure analysis, the Panzar-Rosse model and conjectural variation are applied to assess the level of competition. The results show that the prevailing market structure in the WAEMU financial industry is concentrated and financial intermediaries operate under imperfect competition. Although competition was fierce during the mid-2000s, the level of competition has remained limited. Moreover, apart from Benin and Mali, the structural and non-structural approaches are closely related, contrary to previous findings, which have some implications for the empirical studies. Finally, a common regulatory framework does not imply similar level of competition. The presence of non-legal barriers is the most plausible explanation of these large differences between WAEMU members.
    Keywords: Banking competition, Market structure, Panzar-Rosse model, Conjectural variation model, WAEMU
    JEL: O55 L13 L11 G21 D4
    Date: 2012
  29. By: Bryan, Gharad; Chowdhury, Shyamal; Mobarak, Ahmed Mushfiq
    Abstract: Pre-harvest lean seasons are widespread in the agrarian areas of Asia and Sub-Saharan Africa. Every year, these seasonal famines force millions of people to succumb to poverty and hunger. We randomly assign an $8.50 incentive to households in Bangladesh to out-migrate during the lean season, and document a set of striking facts. The incentive induces 22% of households to send a seasonal migrant, consumption at the origin increases by 30% (550-700 calories per person per day) for the family members of induced migrants, and follow-up data show that treated households continue to re-migrate at a higher rate after the incentive is removed. The migration rate is 10 percentage points higher in treatment areas a year later, and three years later it is still 8 percentage points higher. These facts can be explained by a model with three key elements: (a) experimenting with the new activity is risky, given uncertain prospects at the destination, (b) overcoming the risk requires individual-specific learning (e.g. resolving the uncertainty about matching to an employer), and (c) some migrants are close to subsistence and the risk of failure is very costly. We test a model with these features by examining heterogeneity in take-up and re-migration, and by conducting a new experiment with a migration insurance treatment. We document several pieces of evidence consistent with the model.
    Keywords: Bangladesh; Migration; Risk Aversion
    JEL: J61 O1 O15 R23
    Date: 2012–01
  30. By: Gani Aldashev (Center for Research in the Economics of Development, University of Namur); Jean-Marie Baland (Center for Research in the Economics of Development, University of Namur; CEPR; BREADS)
    Abstract: Across African countries, prevention policies are unrelated to the prevalence of HIV/AIDS and, even in countries in which they were successful, these policies are often unstable or reversed. To explain these two puzzles, we propose a simple political economy model that examines how prevention policies and the epidemic dynamics are jointly determined. Prevention campaigns affect both citizens'behavior and their perception of the role of public policies in fighting AIDS. The behavioral changes induced by the policy, in turn, reduce the risk of infection for sexually active agents, and this creates political support for future policies. The two-way relationship between prevention policy and awareness generates two stable steady-state equilibria: high awareness/slow prevalence and low awareness/high prevalence. The low prevalence equilibrium is fragile: the economy can easily drift away towards the high prevalence rates as they also imply less active prevention policies. We then conduct an empirical analysis of the determinants of public support for HIV/AIDS policies using the 2005 Afrobarometer data. High prevalence rates translate into public support for prevention policies only in countries which carried out active prevention campaigns in the past. The proposed framework extends naturally to a large class of public health policies under which awareness partly follows from the policies themselves.
    Keywords: HIV/AIDS, voting, public health, awareness
    JEL: I18 H51
    Date: 2012–03
  31. By: Ahmed, Syud Amer; Hertel, Thomas W.; Martin, William J.
    Abstract: Given global heterogeneity in climate-induced agricultural variability, Tanzania has the potential to substantially increase its maize exports to other countries. If global maize production is lower than usual due to supply shocks in major exporting regions, Tanzania may be able to export more maize at higher prices, even if it also experiences below-trend productivity. Diverse destinations for exports can allow for enhanced trading opportunities when negative supply shocks affect the partnersâ.. usual import sources. Future climate predictions suggest that some of Tanzaniaâ..s trading partners will experience severe dry conditions that may reduce agricultural production in years when Tanzania is only mildly affected. Tanzania could thus export grain to countries as climate change increases the likelihood of severe precipitation deficits in other countries while simultaneously decreasing the likelihood of severe precipitation deficits in Tanzania. Trade restrictions, like export bans, prevent Tanzania from taking advantage of these opportunities, foregoing significant economic benefits.
    Keywords: climate change, volatility, Tanzania, trade, export ban, agriculture
    Date: 2011
  32. By: Dorothée Boccanfuso (Département d’économique and GRÉDI, Université de Sherbrooke); Massa Coulibaly (GREAT - Groupe de recherche en économie appliquée et théorique); Govinda R. Timilsina (The World Bank); Luc Savard (Département d’économique and GRÉDI, Université de Sherbrooke)
    Abstract: A biofuels race has emerged because of the increasing cost of oil. In parallel, a growing concern for environmental protection has been observed. The expansion of biofuel production has occurs concurrently with raising prices of the foodstuffs. Developing countries like Mali have seen this situation as an opportunity to reduce its dependency on oil imports and generate gains from biofuel production. This development strategy could put pressure on food security in the country. The government of Mali has developed a strategy to promote biofuels production particularly with jatropha. The economic and environmental stakes around this strategy are far from being negligible. In this paper, we provide an analysis of this sector with opportunities and risk of developing this sector.
    Keywords: Biofuels, agriculture
    JEL: D58 D31 I32 Q17
    Date: 2012–02
  33. By: Block, Paul
    Abstract: Ethiopia is powering ahead with an ambitious energy development strategy, highly reliant on abundant hydropower potential. A changing climate, including uncertain water supply, however, may pose a salient challenge to meeting expected targets. Bridging the modeling gaps between climate, energy, and economics, and effectively transforming climate changes into economic measures, is an emerging inter-disciplinary field as nations attempt to position themselves for an uncertain future. Such a framework is adopted here to assess energy production and adaptation costs for four climate change scenarios over 2010â..49. Scenarios that favor a drying trend country-wide may lead to losses of 130â..200 terawatt hours over the 40-year period, translating to adaptation costs of US$2â..4 billion, compared to a no climate change scenario. Even given these potential losses, energy development utilizing hydropower appears economically reasonable from this deterministic, sector-independent evaluation. This development is desperately needed, independent of future climate change trends, with the hope of appreciably reducing vulnerability to variability.
    Keywords: Ethiopia, energy development, hydropower, climate change, economics
    Date: 2011
  34. By: Thurlow, James; Diao, Xinshen
    Abstract: Economy-wide and hydrological-crop models are combined to estimate and compare the economic impacts of current climate variability and future anthropogenic climate change in Zambia. Accounting for uncertainty, simulation results indicate that, on average, current variability reduces gross domestic product by four percent over a ten-year period and pulls over two percent of the population below the poverty line. Socio-economic impacts are much larger during major drought years, thus underscoring the importance of extreme weather events in determining climate damages. Three climate change scenarios are simulated based on projections for 2025. Results indicate that, in the worst case scenario, damages caused by climate change are half the size of those from current variability. We conclude that current climate variability, rather than climate change, will remain the more binding constraint on economic development in Zambia, at least over the next few decades.
    Keywords: climate change, weather variability, economic growth, poverty, Zambia
    Date: 2011
  35. By: Arndt, Channing; Strzepek, Ken; Thurlow, James
    Abstract: The consequences of climate change for agriculture and food security in developing countries are of serious concern. Due to their reliance on rain-fed agriculture both as a source of income and consumption, many low-income countries are generally considered to be most vulnerable to climate change. Here, we estimate the impact of climate change on food security in Tanzania. Representative climate projections are used in calibrated crop models to predict crop yield changes for 110 districts in Tanzania. These results are in turn imposed on a highly-disaggregated, dynamic economy-wide model of Tanzania. We find that, relative to a no climate change baseline and considering domestic agricultural production as the principal channel of impact, food security in Tanzania appears likely to deteriorate as a consequence of climate change. The analysis points to a high degree of diversity of outcomes (including some favourable outcomes) across climate scenarios, sectors, and regions. The economic modelling indicates that markets have the potential to smooth outcomes on households across regions and income groups, though noteworthy differences in impacts across households persist both by region and by income category.
    Keywords: climate change; agriculture; food security; crop model; CGE model; Tanzania
    Date: 2011
  36. By: Rohner, Dominic; Thoenig, Mathias; Zilibotti, Fabrizio
    Abstract: We study the effect of civil conflict on social capital, focusing on the experience of Uganda during the last decade. Using individual and county-level data, we document large causal effects on trust and ethnic identity of an exogenous outburst of ethnic conflicts in 2002-05. We exploit two waves of survey data from Afrobarometer 2000 and 2008, including information on socioeconomic characteristics at the individual level, and geo-referenced measures of fighting events from ACLED. Our identification strategy exploits variations in the intensity of fighting both in the spatial and cross-ethnic dimensions. We find that more intense fighting decreases generalized trust and increases ethnic identity. The effects are quantitatively large and robust to a number of control variables, alternative measures of violence, and different statistical techniques involving ethnic and spatial fixed effects and instrumental variables. We also document that the post-war effects of ethnic violence depend on the ethnic fractionalization. Fighting has a negative effect on the economic situation in highly fractionalized counties, but has no effect in less fractionalized counties. Our findings are consistent with the existence of a self-reinforcing process between conflicts and ethnic cleavages.
    Keywords: ethnic conflict; ethnic identity; fighting; fractionalisation; slavery; social capital; trust; Uganda
    JEL: A13 D74 O55
    Date: 2012–01
  37. By: Arndt, Channing; Strzepek, Kenneth; Thurlow, James
    Abstract: Climate change may damage road infrastructure to the potential detriment of economic growth, particularly in developing countries. To quantitatively assess climate changeâ..s consequences, we construct a climate-infrastructure model based on stressor-response relationships and link this to a recursive dynamic economy-wide modelto estimate and compare road damages to other climate change impact channels. We apply this framework to Mozambiqueand simulate four future climate scenarios. Our results indicate that climate change through 2050 is likely to place a drag on economic growth and development prospects. The economic implications of climate change appear to become more pronounced from about 2030. Nevertheless, the implications are not so strong as to drastically diminish development prospects. An adaptation policy of gradual evolution towards road designs that accommodate higher temperatures and follows rainfall trends (wetter or dryer) improves outcomes. At the same time, a generalized policy of upgrading all roads does not appear to be merited at this time. Our findings suggest that impact assessments should include the damages on long-run assets, such as infrastructure, imposed by climate change.
    Keywords: climate change, infrastructure vulnerability, productivity, economic growth, Mozambique
    Date: 2011

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