nep-afr New Economics Papers
on Africa
Issue of 2012‒12‒10
ten papers chosen by
Quentin Wodon
World Bank

  1. Safety Valve or Sinkhole? Vocational Schooling in South Africa By Pugatch, Todd
  2. Working Paper 159 - Why do some Firms abandon Formality for Informality? Evidence from African Countries By AfDB
  3. Fighting software piracy in Africa: how do legal origins and IPRs protection channels matter? By Simplice A , Asongu
  4. Does colonialism have an impact on the current language situation in Sub-Saharan Africa? By Buzasi, Katalin
  5. Fighting consumer price inflation in Africa. What do dynamics in money, credit, efficiency and size tell us? By Simplice A , Asongu
  6. Monetary Policy Response to Capital Inflows in Form of Foreign Aid in Malawi By Manoel Bittencourt; Chance Mwabutwa; Nicola Viegi
  7. Social Spending and Human Development in Selected West African Countries By iheoma, nonso
  8. Financial sector competition and knowledge economy: evidence from SSA and MENA countries By Simplice A, Asongu
  9. Which Medicaid Buy-In Participants Use SSA Work Supports? Washington, DC: Mathematica Policy Research By Denise Hoffman; Jody Schimmel
  10. Population and Environment: Case of human pressure on the periurban forest of Gonsé in Burkina Faso. (In French) By Boukary OUEDRAOGO (Université Ouaga II - Burkina Faso)

  1. By: Pugatch, Todd (Oregon State University)
    Abstract: As an alternative to traditional academic schooling, vocational schooling in South Africa may serve as a safety valve for students encountering difficulty in the transition from school to work. Yet if ineffective, vocational schooling could also be a sinkhole, offering little chance for success on the labor market. After defining the terms "safety valve" and "sinkhole" in a model of human capital investment with multiple schooling types, I test for evidence of these characteristics using a panel of urban youth in South Africa. I find support for the safety valve role of vocational schooling, with a small increase in vocational enrollment in response to grade failure, compared to a decline of 38 percentage points for academic enrollment. In contrast, I find no evidence that vocational schooling is a sinkhole, with wage and employment returns at least as large as those for academic schooling. The results suggest that vocational schooling plays an important role in easing difficult school to work transitions for South African youth.
    Keywords: human capital investment, vocational schooling, youth unemployment, South Africa
    JEL: I25 J24 J31 O12
    Date: 2012–11
  2. By: AfDB
    Date: 2012–11–29
  3. By: Simplice A , Asongu
    Abstract: In the current efforts towards harmonizing IPRs regimes in the African continent, this paper provides answers to four key questions relevant in the policy decision making processes. After empirically examining the questions, the following findings are established. (1) In comparison to common law countries, civil law countries inherently have a significant autonomous rate of piracy; consistent with the ‘law and property rights’ theory. (2) But for IPRs laws, the other IP protection channels (WIPO treaties, Main IP law and Multilateral treaties) reduce the incidence of piracy. (3) In both short-run and long-term, IPRs protection channels in civil law countries appear to mitigate piracy more than in common law countries. (4) Formal institutions are instrumental in the fight against piracy through IPRs protection channels.
    Keywords: Software piracy; Intellectual property rights; Panel data; Africa
    JEL: F42 O38 O34 O57 K42
    Date: 2012–07–17
  4. By: Buzasi, Katalin
    Abstract: Recent studies show that colonization and ethnolinguistic fragmentation have relevant long-lasting impacts on ex-colonies and might explain development and underdevelopment of different parts of the world. The aim of this paper is to connect these two strands of the literature to some extent by investigating the effect of colonizer’s identity on the current language situation in Sub-Saharan Africa. To establish the relationship between colonization and linguistic circumstances we conduct basic statistical analysis at the country level and more detailed econometric analyses at the level of individuals. The variable of interest is the Communication Potential Index (CPI) which reflects the probability that two randomly selected people in a society can communicate based on commonly spoken languages. Basic observations at the country level and multilevel analysis at the individual level suggest that current linguistic situation measured with the CPI cannot be explained by the identity of the colonizer.
    Keywords: Sub-Saharan Africa; language; communication potential; colonialism; multi-level regression analysis
    JEL: Z1 N97
    Date: 2012–11–22
  5. By: Simplice A , Asongu
    Abstract: Purpose – The purpose of this paper is to examine the effects of policy options in financial dynamics (of money, credit, efficiency and size) on consumer prices. Soaring food prices have marked the geopolitical landscape of African countries in the past decade. Design/methodology/approach – We limit our sample to a panel of African countries for which inflation is non-stationary. VAR models from both error correction and Granger causality perspectives are applied. Analyses of dynamic shocks and responses are also covered. Six batteries of robustness checks are applied to ensure consistency in the results. Findings – (1) There are significant long-run equilibriums between inflation and each financial dynamic. (2) When there is a disequilibrium, while only financial depth and financial size could be significantly used to exert deflationary pressures, inflation is significant in adjusting all financial dynamics. In other words, financial depth and financial size are more significant instruments in fighting inflation than financial efficiency and activity. (3) The financial intermediary dynamic of size appears to be more instrumental in exerting a deflationary tendency than financial intermediary depth. (4) The deflationary tendency from money supply is double that based on liquid liabilities. Practical implications – Monetary policy aimed at fighting inflation only based on bank deposits may not be very effective until other informal and semi-formal financial sectors are taken into account. It could be inferred that, tight monetary policy targeting the ability of banks to grant credit (in relation to central bank credits) is more effective in tackling consumer price inflation than that, targeting the ability of banks to receive deposits. In the same vein, adjusting the lending rate could be more effective than adjusting the deposit rate. The insignificance of financial allocation efficiency and financial activity as policy tools in the battle against inflation could be explained by the (well documented) surplus liquidity issues experienced by the African banking sector. Social implications – This paper helps in providing monetary policy options in the fight against soaring consumer prices. By keeping inflationary pressures on food prices in check, sustained campaigns involving strikes, demonstrations, marches, rallies and political crises that seriously disrupt economic performance could be mitigated. Originality/value – As far as we have perused, there is yet no study that assesses monetary policy options that could be relevant in addressing the dramatic surge in the price of consumer commodities.
    Keywords: Banks; Inflation; Development; Panel; Africa
    JEL: O55 E31 O10 G20 P50
    Date: 2012–09–05
  6. By: Manoel Bittencourt (Department of Economics, University of Pretoria); Chance Mwabutwa (Department of Economics, University of Pretoria); Nicola Viegi (Department of Economics, University of Pretoria)
    Abstract: This paper estimates the Bayesian dynamic stochastic general equilibrium (DSGE) model and uses the model to account for the short-run monetary policy response to increased aid inflows in Malawi. The estimates reveal that the monetary authorities reacted to increased foreign aid inflows the same way as was experienced in other African countries. The model also suggests that there was non-existence of the threats of the ‘Dutch Disease’ in contrast to what was found in Mozambique. The country can continue to receive aid by targeting the supply side of the economy with an aim of improving the competiveness of the export sector. Evidently, the conduct of monetary policy performs better under the assumption of full accessibility of financial assets. In addition, the impact of aid inflows on depreciation and inflation are much smaller when monetary authorities indulge in money targeting other than following the Taylor rule and incomplete sterilisation. On the small note, the study suggests that actual spending of aid should be aligned with the actual absorption of increased aid. Nevertheless, the outcome of the aid effects has been clouded out by the limitation of the exchange rate management in Malawi.
    Keywords: Taylor Rule, DSGE Model, Rule-of-Thumb, Spending, Absorption, Foreign Exchange Rate, Bayesian Methods
    JEL: C11 C13 E52 E62 F31 F35
    Date: 2012–12
  7. By: iheoma, nonso
    Abstract: The fundamental focus of economic development is the development of the human person, and over the years, there has been a common consensus among development economists on the efficacy of social services in achieving this objective. But, as is the case in advanced countries, is social spending capable of ensuring human development in developing countries? This study aims at providing answers to this question using Nigeria, Ghana and Senegal as case studies. The study adopts the fixed effect partial adjustment model and regresses the human development index on health and education spending across these countries for a period of 10 years (2000 – 2010) for each country, estimated using the ordinary least square. Results show that while health spending is significant in explaining human development in these countries both in the short and long runs, education spending is not. Therefore, it is recommended that in order to ensure the continued development of the human capital in these countries, increased funding of the health sector is necessary. Furthermore, ensuring adequate utilization of education sector allocation and enhancing the availability and accessibility of education services especially to the urban poor and rural dwellers will address the disconnect between education spending and human development.
    Keywords: human development; social spending; health; education
    JEL: H50 H5
    Date: 2012–06–12
  8. By: Simplice A, Asongu
    Abstract: The goal of this paper is to assess how financial sector competition plays out in the development of knowledge economy (KE). It contributes at the same time to the macroeconomic literature on measuring financial development and response to the growing field of KE by means of informal sector promotion, micro finance and mobile banking. It suggests a practicable way to disentangle the effects of various financial sectors on different components of KE. The variables identified under the World Bank’s four knowledge economy index (KEI) are employed. Three hypotheses based on seven propositions are tested. Results show: (1) the informal financial sector, a previously missing component in the definition of the financial system by the IMF significantly affects KE dimensions; (2) disentangling different components of the existing measurement of the financial system improves dynamics in the KE-finance nexus and; (3) introduction of measures of sector importance provides relevant new insights into how financial sector competition affects KE.
    Keywords: Financial development; Knowledge Economy
    JEL: P00 O10 O34 P48 G21
    Date: 2012–08–20
  9. By: Denise Hoffman; Jody Schimmel
    Keywords: Working with Disability, SSA Work Supports, Medicaid Buy-In, Health
    JEL: I J I
    Date: 2012–11–30
  10. By: Boukary OUEDRAOGO (Université Ouaga II - Burkina Faso)
    Abstract: This article uses survey data streams on timber and non-timber forest products out of the forest of Gonsé to highlight the importance of human pressure on the peri-urban forest of Gonsé, located 35 km from Ouagadougou, the country’s capital city. A literature review on drivers of deforestation in the world and specifically in Burkina Faso, can retain the use of the timber resource to energy goals as the main driver of deforestation in Burkina Faso, and of course in this case, as the mainspring of forest resources’ depletion in Gonsé. A descriptive approach not only allows quantifying the volume of wood energy out of the forest, but also shows the importance of fraudulent harvesting of fuelwood from this forest. Thus, it was found that 30% and 22% of firewood and charcoal harvesting in this forest are insidiously sent to the neighboring villages and to the city of Ouagadougou between 18 pm and 6 am. Thus, this paper recounts how the anthropogenic pressure on forest resources will bring the government to change the status of the classified forest of Gonsé into another one called \"classified forest and partial wildlife reserves of Gonsé\" by Decree adopted on 4th July of 2007 by the Council of Ministers.
    Keywords: Anthropogenic pressure, Fuelwood, Forest of Gonsé, Burkina Faso
    JEL: Q21 Q23 Q28 Q41
    Date: 2012

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