nep-afr New Economics Papers
on Africa
Issue of 2013‒03‒23
ten papers chosen by
Quentin Wodon
World Bank

  1. Nowhere Left to Hide? Stock Market Correlation, Regional Diversification, and the Case for Investing in Africa By Todd Moss and Ross Thuotte
  2. Resources, Policies, and Agricultural Productivity in Sub-Saharan Africa By Fuglie, Keith O.; Rada, Nicholas E.
  3. Development and biodiversity conservation in Sub-Saharan Africa: A spatial analysis By Ariane Manuela AMIN; Johanna Choumert
  4. On the causality and determinants of energy and electricity demand in South Africa: A review By Anastassios Pouris
  5. Institutions and growth accelerations By Andersen, Thomas Barnebeck; Jensen, Peter Sandholt
  6. Road Infrastructure and Enterprise Dynamics in Ethiopia By Admasu Shiferaw; Måns Söderbom; Eyersusalem Siba; Getnet Alemu
  7. The economic importance and impacts of intellectual property rights (IPRs) in Sudan By Nour, Samia Satti Osman Mohamed
  8. Accounting for Heterogeneity in Growth Incidence in Cameroon Using Recentered Influence Function Regression By B. Essama-Nssah; Paul Saumik; Léandre Bassolé
  9. Development and social justice: Education, training and health in Sudan By Nour, Samia Satti Osman Mohamed
  10. Trade Restrictions and Conflict Commodities: Market Reactions to Regulations on Conflict Minerals from the Democratic Republic of the Congo By William Seitz

  1. By: Todd Moss and Ross Thuotte
    Abstract: Investors diversify their portfolios to boost returns and manage risk. However, the benefits of diversifying across geographic regions are reduced if markets are highly correlated. This paper examines trends over the past two decades and finds, as expected from global market integration, that regional indices have become increasingly correlated with the S&P 500 index. Sub-Saharan Africa is also part of this trend, but is a notable laggard. For instance, in 2010 the correlation with the S&P500 was 0.86 for markets in Latin America, 0.79 for Asia, and just 0.31 for sub-Saharan markets (excluding South Africa). Additionally, correlations among African markets are generally very low. While there remain barriers to exploiting this trend, Africa’s integration lag may present opportunities for investors seeking regional diversification—and policymakers seeking to attract greater portfolio investment to the continent.
    Keywords: international financial markets, portfolio choice, emerging markets, Africa, market correlation, stock markets
    JEL: G11 G15 F36
    Date: 2013–03
  2. By: Fuglie, Keith O.; Rada, Nicholas E.
    Abstract: Agricultural productivity in Sub-Saharan Africa (SSA) remains low and is falling farther behind other regions of the world. Although agricultural output growth in the region has accelerated since the 1990s, this has been primarily due to resource expansion rather than to higher productivity. Yet there is evidence that agricultural productivity growth has improved in some countries. Enhanced productivity is correlated with investments in agricultural research, wider adoption of new technologies, and policy reforms that have strengthened economic incentives to farmers. Many of the technological improvements have come from the Consultative Group for International Agricultural Research (CGIAR) centers. Benefits from the CGIAR in SSA are estimated to be over $6 for each $1 invested. Returns to national agricultural research are also robust, at least for large countries. But overall investment in agricultural research has remained low, and increases in research capacity will likely be necessary to significantly accelerate agricultural growth in the region. Other constraints to agricultural productivity include government policies that reduce earnings in the farm sector, the spread of the HIV/AIDS virus, and armed conflict within and between countries.
    Keywords: national agricultural research systems, technology adoption, returns to research, structural adjustment, total factor productivity (TFP), CGIAR, international agricultural research., International Development,
    Date: 2013–02
  3. By: Ariane Manuela AMIN (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Johanna Choumert (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: A better understanding of the relationship between economic development and biodiversity loss is of great relevance, given the current rapid extinction of species along with challenges born from the context of economic development in poor countries. The purpose of the current study is to provide a sound analysis, within the framework of an Environmental Kuznets Curve, of the relationship between economic development and pressure on biodiversity. Drawing on the most up-to-date data on threatened species from 48 sub-Saharan African countries, we used Maximum-likelihood and generalized spatial two-stage least-squares estimators to account for spatial-autoregressiveness in the dependent variable, as well as in the explanatory variables and in the disturbances of the models. We find evidence that supports an inverted U-shaped relationship between development and biodiversity imperilment, measured as the percent of threatened bird species. The results also reveal some species-level differences in the biodiversity-development relationship, since the Environmental Kuznets Curve hypothesis doesn't hold for mammals. This analysis contributes to the literature by partially challenging the paradigm of a strictly negative relationship between biodiversity and development in a developing countries context.
    Keywords: biodiversity;species imperilment;Spatial econometrics;Cliff-Ord model;spatial Durbin model
    Date: 2013–03–11
  4. By: Anastassios Pouris (Institute for Technological Innovation, University of Pretoria)
    Abstract: The purpose of this paper is to review, summarise and critically assess the academic studies that have dealt with either the causal relationship between energy consumption and growth or the determinants of energy demand in South Africa from 2007 and outline recent forecasts for electricity demand. The results of this review aim to identify gaps in the existing research. From a policy point of view, the findings of this effort have the potential to inform the relevant stakeholders to make appropriate interventions to improve the status quo of the energy sector. The results have indicated that studies examining the causality direction between energy (electricity) consumption and economic growth have failed to reach a consensus. The main differences identified were the time periods examined, the econometric approaches and the variables included in the estimations. Another potential reason for the results is the availability –or lack thereof– of data specific for the country. On the other side, the studies looking at the factor affecting energy (electricity) demand have agreed that economic growth or income or output are considered significant factors. The role of prices was debatable among different studies. This has become more apparent when reviewing the few forecasting efforts in the country that resulted in conflicting results.
    Keywords: Review, South Africa, energy sector, causality, determinants
    Date: 2013–03
  5. By: Andersen, Thomas Barnebeck (Department of Business and Economics); Jensen, Peter Sandholt (Department of Business and Economics)
    Abstract: This paper estimates the effect of institutions on economic growth in Sub-Saharan Africa over the period 1995-2007. We follow Henderson, Storeygard, and Weil (American Economic Review 102(2): 994-1028, 2012) in combining Penn World Tables GDP data with satellite-based data on nightlights in order to arrive at a more accurate measure of economic growth. We find that countries with good institutions grew faster than countries with poor institutions. Using external instruments, 2SLS regressions point to a causal impact. Our findings are consistent with the view that institutions are a root cause of economic development.
    Keywords: Institutions; economic growth; 2SLS; Africa
    JEL: O11 O43 O47
    Date: 2013–03–12
  6. By: Admasu Shiferaw (Department of Economics, The College of William and Mary); Måns Söderbom (Economics Department, University of Gothenburg, Sweden); Eyersusalem Siba (Economics Department, University of Gothenburg, Sweden); Getnet Alemu (College of Development Studies, Addis Ababa University, Ethiopia)
    Abstract: This paper investigates firm level responses to a large scale public investment program on road infrastructure in Ethiopia during 1997 to 2010. Firms' location choices and average start-up size are examined by combining town level panel data on road accessibility with a panel of manufacturing firms for the period 1996 to 2009. We find econometric results showing that better road access increases a town's attractiveness for manufacturing firms. While towns with initially large number of firms continue to attract more firms, there has been a tendency toward convergence in the distribution of firms, reducing their geographic concentration. Average startup size in isolated locations is also smaller relative to firms entering well connected markets in terms of road access. We conclude that improved road infrastructure has a favorable impact on the entry patterns and structure of the manufacturing sector in Ethiopia.
    Keywords: Road infrastructure, Firm Entry, Location Choice, Startup-Size, Ethiopian Manufacturing
    Date: 2013–03–10
  7. By: Nour, Samia Satti Osman Mohamed (Faculty of Economic and Social Studies, Khartoum University, and UNU-MERIT/MGSoG)
    Abstract: This paper explains the importance of IPRs and examines the factors hindering and those contributing toward enhancing IPRs in Sudan. We find that the inadequacy of IPRs protection in Sudan is attributed to low integration in the international institutions, lack of legal issues, lack of government concern, lack of private sector concern, weak institutions setting, lack of public awareness, lack of resources, weak culture for IPRs, lack of cooperation between universities and industry and lack of coordination. The inadequate IPRs protection in Sudan leads to poor national system of innovation, hindering FDI and hindering transfer of technology. The factors contributing toward enhancing IPRs in Sudan include promotion of adequate IPRs legislations and enforcement; planning, commitment to international IPRs agreements; finance, investment and resources; social partnership to encourage IPRs protection, government concern, private sector concern, public awareness, cooperation between universities and industry, institutions setting, coordination and culture for IPRs protection.
    Keywords: IPRs, economic importance, economic impacts, Sudan, Africa
    JEL: O30 O34
    Date: 2013
  8. By: B. Essama-Nssah (Independent Consultant (Former World Bank Senior Economist)); Paul Saumik (Osaka University); Léandre Bassolé (African Development Bank)
    Abstract: This paper frames growth incidence analysis within the logic of social impact evaluation understood as an assessment of variations in individual and social outcomes attributable to shocks and policies. It uses recentered influence function (RIF) regression to link the growth incidence curve (GIC) to household characteristics and perform counterfactual decomposition à la Oaxaca-Blinder to identify sources of variation in the distribution of consumption expenditure in Cameroon in 2001-2007. We find that the structural effect is driven mostly by the sector of employment and geography and is the main driver of the observed pattern of growth. The composition effect accounts for the lion’s share of the observed variation in the social impact of growth. In particular, that effect tends to reduce poverty while the structural effect tends to increase it. This conclusion is robust with respect to the choice of poverty measures and RIF regression models.
    Keywords: Cameroon, counterfactual analysis, economic growth, growth incidence curve, inequality, Oaxaca-Blinder decomposition, poverty, recentered influence function (RIF) regression, quantile regression, social evaluation
    JEL: C14 C31 D31 I32 O55 R11
    Date: 2013–02
  9. By: Nour, Samia Satti Osman Mohamed (Faculty of Economic and Social Studies, Khartoum University, and UNU-MERIT/MGSoG)
    Abstract: This paper discusses the importance of sound policies for achieving social development and social justice in provision of education, training and health services in Sudan. Different from Sudanese literature, we provide new contributions by explaining the low commitment to the standardized international equity criterion related to the supply-demand sides and provision of education, training and health services in Sudan. We fill an important gap in Sudanese literature by explaining that regional inequality in the demand for education (share in enrolment in education) is most probably due to economic reasons (per capita income and poverty rate), demographic reasons (share in total population) and other reasons (degree of urbanization) in Sudan. We find that the increase in the incidence of high poverty rates and low per capita incomes seem to be the most important factor limiting the demand for education, notably, demand for primary education, especially for females in Sudan. The major policy implication from our findings is that poverty eradication is key for the achievement of universal access to primary education, gender equality, equity, social justice and therefore, fulfillment of the second and third UN-MDGs in Sudan by 2015. We recommend further efforts to be made to improve equitable provision of education, training and health services to enhance social justice and social development in Sudan.
    Keywords: Education, training, health, supply, demand, equity, development, social justice, Sudan
    JEL: I14 I24 I28
    Date: 2013
  10. By: William Seitz
    Abstract: In this paper, I use an event study approach to investigate the claim that conflict minerals legislation in the United States (US) led to a ban on some mining exports from the Democratic Republc of the Congo (DRC), and that the passage of US regulation caused a ban on both production and trade by regulators in the DRC several months later. I als oconsider the assertion that conflict minerals legislation imposed severe costs for companies that report to the Securities and Exchange Commission in the US. I find that returns for some companis traded on US stock exchanges were sensitive to changes in production in the DRC after the proposed legislation became law in the US. This either suggests that some financial market participants did not expect an immediate full embargo on newly-regulated Congolese mining and trading activities, or that market participants did not expect trade to be halted indefinitely. Reactions to a DRC-imposed ban on production were statistically significant; indicating that addtional reductions in trade were not fully anticipated by financial market participants after regulations became law in the US. I also find that among metal and gold mining companies traded on US exchanges, returns were abnormally high when conflict mineral legislation became more probable. Electronic communication manufacturing firms, which as a group were a target for many supporters of conflict mineral regulations, experienced no systematically abnormal returns corresponding to important dates in the US legislative process that I consider, but experienced abnormally positive returns coinciding with the ban on mining in the eastern DRC.
    Keywords: Event Study, Mining, Conflict Minerals, the Democratic Republic of the Congo, Trade Regulations, Natural Resources
    JEL: F51 Q34
    Date: 2013

This nep-afr issue is ©2013 by Quentin Wodon. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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