nep-afr New Economics Papers
on All new papers
Issue of 2014‒09‒08
twelve papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Africa is on time By Pinkovskiy, Maxim L.; Sala-i-Martin, Xavier X.
  2. Exploring the Causality Links between Energy and Employment in African Countries By Mohamed El Hedi Arouri; Adel Ben Youssef; Hatem M’Henni; Christophe Rault
  3. Is Chad Affected by Dutch or Nigerian Disease? By Sandrine Kablan; Josef Loening
  4. Linking FDI inflows to economic growth in North African countries By Anis Omri; Amel Sassi-Tmar
  5. Price and Income Elasticities of Demand for Oil Products in African Member Countries of OPEC: A Cointegration Analysis By Suleiman Sa ad; Muhammad Shahbaz
  6. Situation Analysis of Child Poverty and Deprivation in Uganda By John Cockburn; Ibrahim Kasirye; Jane Kabubo-Mariara; Luca Tiberti; Gemma Ahaibwe
  7. Testing the Asymmetric Effects of Financial Conditions in South Africa: A Nonlinear Vector Autoregression Approach By Mehmet Balcilar; Kirsten Thompson; Rangan Gupta; Renee van Eyden
  8. The Effect of Weather-Induced Internal Migration on Local Labor Markets Evidence from Uganda By Eric Stobl; Marie-Anne Valfort
  9. The Real Exchange Rate and Growth in Zimbabwe: Does the Currency Regime Matter? By Brixiova, Zuzana; Ncube, Mthuli
  10. The Role of Renewable Energy Consumption and Trade: Environmental Kuznets Curve Analysis for Sub-Saharan Africa Countries By Mehdi Ben Jebli; Slim Ben Youssef; Ilhan Ozturk
  11. Understanding the agricultural input landscape in Sub-Saharan Africa : recent plot, household, and community-level evidence By Sheahan, Megan; Barrett, Christopher B.
  12. Who bears the costs of climate change? Evidence from Tunisia By Manfred Wiebelt; Perrihan Al-Raffai; Richard Robertson

  1. By: Pinkovskiy, Maxim L. (Federal Reserve Bank of New York); Sala-i-Martin, Xavier X.
    Abstract: We present evidence that the recent African growth renaissance has reached Africa’s poor. Using survey data on African income distributions and national accounts GDP, we estimate income distributions, poverty rates, and inequality indices for African countries for the period 1990-2011. Our findings are as follows. First, African poverty is falling rapidly. Second, the African countries for which good inequality data exist are set to reach the Millennium Development Goal (MDG) poverty reduction target on time. The entire continent except for the Democratic Republic of Congo (DRC) will reach the MDG in 2014, one year in advance of the deadline, and adding the DRC will delay the MDG until 2018. Third, the growth spurt that began in 1995, if anything, decreased African income inequality instead of increasing it. And fourth, African poverty reduction is remarkably general: It cannot be explained by a large country or even by a single set of countries possessing some beneficial geographical or historical characteristic. All classes of countries, including those with disadvantageous geography and history, experienced reductions in poverty. In particular, poverty fell for both landlocked as well as coastal countries; for mineral-rich as well as mineral-poor countries; for countries with favorable or unfavorable agriculture; for countries regardless of colonial origin; and for countries with below- or above-median slave exports per capita during the African slave trade.
    Keywords: poverty; Africa
    JEL: I32 O15
    Date: 2014–08–01
  2. By: Mohamed El Hedi Arouri; Adel Ben Youssef; Hatem M’Henni; Christophe Rault
    Abstract: Using a bootstrap panel analysis that allows for cross-country dependence, without requiring the use of pre-tests for a unit root, we study the causality links between energy use and employment for a sample of 16 African countries over the 1991-2010 period (according to availability of countries’ data) in a panel Vector AutoRegressive model. Our results indicate that employment and energy use are strongly linked in Africa. Unidirectional causality from employment to energy use in Tunisia, Cameroun, Zambia and Ethiopia is found. A unidirectional causality from energy use to employment is found in DRC and Egypt. We found also bidirectional causality for Algeria, Benin, Kenya, Mozambique and Tanzania). However, our estimates did not indicate any causality in Big African players like South Africa, Nigeria, Morocco, Ghana and Senegal.
    Keywords: employment, energy consumption, growth, VAR
    JEL: Q43 Q53 Q56
    Date: 2014–08–29
  3. By: Sandrine Kablan; Josef Loening
    Abstract: We examine the effects of the ‘natural resource curse’ on Chad and find little evidence for Dutch disease. Structural vector auto-regression suggests that changes in domestic output and prices are overwhelmingly determined by aggregate demand and supply shocks, and while oil production and high international prices negatively affect agricultural output, the effects are small. Consistent with empirical evidence for neighbouring Cameroon, we observe minimal impact on Chad’s manufacturing sector. We associate our findings with structural underemployment and the inefficient use of existing production factors. In this context, increased public expenditures in tradable sectors present the opportunity to make oil revenues an engine of national development.
    Keywords: Natural resource curse, Dutch disease, Chad, Structural VAR.
    JEL: C30 E32 E61 O11 O13
    Date: 2014–08–29
  4. By: Anis Omri; Amel Sassi-Tmar
    Abstract: This paper examines the relationship between FDI inflows and the economic growth for three African economies (Tunisia, Morocco, and Egypt) during 1985–2011. Our analysis, which is based on a simultaneous equations model, reveals that in overall terms a mutually promoting two-way linkage between FDI and economic growth exists in these countries. Using the generalized method of moments (GMM), we find that the two-way linkage between FDI inflows and economic growth has been verified in all three economies , i.e., high level of foreign direct investment inflows had accelerated economic growth and high economic growth in these economies does send positive signals to prospective foreign investors.
    Keywords: Economic growth; FDI inflows; GMM-estimator; North African countries.
    JEL: G20 H54 C36
    Date: 2014–08–29
  5. 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
    Date: 2014–08–29
  6. By: John Cockburn; Ibrahim Kasirye; Jane Kabubo-Mariara; Luca Tiberti; Gemma Ahaibwe
    Abstract: Poverty is different for children than for adults. This becomes very clear when we listen to children themselves talking about their experiences of poverty, as they do in the companion piece to this report, “The Voices of Children.” In their own way, children have the ability to cut right to the very core of the crucial problems they face, from worrying how a lack of education will erode their futures, to seeing poor health taking their families livelihoods; of how the hunger they face can be devastating, or their how their experience of violence evaporates hope. Using traditional income poverty measures will not adequately capture these experiences of childhood. The importance of effectively measuring child poverty is underlined by the fact that its impacts are particularly devastating; for children, poverty can last a lifetime. The impacts of poor nutrition, a missed education or poor child health cannot be easily remedied and will change a child’s life chances forever. Further, where child poverty is widespread it can impact on all of society and the economy. As Uganda looks towards middle income status in Vision 2040, ensuring a strong start for Uganda’s children will lay an essential foundation....
    Date: 2014
  7. By: Mehmet Balcilar; Kirsten Thompson; Rangan Gupta; Renee van Eyden
    Abstract: The negative consequences of financial instability for the world economy during the recent financial crisis have highlighted the need for a better understanding of financial conditions. We use a financial conditions index (FCI) for South Africa previously constructed from 16 financial variables to test whether the South African economy responds in a nonlinear and asymmetric way to unexpected changes in financial conditions. To this end, we make use of a nonlinear logistic smooth transition vector autoregressive model (LSTVAR), which allows for a smooth evolution of the economy, governed by a chosen switching variable between periods of high and low financial volatility. We find that the South African economy responds nonlinearly to financial shocks, and that manufacturing output growth and Treasury Bill rates are more affected by financial shocks during upswings. Inflation responds significantly more to financial changes during recessions.
    Keywords: financial conditions index; nonlinear vector autoregression; LSTVAR; asymmetry
    JEL: C32 G01 E44 E32
    Date: 2014–08–29
  8. By: Eric Stobl; Marie-Anne Valfort
    Abstract: Relying on census data collected in 2002 and historical weather data for Uganda, this paper estimates the impact of weather-induced internal migration on the probability for non-migrants living in the destination regions to be employed. Consistent with the prediction of a simple theoretical model, the results reveal a larger negative impact than the one documented for developed countries. They further show that this negative impact is significantly stronger in Ugandan regions with lower road density and therefore less conducive to capital mobility: a 10 percentage points increase in the net in-migration rate in these areas decreases the probability of being employed of non-migrants by more than 10 percentage points.
    Keywords: weather shocks, internal migration, labor market, Sub-Saharan Africa.
    JEL: E24 J21 J61 Q54 R23
    Date: 2014–08–29
  9. By: Brixiova, Zuzana (African Development Bank); Ncube, Mthuli (African Development Bank)
    Abstract: Zimbabwe faces growth and external competitiveness challenges, as indicated by its low trend growth and investment, declining share in the world exports, high current account deficits, and external debt. The stock-flow approach to the equilibrium exchange rate reveals that the real exchange rate experienced periods of sizeable overvaluation, both prior to the 2008 economic collapse and under the current multicurrency regime. While overvaluation hampers GDP growth, as well as growth and employment in export sectors, we have not found that undervaluation would raise it. Replacing the multicurrency regime anchored in the US$ by the South African rand as the sole transaction currency would help reduce overvaluation and stimulate exports and growth. Under any currency regime, Zimbabwe needs to adhere to sound macroeconomic policies, avoid overspending on public wages, and create environment conducive for investment.
    Keywords: real exchange rate misalignment, growth, employment, currency regime, Zimbabwe
    JEL: F36 F41 C22 O11
    Date: 2014–08
  10. By: Mehdi Ben Jebli; Slim Ben Youssef; Ilhan Ozturk
    Abstract: Based on the Environmental Kuznets Curve (EKC) hypothesis, this paper uses panel cointegration techniques to investigate the short and the long-run relationship between CO2 emissions, economic growth, renewable energy consumption and trade openness for a panel of 24 Sub-Saharan Africa countries over the period 1980-2010. The validity of the EKC hypothesis has not been supported for these countries. Short-run Granger causality results reveal that there is a bidirectional causality between emissions and economic growth; bidirectional causality between emissions and real exports; unidirectional causality from real imports to emissions; and unidirectional causality runs from trade (exports or imports) to renewable energy consumption. There is an indirect short-run causality running from emissions to renewable energy and an indirect short-run causality from GDP to renewable energy. In the long-run, the error correction term is statistically significant for emissions, renewable energy consumption and trade openness. The long-run estimates suggest that real GDP per capita and real imports per capita both have a negative and statistically significant impact on per capita CO2 emissions. The impact of the square of real GDP per capita and real exports per capita are both positive and statistically significant on per capita CO2 emissions. For the model with imports, renewable energy consumption per capita has a positive impact on per capita emissions. One policy recommendation is that Sub-Saharan countries should expand their trade exchanges particularly with developed countries and try to maximize their benefit from technology transfer generated by such trade relations as this increases their renewable energy consumption.
    Keywords: Environmental Kuznets Curve; Renewable electricity consumption; International trade; Panel cointegration; Sub-Sahara.
    JEL: C33 F14 Q43 O55
    Date: 2014–08–29
  11. By: Sheahan, Megan; Barrett, Christopher B.
    Abstract: Conventional wisdom holds that Sub-Saharan African farmers use few modern inputs despite the fact that most growth-inducing and poverty-reducing agricultural growth in the region is expected to come largely from expanded use of inputs that embody improved technologies, particularly improved seed, fertilizers and other agro-chemicals, machinery, and irrigation. Yet following several years of high food prices, concerted policy efforts to intensify fertilizer and hybrid seed use, and increased public and private investment in agriculture, how low is modern input use in Africa really? This paper revisits Africa's agricultural input landscape, exploiting the unique, recently collected, nationally representative, agriculturally intensive, and cross-country comparable Living Standard Measurement Study-Integrated Surveys on Agriculture covering six countries in the region (Ethiopia, Malawi, Niger, Nigeria, Tanzania, and Uganda). The study uses data from more than 22,000 households and 62,000 plots to investigate a range of commonly held conceptions about modern input use in Africa, distilling the most striking and important findings into 10 key takeaway descriptive results.
    Keywords: Crops and Crop Management Systems,Climate Change and Agriculture,Fertilizers,Regional Economic Development,Agricultural Knowledge and Information Systems
    Date: 2014–08–01
  12. By: Manfred Wiebelt; Perrihan Al-Raffai; Richard Robertson
    Abstract: In order to estimate the economic costs of climate change for Tunisia, this paper uses a combination of biophysical and economic models. In addition, the paper draws on the literature to complement the quantitative analysis with policy recommendations on how to adapt to the changing climate. The results bear out the expectation that climate change has a negative but weak overall effect on the Tunisian economy. Decomposing the global and local effects shows that global climate change may benefit the agricultural sector since higher world market prices for agricultural commodities are likely to stimulate export expansion and import substitution. Locally felt climate change, however, is likely to hurt the agricultural sector as lower yields reduce factor productivities lead to lower incomes and higher food prices. The combined local and global effects are projected to be mostly negative and the costs will have to be carried mainly by urban and richer households. From a policy perspective, the results suggest that Tunisia should try to maximize the benefits from rising global agricultural prices and to minimize (or reverse) declining crop yields at home
    Keywords: climate change, agricultural growth, general equilibrium analysis, Tunisia, Middle East and North Africa
    JEL: O5 O13 D13 C68
    Date: 2014–08

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