nep-afr New Economics Papers
on Africa
Issue of 2015‒04‒11
nine papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Against all odds! Why the ‘three darlings’ failed? By Amankwah-Amoah, Joseph
  2. A Practical Guide to Increasing Mining Local Procurement in West Africa By World Bank Group; Kaiser Economic Development Partners
  3. The Moral and Fiscal Implications of Anti-Retroviral Therapies for HIV in Africa By Paul Collier; Olivier Sterck; Richard Manning
  4. Firm Survival and Change in Ghana, 2003-2013 By Elwyn Davies; Andrew Kerr
  5. Falling Off the Map: The Impact of Formalizing (Some) Informal Settlements in Tanzania By Matthew Collin; Justin Sandefur; Andrew Zeitlin
  6. When No Bad Deed Goes Punished: A Relational Contracting Experiment in Ghana By Elwyn Davies; Marcel Fafchamps
  7. Decision Time : Spend More or Spend Smart? Kenya Public Expenditure Review By World Bank Group
  8. Stuck in the Middle? Structural Change and Productivity Growth in Botswana By Brian McCaig; Margaret S. McMillan; Iñigo Verduzco-Gallo; Keith Jefferis
  9. Migration and Employment Interactions in a Crisis Context: the case of Tunisia By Marouani, Mohamed Ali; David, Anda

  1. By: Amankwah-Amoah, Joseph
    Abstract: Although a plethora of research has examined the benefits of government support for stateowned enterprises, our understanding of how domestic support can become a source of liability is severely limited. In this paper, we develop a novel concept of “liability of domestic support” to articulate how government support for state-owned firms can create conditions for business failure to occur. Analyses of the cases of Air Afrique, Nigeria Airways and Ghana Airways led to the identification of factors which helped to create the conditions that allowed inefficiencies, mediocrity and incompetence inherent in state-owned organisations to thrive, which ultimately led to their demises.
    Keywords: Business failure; airlines; africa
    JEL: L1 L2 L5 L52 M2 N4
    Date: 2014
  2. By: World Bank Group; Kaiser Economic Development Partners
    Keywords: Public Sector Corruption and Anticorruption Measures Private Sector Development - Competitiveness and Competition Policy Social Development - Community Development and Empowerment Mining and Extractive Industry (Non-Energy) Public Sector Development Industry Energy - Energy and Mining International Economics and Trade - Government Procurement
    Date: 2015–02
  3. By: Paul Collier; Olivier Sterck; Richard Manning
    Abstract: Thanks to anti-retroviral therapies, people living with HIV in developing countries can now have a near-normal life at a cost of a few hundred dollars per year. We postulate that given this newly low cost of maintaining lives, there is a moral duty to rescue those who are infected. The core of the paper quantifies a reasonable lower bound for the fiscal consequences of this duty, which we show creates a financial quasi-liability which for some African countries is comparable to their debt-to-GDP ratios. Expenditures on prevention can pre-empt some of these liabilities. We construct a model to show that in some countries expenditure on prevention would be cost-effective, reducing liabilities by more than its cost. In principle, prevention should be pursued at least up to the point at which expenditure on it reduces the quasi-liability sufficiently to minimize the overall cost of accepting the duty to rescue. However, we show that even with optimal prevention the quasi-liability is likely to remain too high to be affordable for a significant number of African countries. Extending the model to two players, we show that if the international community accepts part of the quasi-liability, (as it does), it should finance an equal share of prevention and treatment efforts. Any imbalance in this distribution would introduce moral hazard and lead to a sub-optimal level of prevention.
    Date: 2015
  4. By: Elwyn Davies; Andrew Kerr
    Abstract: How did Ghanaian manufacturing firms change in the period between 2003 and 2013? This paper presents results from a survey of 1000 firms in Ghana, conducted in 2013, which were randomly selected from the 2003 Ghanaian National Industrial Census. This survey allows us to track survival and exit of firms between 2003 and 2013. We find strong regional differences and also differences for small, medium and large firms. The exit rate of firms in Kumasi, the second city, is lower than in Accra, but the growth rate of firms in Kumasi was also lower. Small firms were more likely to exit than large firms. Overall, the picture we paint of manufacturing in Ghana is not a positive one: total employment by firms operating before 2003 decreased from 134 863 in 2003 to 74 319 in 2013. It remains a question to what extent this was compensated by new employment by firms that entered after 2003, who were not surveyed. We also consider the firm size distribution evolution, and show that selection plays some role in explaining the positive correlation between firm size and age, but that this is less strong than in earlier studies.
    Keywords: Firm survival, Firm growth, Ghana, Firm size, Firm size distribution, Selection
    JEL: L25 O11 O14 O55
    Date: 2015
  5. By: Matthew Collin; Justin Sandefur; Andrew Zeitlin
    Abstract: When the Tanzanian government formalized over 200,000 informal land claims by granting leasehold titles to residents of unplanned settlements in Dar es Salaam in 2004, a few neighborhoods in the initial plan were excluded due to missing satellite photos. We examine the impact of this low-cost, large-scale titling intervention a decade later in a regression discontinuity design using new survey data collected on either side of the arbitrary boundary created by the missing photos. We find significant, positive effects on housing investment, and indicative but not statistically robust increases in tenure security and reductions in land sales. There is no evidence that titles improved access to credit markets.
    Keywords: land titling, formalization, natural experiment, Tanzania
    JEL: J16 K11 O12 O18 Q15
    Date: 2015
  6. By: Elwyn Davies; Marcel Fafchamps
    Abstract: This paper uses experimental methods to study the impact of limited enforcement and reputation on employer-worker relations in labour markets in Ghana. Participants, students recruited from universities in Accra, Ghana are designated as either employers or workers and play a gift-exchange game on a tablet computer. In this game, employers make wage offers to workers, who can then choose to accept or reject and, after accepting, what effort level to exert. Five treatments were used to assess the impact of limited enforcement, competition between employers and reputation. Each participants plays four games, consisting of five trading periods. We find different results from earlier experiments in developed countries: while these experiments have found strong evidence for relational contracting and conditional reciprocity, we do not find evidence for this. We find that a subgroup of workers exerts very low effort levels, but that this low effort of the workers is not punished by employers, who are not responsive in their wage offers to what the workers did previously. As a result, on average, the workers capture most of the profits. Introducing competition or a multilateral reputation mechanism does not significantly improve this.
    Keywords: Relational contracting, conditional reciprocity, gift-exchange game, punishment strategies, Ghana
    JEL: C71 D2 D86 E24 O16
    Date: 2015
  7. By: World Bank Group
    Keywords: Public Sector Expenditure Policy Macroeconomics and Economic Growth - Subnational Economic Development Finance and Financial Sector Development - Debt Markets Public Sector Economics Banks and Banking Reform Public Sector Development
    Date: 2014–12
  8. By: Brian McCaig; Margaret S. McMillan; Iñigo Verduzco-Gallo; Keith Jefferis
    Abstract: This paper decomposes Botswana’s growth from the late 1960s through 2010 into a within-sector and a between-sector (structural change) component. We find that during the 70s and 80s Botswana’s rapid economic growth was characterized by significant structural change with the share of the labor force employed in agriculture dropping from more than 80 percent to around 40 percent. Between 1990 and 2010 growth was also rapid, but structural change detracted from growth. We hypothesize that this is one of the reasons for persistent poverty and very high income inequality in Botswana today. This leaves us with the following puzzle: why is it that a country with such an impressive track record marked by good governance and prudent macroeconomic and fiscal policy is having so much trouble diversifying its economy?
    JEL: O5 O55
    Date: 2015–03
  9. By: Marouani, Mohamed Ali; David, Anda
    Abstract: This article analyses how a crisis impacts labor markets in origin countries through migration channels. For this purpose, we develop a novel dynamic general equilibrium model with a focus on the interlinkages be- tween migration, the labor market and education. The main innovation of the paper is the retrospective modeling in general equilibrium of the impact of an economic crisis to isolate the impact of migration on local unemployment. The impact of the crisis on education decision is captured through endogenous returns to education. The simultaneity of the crisis in Tunisia and its partners worsened the labour market situation mainly through the increase in labour supply. The main result is that migration is indeed one of the main determinants of the unemployment increase and that remittances have a higher impact than the variation of emigration flows. The low skilled bear the highest costs in terms of unemployment and wage decline.
    Keywords: International migration; remittances; labour supply; CGE; Tunisia; Migration internationale; transferts de fonds; offre de travail; équilibre général calculable; Tunisie;
    JEL: F22 F24 J21 C68
    Date: 2015–03

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