nep-afr New Economics Papers
on Africa
Issue of 2015‒04‒25
nine papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Financial liberalization and capital flight: evidence from the African continent By Hermes, Niels; Lensink, Robert
  2. Taxation, foreign aid and political governance: figures to the facts of a celebrated literature By Asongu, Simplice
  3. Middle class in Africa: Determinants and Consequences By Kodila-Tedika, Oasis; Asongu, Simplice A
  4. Global experiences with special economic zones : focus on China and Africa By Zeng,Zhihua
  5. Are women less productive farmers ? how markets and risk affect fertilizer use, productivity, and measured gender effects in Uganda By Larson,Donald F.; Savastano,Sara; Murray,Siobhan; Palacios-Lopez,Amparo
  6. How does Market Access affect Smallholder Behavior? The Case of Tobacco Marketing in Malawi By Wouter Zant
  7. Proving the old spell wrong: New African hydrocarbon producers and the 'resource curse' By Bressand, Albert
  8. Teaching through television: Experimental evidence on entrepreneurship education in Tanzania. By Bjorvatn, Kjetil; Cappelen, Alexander W.; Sekei, Linda Helgesson; Sørensen, Erik Ø.; Tungodden, Bertil
  9. Sugarcane outgrowers in Ethiopia: ’Forced’ to remain poor? By Mengistu Assefa Wendimu; Arne Henningsen; Peter Gibbon

  1. By: Hermes, Niels; Lensink, Robert (Groningen University)
    Date: 2014
  2. By: Asongu, Simplice
    Abstract: This paper puts figures to the facts of Eubank (2012), a recently celebrated paper in the Journal of Development Studies. We investigate the underpinning Somaliland-based hypothesis that foreign aid dilutes the positive role of taxation on political governance. The assessment is based on 53 African countries for the period 1996-2010. For more policy options, the dataset is disaggregated into fundamental characteristics of African development based on income-levels, legal origins, natural resources and landlockeness. While the Eubank hypothesis is invalid in baseline Africa, low-income and English common law countries of the continent, we cannot conclude on its validity for other fundamental characteristics of development. Policy implications, caveats and future directions are discussed.
    Keywords: Foreign Aid; Political Economy; Development; Africa
    JEL: B20 F35 F50 O10 O55
    Date: 2014–08–13
  3. By: Kodila-Tedika, Oasis; Asongu, Simplice A
    Abstract: This study complements the inclusive growth literature by examining the determinants and consequences of the middle class in a continent where economic growth has been relatively high. The empirical evidence is based on a sample of 33 African countries for a 2010 cross-sectional study. OLS, 2SLS, 3SLS and SUR estimation techniques are employed to regress a plethora of middle class indicators, notably, the: floating, middle-class with floating, middle-class without floating, lower-middle-income and upper-middle-income categories. Results can be classified into two main strands. First, results on determinants broadly show that GDP per capita and education positively affect all middle class dependent variables. However, we have seen a negative nexus for the effect of ethnic fragmentation, political stability in general and partially for economic vulnerability. Simple positive correlations have been observed for: the size of the informal sector, openness and democracy. Second, on the consequences, the middle class enables the accumulation of human and infrastructural capital, while its effect is null on political stability and democracy in the short-run but positive for governance and modernisation. Policy implications are discussed.
    Keywords: Poverty; Inequality; Middle class; Africa
    JEL: D31 I32 O10 O40 O55
    Date: 2014–12–03
  4. By: Zeng,Zhihua
    Abstract: This study briefly summarizes the development experiences of special economic zones in China and Africa, the lessons that Africa can learn from China, and the preliminary results of the Chinese investments in special economic zones in Africa. The study makes recommendations on how to unleash the power of special economic zones and industrial zones in Africa through strategically leveraging the Chinese experiences. The success factors of Chinese special economic zones include the strong and long-term commitment of the government, a conducive business environment in the zones, strategic locations, technology upgrading and skills training, and strong linkages with the local economy. However, the Chinese experiences highlight some pitfalls to avoid, such as the ?mushroom approach? and high-level overlaps at the later stage, environmental degradation, and the unbalance between industrial development and social dimensions. This calls for a bigger role for the market. Sub-Sahara Africa's experience with traditional economic zones has been relatively poor, except in a few countries, such as Mauritius. The key challenges include the poor regulatory and institutional framework, lack of effective strategic planning, weak governance and implementation capacity, and inadequate infrastructure, among others. Since 2006, China has implemented special economic zone projects globally, including in four countries in Sub-Saharan Africa. It is still too early to conduct a full assessment of these projects; however, the evidence shows that some zones have begun to attract investments and make important contributions to the local economy. The main challenges include access to land, regulatory barriers, resettlement and coordination issues, and lack of external infrastructure.
    Keywords: Debt Markets,Environmental Economics&Policies,ICT Policy and Strategies,Banks&Banking Reform,Emerging Markets
    Date: 2015–04–14
  5. By: Larson,Donald F.; Savastano,Sara; Murray,Siobhan; Palacios-Lopez,Amparo
    Abstract: African governments and international development groups see boosting productivity on smallholder farms as key to reducing rural poverty and safeguarding the food security of farming and non-farming households. Prompting smallholder farmers to use more fertilizer has been a key tactic. Closing the productivity gap between male and female farmers has been another avenue toward achieving the same goal. The results in this paper suggest the two are related. Fertilizer use and maize yields among smallholder farmers in Uganda are increased by improved access to markets and extension services, and reduced by ex ante risk-mitigating production decisions. Standard ordinary least squares regression results indicate that gender matters as well; however, the measured productivity gap between male and female farmers disappears when gender is included in a list of determinants meant to capture the indirect effects of market and extension access.
    Date: 2015–04–20
  6. By: Wouter Zant (VU University Amsterdam)
    Abstract: Transaction costs play a key role in the behaviour of smallholders in developing countries. We exploit the introduction of an additional tobacco auction floor in Malawi to investigate the impact of a reduction in transaction costs and improved market access on production per hectare and the underlying smallholder’s decisions on production and cultivated area of tobacco, the major cash crop in Malawi. Given the non-experimental nature of the data we use matching and potential outcome models to identify impact. Estimations are based on annual data by Extension Planning Area, 198 in total, fully covering Malawi, for the period 2003-04 to 2009-10. The estimation results support a statistically significant positive impact of the introduction of a new auction floor on smallholders’ behaviour: production per hectare, production and area of tobacco has increased in the long run with respectively 20-25%, 36-38% and 15-21%. This outcome, and the increase in cultivated area in articular, suggests that lower transaction costs trigger smallholder farmers to shift to commercial agriculture.
    Keywords: transaction costs, market access, subsistence, food & cash crops, Malawi, Africa
    JEL: D23 O13 O55 Q11 Q13
    Date: 2012–09–03
  7. By: Bressand, Albert (Groningen University)
    Date: 2014
  8. By: Bjorvatn, Kjetil (Dept. of Economics, Norwegian School of Economics and Business Administration); Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Sekei, Linda Helgesson (Development Pioneer Consultants); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: Can television be used to teach and foster entrepreneurship among youth in developing countries? We report from a randomized control field experiment of an edutainment show on entrepreneurship broadcasted over almost three months on national television in Tanzania. The field experiment involved more than two thousand secondary school students, where the treatment group was incentivized to watch the edutainment show. We find short-term evidence of the edutainment show inspiring the viewers to become more interested in entrepreneurship and business and shaping non-cognitive traits such as risk- and time preferences, and long-term evidence of more business startups; in general, the treatment effects are more pronounced for the female viewers. However, we also find evidence that the encouragement of entrepreneurship discouraged investment in schooling;administrative data show a negative treatment effect on school performance and long-term survey data show that fewer treated students continue schooling.
    Keywords: Field experiment; edutainment; developing countries
    JEL: I25 O10
    Date: 2015–04–16
  9. By: Mengistu Assefa Wendimu (Danish Institute for International Studies (DIIS), Natural Resources and Development; Department of Food and Resource Economics, University of Copenhagen); Arne Henningsen (Department of Food and Resource Economics, University of Copenhagen); Peter Gibbon (Danish Institute for International Studies (DIIS), Global Transformations)
    Abstract: Contract farming is often seen as a panacea to many of the challenges faced by agricultural production in developing countries. Given the large heterogeneity of contract farming arrangements, it is debatable whether all kinds of contract farming arrangements offer benefits to participating smallholders. We apply matching methods to analyze the effects of a public sugarcane outgrower scheme in Ethiopia. Participation in the outgrower scheme significantly reduces the income and asset stocks of outgrowers who contributed irrigated land to the outgrower scheme, while the effect was insignificant for outgrowers who contributed rain-fed land. We provide several explanations and discuss policy implications.
    Keywords: Productivity, Outgrower scheme, contract farming, sugarcane, propensity score, genetic matching, Ethiopia
    JEL: Q12 Q13 O13 I31
    Date: 2015–04

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