nep-afr New Economics Papers
on Africa
Issue of 2015‒08‒13
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. The impact of Chinese competition on Africa’s manufacturing By Sylviane GUILLAUMONT JEANNENEY; Ping HUA
  2. Coffee value chains on the move: Evidence from smallholder coffee farmers in Ethiopia: By Minten, Bart; Dereje, Mekdim; Engeda, Ermias; Kuma, Tadesse
  3. Spill-Overs of a Resource Boom: Evidence from Zambian Copper Mines By Alexander Lippert
  4. Who benefits from the rapidly increasing voluntary sustainability standards? Evidence from fairtrade and organic certified coffee in Ethiopia: By Minten, Bart; Dereje, Mekdim; Engeda, Ermias; Tamru, Seneshaw
  5. Tribe or title? Ethnic enclaves and the demand for formal land tenure in Tanzanian slum By Matthew Collin
  6. Technology Adoption Under Uncertainty: Take-Up and Subsequent Investment in Zambia By B. Kelsey Jack; Paulina Oliva; Christopher Severen; Elizabeth Walker; Samuel Bell

  1. By: Sylviane GUILLAUMONT JEANNENEY (Université d'Auvergne); Ping HUA (FERDI)
    Abstract: In this paper, the impact of Chinese competition on Africa’s manufacturing value added is analyzed through a model of manufacturing. Using panel data on 44 African countries covering the period 2000 to 2013, and controlling for the usual determinants of industrialization – such as the size of the domestic market, the quality of infrastructure and governance – we find that exports of manufactured goods by China and other countries to African countries mainly exert a negative effect on African manufacturing, while a moderate real appreciation of African currencies vis-à-vis the renminbi positively influences manufacturing value added, probably due to the reduced cost of imported machine and transport equipment from China (which accounted for 36% of total African imports from China in 2013) and to the reduced price of imported consumption goods increasing the remuneration of poor workers and therefore improving their productivity. However, a strong real appreciation (of more than 33%) instead exerts a negative effect on African’s manufacturing, as traditional theory predicts.
    Keywords: manufacturing, China, Africa, real exchange rates
    JEL: E60 L60 O55
    Date: 2015–07
  2. By: Minten, Bart; Dereje, Mekdim; Engeda, Ermias; Kuma, Tadesse
    Abstract: In this paper, we look at the coffee sector in Ethiopia and analyze changes and their drivers upstream in the value chain. In this study we focus on three main research questions. First, we study changes in coffee production practices over the last decade and then analyze how these production practices affect coffee productivity. Second, we document changes in harvest, post-harvest, marketing, and processing activities, and analyze their links with improved quality, prices, and incomes of producers. Third, we look at drivers of and constraints to change and transformation at the level of the coffee producer. For the analysis, we rely on a unique recently collected and representative large-scale survey of coffee producers and processors. To our knowledge, no other study comprising such breadth in the upstream sector has been done recently in Ethiopia, or elsewhere.1
    Keywords: agricultural development, beans, smallholders, coffee, coffee industry, productivity, marketing, postharvest technology, capacity building, value chains,
    Date: 2015
  3. By: Alexander Lippert
    Abstract: Do local populations benefit from resource booms?  How strong are market linkages between the mining sector and the regional economy?  This paper exploits exogenous variation in mine-level production volumes generated by the recent copper boom in Zambia to shed light on these questions.  Using a novel dataset, I find robust evidence that an increase in local copper production improves living standards in the surroundings of the mines even for households not directy employed in the mining sector: a 10% increase in constituency-level copper output is associated with a 2% increase in real household expenditure; positive effects on housing conditions, consumer durable ownership and child health are of similar magnitude.  The positive spill-overs extend to the rural hinterland of mining cities, neighboring constituencies, and constituencies to the copper transportation route.  Additionally,I  identify boom-induced changes in the demand for servics and agricultural products as key channels through which the urban and rural populations benefit from the mine expansions.  Since the boom failed to generate fiscal revenues, these effects can be interpreted as the result of the mines' backward linkages.  Taken together, these findings highlight the welfare potential of local procurement policies in resource rich developing countries.
    Keywords: Commodity Shocks, Local Development, Mining, Natural Resources
    JEL: I31 O12 O13 Q32 Q33
    Date: 2014–01–30
  4. By: Minten, Bart; Dereje, Mekdim; Engeda, Ermias; Tamru, Seneshaw
    Abstract: Voluntary Sustainability Standards (VSS) are rapidly increasing in global value chains. While consumers, mostly in developed countries, are willing to pay significant premiums for such standards, it is not well understood how effectively these incentives are transmitted to producing countries. We study VSS in Ethiopia’s coffee sector, the country’s most important export commodity, using a unique census of transaction data at the export level and large-scale data at the production level. We find that transmission of the export quality premiums to coffee pro-ducers is limited, with only one-third of this premium being passed on. Moreover, as quality premiums are small and average production levels in these settings are low, these premiums would only lead to an increased income for coffee farmers of 20 USD per year even with a perfect transmission scenario, and therefore would have little effect on the welfare of the average coffee farmer.
    Keywords: Sustainability, coffee, exports, Commodities, Quality, value chains, high value agricultural products,
    Date: 2014
  5. By: Matthew Collin
    Abstract: This paper examines the relationship between ethnic heterogeneity and the demand for formal land tenure in urban Tanzania.  Using a unique census of two highly-fractionalized unplanned settlements in Dar es Salaam, I show that households located near coethnics are significantly less likely to purchase a limited form of land tenure recently offered by the government.  I attempt to address one of the chief concerns - endogenous sorting of households - by conditioning on a household's choice of coethnics neighbors upon arrival in the neighborhood.  I also find that coethnic residence predicts lower levels of perceived expropriation risk, but not perceived access to credit nor contribution to local public goods.  These results suggest that close-knit ethnic groups may be less likely to accept state-provided goods due to their ability to generate reasonable substitutes, in this case protection from expropriation.  The results are robust to different definitions of coethnicity and spatial cut-offs, controls for family ties and religious similarity as well as spatial fixed effects.  Finally, the main result is confirmed using a large-scale administrative data-set covering over 20,000 land parcels in the city, exploiting ethnically-unique last names to predict tribal affiliation.
    Keywords: Ethnicity, Land tenure, Tanzania, Unplanned settlements
    JEL: J15 Q15 R23
    Date: 2013–08–16
  6. By: B. Kelsey Jack; Paulina Oliva; Christopher Severen; Elizabeth Walker; Samuel Bell
    Abstract: Many technology adoption decisions are made under uncertainty about the costs or benefits of subsequent investments in the technology after the initial take-up. As new information is realized, agents may prefer to abandon a technology that appeared profitable at the time of take-up. Low rates of follow-through (engagement in subsequent investments) are particularly problematic when subsidies are used to increase adoption, in part because they may attract users with a lower value for the technology. We use a field experiment with two stages of randomization to generate exogenous variation in the payoffs associated with taking up and following through with a new technology: a tree species that provides private fertilizer benefits to adopting farmers. Our empirical results show high rates of abandoning the technology, even after paying a positive price to take it up. The experimental variation offers a novel source of identification for a structural model of intertemporal decision making under uncertainty. Estimation results indicate that the farmers experience idiosyncratic shocks to net payoffs after take-up, which increase take-up but lower average per farmer tree survival. We simulate counterfactual outcomes under different levels of uncertainty and observe that subsidizing take-up of the technology affects the composition of adopters only when the level of uncertainty is relatively low. Thus, uncertainty provides an additional explanation for why many subsidized technologies may not be utilized even when take-up is high.
    JEL: D81 O13 Q12
    Date: 2015–07

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