nep-afr New Economics Papers
on Africa
Issue of 2015‒11‒15
three papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Rational Asymmetric Development: Transfer Pricing and Sub-Saharan Africa’s Extreme Poverty Tragedy By Asongu, Simplice
  2. Impact of Oil Production on Human Condition in Nigeria By Isola, W.A.; Mesagan, E.P.
  3. The Absorption and Spending Capacity of Aid in the Economic Community of West African States By zoundi, zakaria

  1. By: Asongu, Simplice
    Abstract: A recent publication by the World Bank on Millennium Development Goals (MDGs) has established that extreme poverty has been decreasing in all regions of the world with the exception of sub-Saharan Africa (SSA), in spite of over two decades of growth resurgence. This chapter explores the role of transfer pricing in SSA’s extreme poverty tragedy. The analytical structure entails: (i) emphasis of rational asymmetric development as the dark side of transfer pricing, (ii) evidence that the recent growth resurgence in African countries has been driven substantially by resource-rich countries which are experiencing high levels of exclusive growth and extreme poverty, (iii) the practice of transfer pricing by multinationals operating in resource-rich countries of SSA and (iv) a Zambian case study of extreme poverty and transfer pricing schemes by Glencore in the copper industry. While transfer pricing is contributing to diminishing African growth, available evidence shows that the component growth that is not captured by transfer pricing does not trickle down to the poor because the African elite is also captured by practices of rational asymmetric development. Policy implications for the fight against extreme poverty are discussed.
    Keywords: Transfer pricing, Asymmetric development; Extreme poverty; SSA
    JEL: F20 F50 H20 O11 O55
    Date: 2015–05
  2. By: Isola, W.A.; Mesagan, E.P.
    Abstract: This article focused on the impact of oil production on human condition in Nigeria. The study used environmental degradation, life expectancy, and infant mortality rate as proxies of human condition. The data were obtained from the statistical bulletin of the Central Bank of Nigeria and World Development Indicator. The study covered 1980 to 2012. Vector autoregressive (VAR) model and variance decomposition analysis were explored. Three striking results were reported: (i) oil production of the first period positively impacted environmental degradation, while it was negative in the second period; (ii) Its first period lag has positive relationship but second period lag has negative relationship with life expectancy; and (iii) The variance decomposition analysis showed that oil production worsened environmental degradation and adversely impacted on infant mortality rate, while it positively affected life expectancy. Two major recommendations emanated from the study: (i) since oil production has a negative impact on human condition in Nigeria, efforts should be made to control carbon emission from fuel by ending gas flaring, especially in the Niger Delta region; and (ii) Government should look for means to channel their efforts into sustainable policies that would aim at transforming some of the largess from the oil sector into the health sector, as well as into the provision of infrastructural and life enhancing facilities like good roads, portable water, and so on. These can help to enhance life expectancy beyond its current stagnating state. All these as suggested will make the oil sector to have huge positive impact on human condition.
    Keywords: Oil Production; Human Condition; Niger Delta; Nigeria.
    JEL: D62 Q56
    Date: 2014–06
  3. By: zoundi, zakaria
    Abstract: The study focuses on the absorption and spending capacity of aid inside the member countries of the Economic Community of West African States (ECOWAS). The absorption and spending of aid are analyzed through the impact of aid on, respectively, the non-aid current account balance, and the non-aid government budget. One of the new features of the study is the inclusion of financial and government related variables in the list of control variables. This helps to capture well the estimators, and avoid the bias generated by the exclusion of relevant variables. In addition, the study uses more appropriate econometric tools. The analysis focuses on three econometric estimators, namely, a fixed effect model, an instrumental variable and the generalized method of moments. Results show that aid is more absorbed than spent inside the whole union. Countries that have less dependency on aid have better spending capacity than the ones who highly rely on aid. In highly-aid dependent countries, aid is used to reduce budget deficit rather than to finance government expenditures.
    Keywords: Aid absorption, Aid spending, Fixed effect, Instrumental Variable, Generalized Method of Moments.
    JEL: O10 O11 O19
    Date: 2015–08–13

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