nep-afr New Economics Papers
on Africa
Issue of 2016‒02‒23
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. When do multinational companies consider corporate social responsibility? A multi-country study in Sub-Saharan Africa By Holger Görg; Aoife Hanley; Stefan Hoffmann and Adnan Seric
  2. Financial channels, property rights, and poverty : a Sub-Saharan African perspective By Singh,Raju; Huang,Yifei
  3. The relevance of certifications and business practices in linking smallholders and large agro-businesses in Sub-Sahara Africa By Kleemann, Linda
  4. Can Africa Compete with China in Manufacturing? The Role of Relative Unit Labor Costs By Janet Ceglowski; Stephen Golub; Aly Mbaye; Varun Prasad
  5. The heterogeneity of FDI in Sub-Saharan Africa: How do the horizontal productivity effects of emerging investors differ from those of traditional players? By Pfeiffer, Birte; Görg, Holger; Perez-Villar, Lucia
  6. A Good Turn Deserves Another: Political Stability, Corruption and Corruption-Control By Asongu, Simplice; Nwachukwu, Jacinta

  1. By: Holger Görg; Aoife Hanley; Stefan Hoffmann and Adnan Seric
    Abstract: While African countries are becoming more and more relevant as host countries for suppliers of multinational companies little is known about corporate social responsibility (CSR) in this region. To fill this gap, the present paper explores CSR considerations of foreign affiliates of multinational companies when choosing local African suppliers. The paper suggests a model of three types of determinants, namely firm characteristics, exports, and intra-trade. Analyses of a large-scale and quite unique firm level data for more than 2,000 foreign owned firms in 19 Sub-Saharan African countries demonstrate that firms importing intermediates from their parent company abroad are more likely to implement CSR. Similarly, CSR plays a larger role for affiliates that export to developed countries. Different determinants affect environmental and social CSR activities.
    Keywords: Global supply chains, corporate social responsibility, multinational companies, Africa
    Date: 2016–01
  2. By: Singh,Raju; Huang,Yifei
    Abstract: Studies on the link between financial development and poverty have been inconclusive. Some claim that deeper financial sectors should improve the allocation of capital by allowing entrepreneurs greater access to finance, which should particularly favor the poor. Others argue that improvements in the financial system primarily benefit the rich and politically connected. The literature has also been ambiguous about the channels through which finance may be associated with lower poverty (deposits versus credit). Looking at a sample of 37 countries in Sub-Saharan Africa from 1992 through 2006, the paper suggests that financial deepening is associated with lower poverty through different channels depending on the strength of property rights. In the absence of well-defined and enforced property rights, wider access to saving and risk-sharing instruments is accompanied by a reduction in poverty. Only once property rights grow stronger is credit associated with lower poverty.
    Keywords: Debt Markets,Banks&Banking Reform,Economic Theory&Research,Access to Finance,Pro-Poor Growth
    Date: 2016–02–08
  3. By: Kleemann, Linda
    Abstract: Smallholders often have to certify according to international standards and produce under contract for large agro-businesses to access the export market. While mostly positive effects for the farmers have been found for contracts and certifications, little is known about the role of individual firm behavior and certifications in shaping farmer-agro-business relationships and contract success. This is what this article does. Data of 386 smallholders in the pineapple export sector in Ghana is analyzed quantitatively and enriched by a detailed case study of a large-scale agro-business in Ghana called Blues Skies. The results show that certification is an agent of change in farmer-agro-business relations. Building trust and aligning expectations of farmers and firms is important for success. Additionally, individual firm behavior matters more than taken into account in previous research. Our case study shows that three 'R', reliability, reputation and respect, constitute the basis for contract relationships that benefit all.
    Keywords: contract farming,certification,smallholders,Ghana,firm behavior
    Date: 2015
  4. By: Janet Ceglowski; Stephen Golub; Aly Mbaye; Varun Prasad (Université Cheikh anta Diop de Dakar; Professor of Economics)
    Abstract: In this paper we examine Sub-Saharan Africa’s (SSA) bilateral trade and cost competitiveness with China. We review patterns of bilateral trade between SSA and China, showing an extraordinary imbalance in the structure of trade, in that China overwhelmingly exports manufactured products to SSA and almost exclusively imports primary products in return. Our principal means of assessing the competitiveness of SSA’s manufacturing sector, vis-à-vis China, are measures of relative unit labor costs (RULC). We find that African RULC levels have generally been very high relative to China, but declined over the 2000s as China’s wages have risen faster than Chinese productivity, while the reverse is true for the SSA countries in our sample. Nevertheless, RULC vis-à-vis China remained elevated for many SSA countries as of 2010. Generally high RULC along with weaknesses in the business climate suggest that most SSA countries are unlikely to be competitive in labor-intensive manufacturing any time soon.
    Keywords: Sub-Saharan Africa, China, relative unit labor costs, trade, manufacturing
    JEL: J08 J20 J21 J30 J38
    Date: 2015–10
  5. By: Pfeiffer, Birte; Görg, Holger; Perez-Villar, Lucia
    Abstract: This paper analyzes the horizontal productivity effects of foreign direct investment (FDI) from industrialized and developing countries in 10 sub-Saharan African countries. We establish a unique data set by combining data from the World Bank Enterprise Surveys that allow us to distinguish between foreign investors from sub-Saharan Africa, Asia, Europe, the Middle East, and North Africa. We find strong evidence of horizontal productivity spillovers to domestic firms derived from foreign-firm presence. However, these effects are clearly dependent on domestic firms' absorptive capacity. The largest productivity effects seem to be driven by investors from sub-Saharan Africa. Our analysis also shows that productivity effects differ according to the income level of host countries. Overall, the strongest productivity effects seem to materialize in lower-middle-income countries. These key findings emphasize the increasing importance of emerging investors, beyond the traditional players from industrialized countries, in sub-Saharan Africa.
    Keywords: foreign direct investment,productivity,South-South firms,spillovers,sub-Saharan Africa
    JEL: F23
    Date: 2015
  6. By: Asongu, Simplice; Nwachukwu, Jacinta
    Abstract: We build on existing literature and contemporary challenges to African development to assess the role of political stability in fighting corruption and boosting corruption-control in 53 African countries for the period 1996-2010. We postulate that on the one hand, an atmosphere of political instability should increase the confidence of impunity owing to less corruption-control. On the other hand, in the absence such impunity from corruption, political instability further fuels corruption. Our findings validate both hypotheses. Hence, contrary to a stream of the literature, we establish causal evidence of a positive (negative) nexus between political stability/no violence and corruption-control (corruption). The empirical evidence is based on Generalized Methods of Moments. The findings are robust to contemporary and non-contemporary quantile regressions. The political stability estimates are consistently significant with decreasing (increasing) magnitudes throughout the conditional distributions of corruption (corruption-control). In other words, the positive responsiveness of corruption-control to political stability is an increasing function of corruption-control while the negative responsiveness of corruption to political stability is a decreasing function of corruption. Simply put: a good turn deserves another.
    Keywords: Fragility; Corruption; Conflicts; Africa
    JEL: F52 K42 O17 O55 P16
    Date: 2015–09

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