nep-afr New Economics Papers
on Africa
Issue of 2016‒07‒09
nine papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Chinese aid and local corruption By Isaksson, Ann-Sofie; Kotsadam, Andreas
  2. How does the health sector benefit from trade openness? Evidence form panel data across sub-Saharan Africa countries. By Novignon, Jacob; Atakorah, Yaw Boateng
  3. Gold mining and education: a long-run resource curse in Africa? By Ahlerup, Pelle; Baskaran, Thushyanthan; Bigsten, Arne
  4. Cooperation and leadership in a segregated community: Evidence from a lab-in-the-field experiment in a South African township By Daniela Grieco; Michela Braga; Francesco Brip
  5. Tanzania.from mining to oil and gas By Alan R. Roe
  6. The long walk to economic freedom after apartheid, and the road ahead By Johan Fourie
  7. North Africa - Working paper - The Role of Nascent Entrepreneurship in Driving Inclusive Economic Growth in North Africa By AfDB AfDB
  8. Is the Threat of Foreign Aid Withdrawal an Effective Deterrent to Political Oppression? Evidence from 53 African Countries By Simplice Asongu; Jacinta C. Nwachukwu
  9. Counting the Cost of Drought Induced Productivity Losses in an Agro-Based Economy: The Case of Uganda By Nicholas Kilimani; Jan van Heerden; Heinrich Bohlmann; Louise Roos

  1. By: Isaksson, Ann-Sofie (Department of Economics, School of Business, Economics and Law, Göteborg University); Kotsadam, Andreas (Ragnar Frisch Centre for Economic Research. Oslo, Norway)
    Abstract: Considering the mounting criticisms concerning Chinese aid practices, the present paper investigates whether Chinese aid projects fuel local-level corruption in Africa. To this end, we geographically match a new geo-referenced dataset on the subnational allocation of Chinese development finance projects to Africa over the 2000-2012 period with 98,449 respondents from four Afrobarometer survey waves across 29 African countries. By comparing the corruption experiences of individuals who live near a site where a Chinese project is being implemented at the time of the interview to those of individuals living close to a site where a Chinese project will be initiated but where implementation had not yet started at the time of the interview, we control for unobservable time-invariant characteristics that may influence the selection of project sites. The empirical results consistently indicate more widespread local corruption around active Chinese project sites. The effect, which lingers after the project implementation period, is seemingly not driven by an increase in economic activity, but rather seems to signify that the Chinese presence impacts local institutions. Moreover, China stands out from the World Bank and Western bilateral donors in this respect. In particular, whereas the results indicate that Chinese aid projects fuel local corruption but have no observable impact on local economic activity, they suggest that World Bank aid projects stimulate local economic activity without fuelling local corruption.
    Keywords: China; aid; local corruption; Africa
    JEL: D73 F35 O10 O55
    Date: 2016–06
  2. By: Novignon, Jacob; Atakorah, Yaw Boateng
    Abstract: The linkages between international trade integration and economic performance has received significant attention from both policy makers and researchers. There seem to be consensus in the literature to suggest that improved trade openness corresponds to improved economic growth. A missing link in the literature is how trade openness affects specific sectors of the economy. Here we argue that trade openness has significant impact on population health and health financing. The study employed panel data for forty-two (42) Sub-Saharan African (SSA) countries over the period 1995-2013. Population health status was measured by total life expectancy at birth, infant mortality rate and under-five mortality rate. Three main estimation procedures were used; (i) Fixed effect (FE), (ii) Random Effect (RE) and (iii) the Generalized Method of Moments (GMM) models were employed in estimating the relationships. The results showed a positive and significant relationship between trade openness and life expectancy, negative and significant relationship between trade openness and infant mortality rate and negative relationship between trade openness and under-five mortality rate. A positive relationship between trade openness and health financing. The findings of the study support international trade integration across countries in SSA and emphasizes the need for countries to be conscious of gains from trade within sub-sectors of the economy.
    Keywords: International trade, health status, health financing, SSA
    JEL: E0 F1 I1
    Date: 2016–06–28
  3. By: Ahlerup, Pelle (Department of Economics, School of Business, Economics and Law, Göteborg University); Baskaran, Thushyanthan (University of Siegen); Bigsten, Arne (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We provide micro-level evidence on an important channel through which mineral resources may adversely affect development in the long-run: lower educational attainment. Combining Afrobarometer survey data with geocoded data on the discovery and shutdown dates of of gold mines, we show that respondents who had a gold mine within their district when they were in adolescence have significantly lower educational attainment. These results are robust to the omission of individual countries, different definitions of adulthood, the use of alternative data from the Development and Health Surveys (DHS), and buffer-based approaches to define neighborhood. Regarding mechanisms, we conclude that the educational costs of mines are likely due to households making myopic educational decisions when employment in gold mining is an alternative. We explore and rule out competing mechanism such as endogenous migration, a lower provision of public goods by the government, and a higher propensity for violent conflicts in gold mining districts.
    Keywords: Education; mineral resources; gold mining; survey data; Africa
    JEL: D74 H70 O10
    Date: 2016–06
  4. By: Daniela Grieco; Michela Braga; Francesco Brip
    Abstract: The paper presents the results of a lab-in-the-field experiment in three South African townships located in the suburbs of Cape Town. The experimental design consists of a set of decisions on how the members of a naturally occurring group allocate an endowment to a private or to a public account. In our treatments, we first manipulate the degree of participation of group members in the choice of the public good, from involvement of the group leader only, to collective discussion and to private voting. Additionally, we explore the effectiveness of monetary incentives (collective versus individual) set in order to promote participation. The results show that leader guidance and participatory incentives significantly raise cooperation and hold after controlling for a wide set of individual and group characteristics.
    Keywords: lab-in-the-field experiment, segregation, cooperation, leadership, participation, township Creation-Date: 2016
  5. By: Alan R. Roe
    Abstract: This paper compares and contrasts the economic situation in Tanzania during the resurgence of gold and diamond production after 1999, with the situation that is now emerging as the country begins to exploit very large resources of natural gas mainly from the Indian Ocean. The mining boom after 1999, provided the authorities with significant lessons and opportunities associated with managing natural resources wealth. The paper assesses some of the key component issues and interprets these in the context of the new possibilities (and dangers) opened up by the natural gas revolution.
    Keywords: Tanzania, gas, liquefied natural gas, mining, energy generation
    Date: 2016
  6. By: Johan Fourie (Department of Economics, University of Stellenbosch)
    Abstract: As South Africa moves further away from the political transition of 1994, the economic history of the post-apartheid era is coming up for debate. The optimism generated by the ANC’s early successes must now, after more than two decades of democracy, be tempered by its conspicuous failures. Not all is lost, though. African growth, technological innovation and private-sector participation in public sector services offer credible opportunities for accelerated development, but will only be effective if policy-makers are cognizant of the political realities. The long walk to economic freedom for many will, unfortunately, continue along a rocky gravel road.
    Keywords: South African economy, democracy, post-apartheid, poverty, inequality, growth, development, Thabo Mbeki, Jacob Zuma, Trevor Manuel
    JEL: O55 N17
    Date: 2016
  7. By: AfDB AfDB
    Date: 2016–06–23
  8. By: Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Coventry University)
    Abstract: This study complements existing literature on the aid-institutions nexus by focusing on political rights, aid volatilities and the post-Berlin Wall period. The findings show that while foreign aid does not have a significant effect on political rights, foreign aid volatilities do mitigate democracy in recipient countries. Such volatilities could be used by populist parties to promote a neocolonial agenda, instill nationalistic sentiments and consolidate their grip on power. This is especially the case when donors are asking for standards that majority of the population do not want and political leaders are unwilling to implement them. The empirical evidence is based on 53 African countries for the period 1996-2010. As a main policy implication, creating uncertainties in foreign aid for political rights enhancement in African countries may achieve the opposite results. Other implications are discussed including the need for an ‘After Washington consensus’.
    Keywords: Uncertainty; Foreign aid; Political Rights; Development; Africa
    JEL: C53 F35 F47 O11 O55
    Date: 2016–01
  9. By: Nicholas Kilimani (Department of Economics, University of Pretoria); Jan van Heerden (Department of Economics, University of Pretoria); Heinrich Bohlmann (Department of Economics, University of Pretoria); Louise Roos (Centre for Policy Studies, Victoria University, Melbourne)
    Abstract: Climate variability can affect economies directly through its impact on agricultural output, and indirectly, through its effect on the activities of down-stream industries and household welfare. This paper uses a Computable General Equilibrium model with a disaggregated agricultural sector to analyse the impact of a drought on the Ugandan economy. The losses were assessed with respect to GDP, agricultural output, employment, the trade balance and household consumption. The drought effects were shown to vary by sector. The fall in employment within the agricultural industries was less compared to the output losses. At a macro level, exports declined, while at a household level, the terms of trade gains mitigated part of the potential welfare losses thereby reducing consumption, but to a lesser degree. The findings indicate that a drought can cause substantial losses to the economy. The need for targeted interventions to mitigate such drought impacts is therefore critical.
    Keywords: computable general equilibrium modelling, drought, economic activity, Uganda
    JEL: D58 Q25 Q54
    Date: 2016–06

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