nep-afr New Economics Papers
on Africa
Issue of 2016‒11‒27
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. China in Africa: Beating the Odds of Underdevelopment By Hadis Siadat
  2. What is the effect of Inflation on Manufacturing Sector Productivity in Ghana? By Bans-Akutey, Mawufemor; Yaw Deh, Isaac; Mohammed, Faisal
  3. Asymmetries in the revenue-expenditure nexus: New evidence from South Africa By Phiri, Andrew
  4. The rapid expansion of herbicide use in smallholder agriculture in Ethiopia: Patterns, drivers, and implications By Tamru, Seneshaw; Minten, Bart; Alemu, Dawit; Bachewe, Fantu Nisrane
  5. Decentralized versus Statistical Targeting of Anti-Poverty Programs: Evidence from Burkina Faso By Schleicher, Michael; Souares, Aurélia; Pacere, Athanase Narangoro; Sauerborn, Rainer; Klonner, Stefan
  6. Growth-enhancing effect of openness to trade and migrations: What is the effective transmission channel for Africa? By Dramane Coulibaly; Blaise Gnimassoun; Valérie Mignon

  1. By: Hadis Siadat (--)
    Abstract: The onset of the Forum on China-Africa Cooperation (FOCAC) in 2000 paved the way for an increase in aid and investment in the developing countries of Africa. As a result of this, China-Africa trade grew from 11 billion USD in 2000 to 170 billion USD in 2011, making China Africa's largest bilateral trading partner. This partnership is crucial to evaluating Africa's economic growth and whether investments, trade and aid have resulted in the improvement of economic conditions and political stability in the region or if China’s activity in Africa has had a negative impact on the continent. The arguments that follow will support the assumption that high levels of Chinese investments, aid and trade have improved the political economic development of Uganda, Kenya, and Zimbabwe. This paper will look at the impacts that China's financial involvements have had on the political economy of development in Africa. More specifically, the questions that will be addressed are: Has Chinese foreign investments, aid and trade in Kenya, Zimbabwe, and Uganda improved the economic situation in these countries? Has China’s economic engagements had positive or negative effects on Kenya, Uganda and Zimbabwe's development from 2000-2015? The variables that will be used to determine the impacts on Africa will be: economic growth (based on GDP per capita), political inclusiveness (based on Freedom House and Ibrahim Index for African Governance indicators) and Human Development (based on the Human Development Index of health and education).
    Keywords: Development, Trade, Economic growth, Foreign aid, Political inclusiveness, Human development.
    JEL: A10
  2. By: Bans-Akutey, Mawufemor; Yaw Deh, Isaac; Mohammed, Faisal
    Abstract: Using annual time series data for Ghana, the current study investigates the effect of inflation on manufacturing sector productivity for the period 1968-2013. The empirical verification is done by using the Johansen test (JT), the Vector Error Correction Model (VECM), and the Ordinary Least Squares (OLS) regression test. The results indicate significant stable long run relationship between inflation and manufacturing sector productivity. However, there is insignificant short run link between inflation and manufacturing sector productivity in the VECM. The results of the OLS test indicate negative significant link between inflation and manufacturing sector productivity. The findings suggest that inflation has led to a decrease in manufacturing sector productivity. Policy makers should manage inflation very well in order to improve manufacturing sector productivity. Future study should examine the current topic accounting for causality and structural breaks issues since the present study did not consider these issues.
    Keywords: Manufacturing sector productivity, Inflation, Long run, Short run
    JEL: E31 L60 P24
    Date: 2016–11–18
  3. By: Phiri, Andrew
    Abstract: In this study, we relax the conventional assumption of a linear cointegration relationship in the revenue-expenditure nexus by examining asymmetric equilibrium effects in the South African fiscal budget using quarterly data collected between 1960:Q1 and 2016:Q2. Our mode of empirical investigation is the MTAR model supplemented with a TEC component. Our estimation results can be summarized into three main empirical findings. Firstly, we find that the long-run elasticity between revenue and expenditure is less-than-unity which implies that the fiscal budget is weakly unsustainable. Secondly we find that positive ‘shocks’ to the fiscal budget are eradicated fairly quickly which means that fiscal authorities must implement their policies in a continuous, on-going fashion over the long run. Lastly, we observe bi-directional causality between revenues and expenditures which offers support in favour of the fiscal synchronization hypothesis. This last result implies that fiscal authorities should amend fiscal imbalances through increased consolidation between revenue collection and expenditure allocation.
    Keywords: Revenue; Expenditure; Fiscal budget sustainability; Threshold cointegration; MTAR; Causality; South Africa.
    JEL: C12 C13 C32 C51 H61 H62
    Date: 2016–11–22
  4. By: Tamru, Seneshaw; Minten, Bart; Alemu, Dawit; Bachewe, Fantu Nisrane
    Abstract: We use qualitative and quantitative information from a number of datasets to study the adoption patterns and labor productivity impacts of herbicide use in Ethiopia. We find a four-fold increase in the value of herbicides imported into Ethiopia over the last decade, primarily by the private-sector. Adoption of herbicides by smallholders has grown rapidly over this period, with the application of herbicides on cereals doubling to more than a quarter of the area under cereals between 2004 and 2014. Relying on unique data from a large-scale survey of producers of teff, the most widely grown cereal in Ethiopia, we find significant positive labor productivity effects of herbicide use of between 9 and 18 percent. We show that the adoption of herbicides is strongly related to proximity to urban centers, levels of local rural wages, and access to markets. All these factors have changed significantly over the last decade in Ethiopia, explaining the rapid take-off in herbicide adoption. The significant increase in herbicide use in Ethiopia has important implications for rural labor markets, potential environmental and health considerations, and capacity development for the design and effective implementation of regulatory policies on herbicides.
    Keywords: ETHIOPIA, EAST AFRICA, AFRICA SOUTH OF SAHARA, AFRICA, smallholders, productivity, farm inputs, herbicides, market access, labor market
    Date: 2016
  5. By: Schleicher, Michael; Souares, Aurélia; Pacere, Athanase Narangoro; Sauerborn, Rainer; Klonner, Stefan
    Abstract: Targeting of national anti-poverty programs in low-income countries commonly relies on statistical procedures involving household-level survey data, while small-scale poverty-alleviation programs often employ so-called community-based targeting, where village communities themselves identify program beneficiaries. Combining data from community-based targeting exercises in north-western Burkina Faso with household-level survey data, we compare the targeting accuracy of community-based targeting with several statistical procedures when the program's purpose is to target consumption-poor households. We find that the community-based assessment targets a similar share of consumption-poor households as the best-performing statistical procedures which are not calibrated with household-level consumption data. Community-based targeting performs relatively better in urban than in rural areas and is not at a disadvantage in larger or more heterogeneous communities. In a cost-benefit analysis we find that in our sub-Saharan African context community-based targeting is far more cost-effective than any statistical procedure for common amounts of welfare program benefits.
    Keywords: Targeting; Community-based Targeting; Welfare Programs; Poverty; Community Wealth Rankings; Proxy-means Testing
    Date: 2016–11–22
  6. By: Dramane Coulibaly; Blaise Gnimassoun; Valérie Mignon
    Abstract: This paper investigates the growth-enhancing effect of openness to trade and to migration by focusing on African countries. Relying on robust estimation techniques dealing with both endogeneity and omitted variables issues, our results put forward the importance of accounting for the type of the partner country. We find evidence that while trade between Africa and industrialized countries has a clear and robust positive impact on Africa's standards of living, trade with developing countries fails to be growth-enhancing. Moreover, our findings show that migration has no significant effect on per capita income in Africa regardless of the partner. Finally, exploring the trade openness transmission channel, we establish that the growth-enhancing effect of Africa's trade with industrialized countries mainly occurs through an improvement in total factor productivity.
    Keywords: Trade, International migration, Income per person, Africa.
    JEL: F22 F4 O4 O55
    Date: 2016

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