nep-afr New Economics Papers
on Africa
Issue of 2016‒12‒11
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Unjust Enrichment from Official Corruption in Africa: Theory and Model on how Lenders have benefited By Asongu, Simplice A; Nwachukwu, Jacinta C.
  2. Drivers of Inequality in South Africa By Janina Hundenborn; Ingrid Woolard; Murray Leibbrandt
  3. Free Primary Education, Schooling, and Fertility: Evidence from Ethiopia By Chicoine, Luke E.
  5. Does democracy reduce the HIV epidemic? Evidence from Kenya By Antoine Marsaudon; Josselin Thuilliez
  6. Growth-enhancing effect of openness to trade and migrations: What is the effective transmission channel for Africa? By Rachidi Kotchoni; Dalibor Stevanovic

  1. By: Asongu, Simplice A; Nwachukwu, Jacinta C.
    Abstract: A 2015 World Bank report on the achievement of Millennium Development Goals (MDGs) revealed that since the 1990s, extreme poverty has been decreasing in all regions of the world with the exception of Africa where about 50 percent of countries in Sub-Saharan Africa did not achieve the MDG extreme poverty target despite the sub-region enjoying more than two decades of GDP growth resurgence. The purpose of this chapter is twofold. First to understand the interconnections between the large pool of capital transferred to the OECD countries and the corrupt deposits of stolen public funds. Second, to illustrate how such diversion of funds overseas are related to the spread of poverty in the African economies. We enunciate a ‘poverty multiplier theory’ and propose a model for its application within an African context. The ‘poverty multiplier theory’ postulates that: (i) one unit of currency deposited abroad represents a loss in financial development at home (ii) a fraction of the unit currency placed in foreign bank accounts is redirected to the domestic economy in the form of external debt. This external debt is further siphoned overseas through interest and loan principal repayment. Policy implications of these processes are discussed.
    Keywords: Poverty, External Debts, Corruption, Capital flight, Development
    JEL: B20 F35 F50 O19 O55
    Date: 2016–09
  2. By: Janina Hundenborn (SALDRU, University of Cape Town); Ingrid Woolard (SALDRU, University of Cape Town); Murray Leibbrandt (SALDRU, University of Cape Town)
    Abstract: The first democratic elections in 1994 brought about the promise for equal opportunity and an overall improvement of living standards for the majority of the South African population. The newly elected government promised to combat high levels of poverty as well as inequality inherited from the apartheid regime. However, 20 years after the democratization of South Africa, levels of inequality remain stubbornly high. Therefore, this paper analyzes the role of income from different sources in order to investigate which one(s) continue to drive those high levels of inequality. We use data from the 1993 Project for Statistics on Living Standards and Development (PSLSD) to present a detailed snapshot of the level and texture of inequality that was prevalent at the end of the apartheid regime. Furthermore, we use recent data from the National Income Dynamics Study (NIDS) from 2008 and 2014 to assess the role of different income sources in overall inequality and compare these contemporary snapshots to the results from 1993. We do so by applying two different decomposition methods to inequality measured by the Gini coefficient. The first is static, explaining the role of income sources in driving income inequality at each of the three points in time. The second is dynamic, explaining the role of changing income sources in changes in income inequality over time. We find that over the past 20 years, labour income has been the major contributor to overall inequality. The results indicate that a drop in inequality from labour market sources led to a decrease in overall income inequality. A more nuanced decomposition technique within the dynamic decomposition allows us to extract the effect of changes in household demographics on inequality from these results. This shows that when factors of household composition are accounted for, changes in all of the different income sources have led to a decrease in inequality between 2008 and 2014 in particular and over the entire post-apartheid period in general.
    Keywords: income distribution; South Africa; inequality drivers; labour markets
    Date: 2016
  3. By: Chicoine, Luke E. (DePaul University)
    Abstract: This paper investigates the causal relationship between women's education and fertility by exploiting variation generated by the removal of school fees in Ethiopia. The increase in schooling caused by this reform is identified using both geographic variation in the intensity of the reform's impact and the temporal variation generated by the implementation of the reform. The model finds that the removal of school fees in Ethiopia led to an increase of over 1.5 years of schooling for women affected by the reform. A two-stage least squares approach is used to measure the impact of the exogenous increase in schooling on fertility. Each additional year of schooling led to a reduction in fertility, a delay in sexual activity, marriage, and the timing of at least their first, second, and third births. There is also evidence that the increase in schooling led to improved labor market outcomes, and a reduction in the desired number of children. Additionally, there is evidence of strategic use of hidden forms of contraception, only after family size becomes sufficiently large or after two sons have been born.
    Keywords: free primary education, Ethiopia, schooling, fertility
    JEL: O55 J13 I25 I26
    Date: 2016–11
  4. By: Idowu Raheem (U.I - University of Ibadan.)
    Abstract: This study investigated the role of oil and non-oil exports on the Nigerian economy over the period of 1981 to 2015. The ADF and PP unit root test, Johansen cointegration test, Granger causality test, impulse response functions (IRF) and variance decomposition (VD) were used in the analysis of the study. The cointegration test indicates that GDP, Oil and Non-oil exports were cointegrated. The Granger causality test indicates short run unidirectional causality running from oil export to GDP. There are also bidirectional long run causality relationship between oil export and GDP, and unidirectional long run causality running from non-oil export to GDP. The study result indicates that oil exports have inverse relationship with economic growth while non-oil exports have positive relationship with economic growth.
    Keywords: oil exports,non-oil exports and Granger causality,Economic growth
    Date: 2016–11–24
  5. By: Antoine Marsaudon (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics); Josselin Thuilliez (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)
    Abstract: Does democracy help Kenyan citizens to struggle against the HIV epidemic? Yet, very little attention has been devoted to establish whether political regimes react differently to the HIV infection. Using an electoral definition of democracy makes a contribution in understanding which aspects of political rules matter to manage the disease. Using a difference-in-difference design that draws upon pre-existing variations in HIV intensity and cohort's exposure to democracy, we find that a person living under democracy is less likely to have a HIV infection. Further, we present some evidence of ethnic favoritism and gender disparities during periods of non-democracy.
    Keywords: Institution,Democracy,HIV,Health,Kenya
    Date: 2016–11
  6. By: Rachidi Kotchoni; Dalibor Stevanovic
    Abstract: This paper proposes a framework to produce real time multi-horizon forecasts of business cycle turning points, average forecasts of economic activity as well as conditional forecasts that depend on whether the horizon of interest belongs to a recession episode or not. Our forecasting models take the form of an autoregression of order one that is augmented with either a probability of recession or an inverse Mills ratio. Our empirical results suggest that a static Probit model that uses only the Term Spread as regressor provides comparable fit to the data as more sophisticated non-static Probit models. We also find that the dynamic patterns of the Term Structure of recession probabilities are quite informative about business cycle turning points. Our most parsimonious augmented autoregressive model delivers better out-of-sample forecasts of GDP growth than the benchmark models considered. We construct several Term Structures of recession probabilities since the last official NBER turning point. The results suggest that there has been no harbinger of a recession for the US economy since 2010Q4 and that there is none to fear at least until 2018Q1. GDP growth is expected to rise steadily between 2016Q3 and 2018Q1 in the range [2.5%,3.5%].
    Keywords: Augmented Autoregressive Model, Conditional Forecasts, Economic Activity, Inverse Mills Ratio, Probit, Recession.
    JEL: C35 C53 E27 E37
    Date: 2016

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