nep-afr New Economics Papers
on Africa
Issue of 2017‒02‒26
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Push Factors of Emerging Multinational Corporations: Evidence from South Africa and Egypt By Mustafa Sakr; Andre Jordaan
  2. Modelling Natural Resources, Oil and Economic Growth in Africa By Janda, Karel; Quarshie, Gregory
  3. Moralizing Gods and Armed Conflict By Skali, Ahmed
  4. What Have We Learned About Mining Taxation in Africa? By Moore, Mick; Lundstøl, Olav
  5. Employment and productivity growth in Tanzania’s service sector By Mia Ellis; Margaret McMillan; Jed Silver
  6. Taxpayer’s dilemma: how can ‘fiscal contracts’ work in developing countries? By Pamela Lenton; Mike Masiye; Paul Mosley

  1. By: Mustafa Sakr (Department of Economics, University of Pretoria, South Africa); Andre Jordaan (Department of Economics, University of Pretoria, South Africa and IPAG Business School, Paris, France)
    Abstract: As literature remains sparse regarding emerging African multinational corporations (EAMNCs), this article focuses on examining the key push factors (i.e. home country macroeconomic specifications) influencing the outward foreign direct investment flow from South Africa and Egypt. Based on dynamic panel data model estimation, the empirical research proves that trade openness, patent and the gross domestic product (GDP) and the GDP growth rate of South Africa and Egypt are dominant drivers of their outward foreign direct investment. In contrast, the number of investment treaties and inward foreign direct investment rate do not significantly influence outbound investment decisions of South African and Egyptian corporations.
    Keywords: South African MNCs, Egyptian MNCs, emerging African MNCs, emerging MNCs, push factor determinants of OFDI
    JEL: P45 F21
    Date: 2017–02
  2. By: Janda, Karel; Quarshie, Gregory
    Abstract: Using panel data from 1980 to 2010 on 34 sub-Saharan African countries, this paper examines whether institutionalised authority, which is a proxy for state authority, can change the negative relationship between natural resources and economic growth. The key finding is that, institutionalised authority can alter the negative relationship that exists between natural resources and economic growth. We also model the relationship between the oil revenue (fuel exports) and economic growth, and how institutionalised authority can alter this relationship as well.
    Keywords: Economic Growth; Natural Resources; Oil; Institutions; Dutch Disease; Sub-Saharan Africa
    JEL: C33 O43 P52 Q43
    Date: 2017–02–10
  3. By: Skali, Ahmed
    Abstract: This study documents a robust empirical pattern between moralizing gods, which prescribe fixed laws of morality, and conflict prevalence and fatalities, using spatially referenced data for Africa on contemporary conflicts and ancestral belief systems of individual ethnic groups prior to European contact. Moralizing gods are found to significantly increase conflict prevalence and casualties at the local level. The identification strategy draws on the evolutionary psychology roots of moralizing gods as a solution to the collective action problem in pre-modern societies. A one standard deviation increase in the likelihood of emergence of a moralizing god increases casualties by 18 to 36% and conflict prevalence by 4 to 8% approximately.
    Keywords: Conflict; Commitment Problem; Religion; Africa; Cooperation
    JEL: D74 O55 Z12
    Date: 2017–01–28
  4. By: Moore, Mick; Lundstøl, Olav
    Abstract: This ICTD Summary Brief is one of six special research synthesis pieces produced at the end of the ICTD's first five-year funding period in Spring 2016. This one looks at what we have learned about mining taxation in Africa.
    Keywords: Development Policy, Economic Development, Governance,
    Date: 2016
  5. By: Mia Ellis; Margaret McMillan; Jed Silver
    Abstract: Despite Tanzania’s rapid recent growth, the vast majority of employment creation has been in informal services. This paper addresses the role that different subsectors of formal and informal services have played in Tanzania’s growth. It finds that subsectors such as trade services contribute significantly to employment despite their relatively low productivity, while subsectors such as business and transportation services display higher productivity and improve the environment for other firms to operate.The paper also acknowledges the role of high-performing small and medium-sized service firms and the tourism sector in contributing further to Tanzania’s growth and structural change.
    Keywords: services, informal sector, economic growth, structural change, Tanzania, tourism
    Date: 2017
  6. By: Pamela Lenton (Department of Economics, University of Sheffield); Mike Masiye (Department of Economics, University of Sheffield); Paul Mosley (Department of Economics, University of Sheffield)
    Abstract: The theoretical literature around effective tax systems, which are a preconditionof an effective state and therefore of development, has coalesced around the idea of a‘fiscal social contract’, in which beneficial expenditures are delivered to taxpayers in returnfor their tax payments, rather than a coercive relationship existing between them and thegovernment. However, these ideas about governance have with few exceptions not beenincorporated into empirical analyses of tax yield and how to increase it. In this paper, weattempt to fill this gap. Our starting-point is the model of the (fundamentally) democratic social contract proposedby Rousseau 250 years ago, which suggests that increased democracy will be good for manystate-building functions including fiscal mobilisation. We develop this idea by means of aprisoner’s dilemma model, which shows that a ‘fiscal contract’ between taxpayers and thegovernment (in the sense of a top left-hand corner, ‘win-win’ solution of the prisoner’sdilemma) will be most likely to emerge not only as a result of greater democraticaccountability, but also if taxpayers feel that they are getting good value from, and are wellinformed about, government expenditures in exchange for their tax payments. This modelis then estimated empirically against a sample of 62 developing countries between 1980-2008 (with the share of human capital expenditures in public expenditure used as anindicator of the value which taxpayers derive from that expenditure), backed by two casestudies of Ghana and Zambia. Our results, both from econometric analysis and the casestudies, suggest that increasing levels of democratic accountability and the quality of publicexpenditure are correlated, and causally connected, with increasing tax/GDP ratios, and thatin countries where competitiveness is blunted by high levels of rent-seeking, the tax ratiowill be less buoyant. Also, the process by which fiscal contracts are constructed isimportant. The government needs to send the taxpayer an effective signal, or bona-fide,illustrating the benefits to be derived from paying their tax bills. Illustrations of effectivebona-fides are provided.
    Keywords: fiscal policy, tax ratios, fiscal contracts, bona-fides, democracy
    JEL: D72 D78 E62 O23
    Date: 2017–01

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