nep-afr New Economics Papers
on Africa
Issue of 2017‒05‒07
four papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. International tourism receipts and economic growth in Kenya 1980 -2013 By Akama, Erick
  2. Productive Capacity and Economic Growth in Ethiopia By Admasu Shiferaw
  3. The Effect of Food Price Changes on Child Labor: Evidence from Uganda By Raymond B. Frempong; David Stadelmann
  4. The Real Exchange Rate, the Ghanaian Trade Balance, and the J-curve By Njindan Iyke, Bernard; Ho, Sin-Yu

  1. By: Akama, Erick
    Abstract: This study aimed at exploring the relationship between international tourism receipts and economic growth in Kenya using a time series data of the period 1980 to 2013. Specifically it sort to answer two questions on causality between international tourism receipts and economic growth as well as the effect of international tourism receipt on Kenyan’s economic growth. The study applied OLS regression, Cointegration and Granger causality test to obtain the study objectives. Results from OLS regression showed that all variables are statistically insignificant except average wage and gross fixed capital formation in determining the economic growth of Kenya under the period of study. Equally result from the causality test showed that all variables in the model were cointegrataed in the long run implying they could be used to explain changes in Kenyan economic growth within the period under study. However, in the short run, the study found a unidirectional causality which ran from international tourism receipts to economic growth. The study findings conforms to Lee and Chang (2008), Oh (2005), and Bridaet. al, (2008b) who found a causality running from international tourism receipts to economic growth but contradicts Kim et. al, (2006) whose causality was a bidirectional. The study recommends government intervention into the sector through relevant policies such as strengthening the tax body (KRA) on all foreign companies dealing with tourism activities within the country so as to maximize gains from such companies, investing more funds to the industry through improving infrastructure to the attraction sites as well as incorporating the communities around the attraction sites as tour guides to enhance welfare distributions from the gains from the tourism sector.
    Keywords: International Tourism Receipts, Economic growth
    JEL: O43
    Date: 2016–11–12
  2. By: Admasu Shiferaw
    Abstract: This paper examines the process of building productive capacity in Ethiopia over the past two decades and the roles played by the state, government, the private sector, foreign firms and development partners. Productive capacity is defined broadly as the natural resource potential, accumulation of human capital and the institutions that facilitate inclusive and sustainable economic growth. This process also encompasses the nurturing modern entrepreneurial skills in the private sector and fostering innovation. The paper starts with an overview of Ethiopia’s economic growth and the change in the domestic economic structure. The manufacturing sector is seen as the success of Ethiopia’s Growth, and its development to a large extent the product of an activist developmental state. The paper then examines growth and diversification of exports and the country’s recent efforts to effectively exploit its natural resources. An analysis of public and private investment and the underlying allocation of financial resources finds that a recent upturn in domestic investment has been financed largely by foreign aid, and that private financing remains too low. Finally, the paper addresses educational attainment, arguing that Ethiopia has some distance to go in its attempts to close the large human capital gap relative to other low-income countries.
    Keywords: Productive capacity, least developed countries, Ethiopia
    JEL: F14 O14 O2 O25 O55
    Date: 2017–04
  3. By: Raymond B. Frempong; David Stadelmann
    Abstract: A majority of people in developing countries spend about 60 percent of their income on food, even though most of them are farmers. Hence, a change in food prices affects both their revenue as well as expenditure, and thereby their labor market decisions. Using the Uganda National Panel Survey and monthly regional food prices, this paper examines the effect of exogenous changes in food prices on child labor. The econometric evidence shows that an increase in food prices leads to an increase in the probability and intensity of child labor. We find the effect of food price increases to be smaller among landowning households, which is consistent with the view that landowning households can better compensate for price shocks. The results suggest that periodic shocks in food prices may have longer lasting effects on human capital development and poverty in developing countries.
    Keywords: Development; Child labor; Exogenous shock; Food prices
    JEL: O12 Q18 J20
    Date: 2017–04
  4. By: Njindan Iyke, Bernard; Ho, Sin-Yu
    Abstract: Using linear and nonlinear specifications, we studied the effects of real exchange rate changes on the trade balance of Ghana during the period 1986Q1 to 2016Q3. We found no evidence in support of the short- and long-run impact of exchange rate changes on the trade balance in the linear specification. The J-curve is refuted in this case. In contrast, exchange rate changes affected the trade balance in the nonlinear specification. Depreciations improve the trade balance in the long run, but appreciations have no impact. Hence, exchange rate changes have nonlinear effects on the trade balance. This is consistent with the J-curve phenomenon.
    Keywords: Trade balance; J-curve; real exchange rates; nonlinearities; Ghana.
    JEL: C22 F31 F32
    Date: 2017–01

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