nep-afr New Economics Papers
on Africa
Issue of 2017‒06‒25
six papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Pyramid Capitalism: Cronyism, Regulation, and Firm Productivity in Egypt By Ishac Diwan; Philip Keefer; Marc Schiffbauer
  2. Phase II of the PAA Africa programme: results and lessons learned By Ana Carla Miranda; Mario Gyori; Fábio Veras Soares
  3. Enterprise promotion in the road construction sector in a conflict-ridden area in Kenya : a solution for the nexus of developmental problems? By Takahashi, Motoki
  4. Potential impacts of liberalisation of the EU-Africa aviation market By Eric Tchouamou Njoya; Panayotis Christidis
  5. Business development centres for youth-led entrepreneurship development in Sierra Leone By Molla Mekonnen Alemu
  6. Current issues on the African Growth and Opportunity Act (AGOA) By Yanai, Akiko

  1. By: Ishac Diwan; Philip Keefer; Marc Schiffbauer
    Abstract: Using a large, original database of 385 politically connected firms under the Mubarak regime in Egypt, we document for the first time the negative impact of cronyism on economic growth. In the early 2000s, a policy shift in Egypt led to the expansion of crony activities into new, previously unconnected sectors. 4-digit sectors that experienced crony entry between 1996 and 2006 experienced lower aggregate employment growth during the period than those that did not. A wide array of supporting evidence indicates that this effect was causal, reflecting the mechanisms described in Aghion et al. (2001), and not due to selection. Crony entry skewed the distribution of employment toward smaller, less productive firms; crony firms did not enter into sectors that would have also grown more slowly even in the absence of crony entry; and they enjoyed multiple regulatory and fiscal privileges that reduced competition and investments by non-crony firms, including trade protection, energy subsidies, access to land, and favorable regulatory enforcement. Moreover, energy subsidies and trade protection account for the higher profits of politically connected firms.
    Keywords: Firm performance, Patronage, Productivity Growth, Industrial Productivity, Productivity Level, Corruption, Economic Growth
    JEL: D72 D24 O47
    Date: 2016–10
  2. By: Ana Carla Miranda (IPC-IG); Mario Gyori (IPC-IG); Fábio Veras Soares (IPC-IG)
    Abstract: "The Purchase from Africans for Africa (PAA Africa) programme is an innovative development cooperation initiative that seeks to promote food security and income generation among vulnerable populations through institutional purchases from smallholder farmers for school feeding programmes. A key innovation of PAA Africa is the combination of providing access to institutional markets and support to agricultural production, such as access to inputs, training and machinery". (?)
    Keywords: Phase II, PAA Africa, programme, results, lessons learned
    Date: 2017–02
  3. By: Takahashi, Motoki
    Abstract: Overcoming the missing middle syndrome by promoting growth of micro and small enterprises through training is a key to solve the nexus of problems including industrial stagnation, inequality, and ethnic confrontation in Africa. We focus on collaborative interventions by an international NGO and the Kenyan government to disseminate labor-based technology of road construction and strengthen managerial skills of youth self-help groups in a county ridden by an ethno-political conflict, called the Post-Election Violence. They tried to help groups formalize as corporations and develop their businesses through training. Our research reveals that ethnically homogenous groups might have better chances to obtain construction contracts but the reason would be trust among permanent members lowering internal transaction costs, rather than ethnicity itself. In conclusion, development of micro and small firms are to some extent determined by education of leaders and internal trust. Trainings could contribute in case groups are equipped with those conditions.
    Keywords: Kenya,Small and medium-scale enterprises,Construction industry,Internal conflicts,Ethnic problem,Micro and small enterprises,Corporatization and formalization,Socio-economic inequality,Ethnic enmity and conflicts,The missing middle syndrome,Stagnation of the industrial sector
    JEL: L74 M13 M14 N67 O14 O17
    Date: 2017–05
  4. By: Eric Tchouamou Njoya (University of Huddersfield); Panayotis Christidis (European Commission – JRC)
    Abstract: Intercontinental air services between Europe and Africa are mainly governed by bilateral agreements negotiated between the individual countries of the EU and the various African governments. This paper provides an overview of the regulatory trends and development of air transport between EU and Africa, focussing on passenger traffic developments over the past five years and discusses the impact of liberalisation between Africa and the EU on the degree of concentration in airport traffic shares. Results indicate a growing role of Dubai and Istanbul and a decreasing role of European hubs as gateways to Africa. While Johannesburg, Cairo, Nairobi and Lagos remain the main international hubs in Africa, regional airport hubs have emerged in Algiers, Dar es Salaam and Casablanca. Liberalisation of EU-African aviation markets is likely to result in the emergence of further African regional hubs.
    Keywords: Transport economics, transport policy, aviation, air transport, EU, Africa
    JEL: R40 R41 R49
    Date: 2017–06
  5. By: Molla Mekonnen Alemu (IPC-IG)
    Abstract: "Youth in Sierra Leone are faced with high rates of inactivity and unemployment, and poor working conditions, compounded by long hours and low pay. They also face mounting problems of poor-quality education, poor health and nutritional standards, rising rates of HIV/AIDS and mounting social development challenges, including teenage pregnancy, drug abuse, violence and crime. These were the predominant development conditions which guided the United Nations Development Programme (UNDP) and the Government of Sierra Leone to develop and implement the Youth Employment and Empowerment Programme (YEEP). It is part of the 'Inclusive Growth and Sustainable Development' programme cluster". (?)
    Keywords: Business, development, centres, youth-led, entrepreneurship, development, Sierra Leone
    Date: 2017–05
  6. By: Yanai, Akiko
    Abstract: The African Growth and Opportunity Act (AGOA) has successfully supported for the sub-Saharan countries to achieve trade-led economic development on one hand, it has been criticized for the limited method for selecting beneficiaries and its legal instability. After the AGOA was renewed for another ten years in 2015, African countries are facing the new challenges such as AGOA reciprocation and the out-of-cycle eligibility review. Based on the active discussions in the AGOA Forum in 2015 and 2016, this paper examines the future potential structures that are most appropriate for U.S.–African trade and investment relationship.
    Keywords: International trade,Economic development,AGOA,Preferential trade arrangement,Trade policy,Sub-Sahara Africa
    JEL: F13 O24 O55
    Date: 2017–03

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