nep-afr New Economics Papers
on Africa
Issue of 2018‒05‒07
seven papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Africa Sector Database (ASD): Expansion and update By Mensah, Emmanuel Buadi; Szirmai, Adam
  2. Government expenditure-revenue nexus reconsidered for Nigeria: Does structural break matter? By Ibrahim, Taofik
  3. How Does Foreign Direct Investment Affect Growth in Sub-Saharan Africa? New Evidence from Non-threshold and Threshold Analysis By Ibhagui, Oyakhilome
  4. Institutional factors and people's preferences in the implementation of social protection: the case of Ethiopia By Vinci, Vincenzo; Roelen, Keetie
  5. Understanding Sub-Saharan Africa’s Extreme Poverty Tragedy By Simplice Asongu; Sara le Roux
  6. Taxing property in a neo-developmental state: The politics of urban land value capture in Rwanda and Ethiopia By Goodfellow, Tom
  7. Growth Dynamics of Young Small Firms: Evidence from Tunisia By Arouri, Hassan; Ben Youssef, Adel; Quatraro, Francesco; Vivarelli, Marco

  1. By: Mensah, Emmanuel Buadi (UNU-MERIT); Szirmai, Adam (UNU-MERIT)
    Abstract: Since the construction of the Africa Sector Database (ASD) at the Groningen Growth and Development Centre, there has been a wave of statistical reforms in some of the countries in the ASD leading to significant revaluations of GDP. These reforms have provided a clearer picture of the size and structure of production of the countries involved (Sy, 2015). We update the ASD to reflect these statistical changes. Most importantly, following the methodology of ASD, we expand the ASD by constructing sectoral data for seven new African countries: Burkina Faso, Cameroon, Lesotho, Mozambique, Namibia, Rwanda and Uganda. This has resulted in an expanded database (from the 1960s to 2015) covering about 80% of GDP in sub-Saharan Africa.
    Keywords: Africa, Data, Employment, Sector, Value Added
    JEL: E01 O11 O47
    Date: 2018–04–20
  2. By: Ibrahim, Taofik
    Abstract: This paper re-examines the government expenditure-revenue nexus in Nigeria from 1970 to 2015. It utilizes the Lee and Strazicich (2003 and 2004) unit root tests that endogenously determines two/one structural breaks in intercept and slope to ascertain the stationarity of the data. The Toda-Yomamoto modified Wald (MWALD)-based causality test that arbitrage between the results with and without structural breaks was conducted to determine the direction of causality between the government expenditure and revenue. The results for the causality test without break suggest that bi-directional causality exists between government expenditure and revenue suggesting the existence of the fiscal synchronization hypothesis. However, the causality test with break reveals a unidirectional causality running from government expenditure to revenue indicating that the spend-revenue hypothesis holds. This finding is a clear departure from other studies on oil-rich countries; thus indicating that accounting for structural break is vital when determining the relationship between government expenditure and revenue for resource countries. This study, therefore, suggests that government should embark on the diversification of the economy away from oil in order to promote reliable and sustained sources of revenue for the nation.
    Keywords: Government expenditure, government revenue, structural break, Causality, Nigeria.
    JEL: H2 H5 H62
    Date: 2018–01–10
  3. By: Ibhagui, Oyakhilome
    Abstract: We draw on the threshold analysis to examine the effect of foreign direct investment on growth in Sub-Saharan Africa. The growth literature is awash with divergent evidence on the role of foreign direct investment (FDI) on economic growth. Although the FDI-growth nexus has been studied in diverse ways, very few studies have examined the problem within the framework of threshold regression analysis. Furthermore, even where this framework has been adopted, none of the previous studies has comprehensively examined the FDI-growth nexus in the broader Sub-Saharan Africa (SSA). In this paper, we revisit, within the standard panel and threshold regression framework, the problem of determining the growth impact of FDI. We use as thresholds six variables – inflation, initial income, population growth, trade openness, financial market development and human capital, and we base the analysis on a large panel-data set that comprises 45 SSA countries for the years 1985-2013. Our results show that the direct impact of FDI on growth is largely ambiguous and inconsistent. However, under the threshold analysis, we find evidence that FDI accelerates economic growth when SSA countries have achieved certain threshold levels of inflation, population growth and financial markets development. This evidence is largely invariant qualitatively and robust to different specifications. FDI enhances growth in SSA when inflation and private sector credit are below their threshold levels while population growth is above its threshold level.
    Keywords: Foreign Direct Investment (FDI), Economic Growth, and Threshold Analysis
    JEL: C4 E0
    Date: 2017
  4. By: Vinci, Vincenzo (UNU-MERIT, and UNICEF); Roelen, Keetie (UNU-MERIT, and Institute of Development Studies)
    Abstract: Effective implementation of social protection interventions is key for achieving positive impact, but factors underpinning quality of implementation have not been widely explored. Recent literature on determinants of social protection expenditures indicates that quality of institutions and people's preferences play an important role. This paper builds on this literature to explore the linkages between quality of institutions and people's preferences in relation to the quality of implementation of social protection interventions. It does so by using Ethiopia and one of the largest social protection programmes in Sub-Saharan Africa - the Productive Safety Net Programme - as a case study, thereby contributing to debates of how social protection can be implemented more effectively, particularly in settings with widespread poverty, relatively low levels of institutional capacity and rapid scale-up of programmes. Based on primary qualitative data, the paper finds that greater institutional quality is associated with more effective implementation of social protection interventions. The ability to voice preferences can lead to adaptations in implementation, although the extent to which this occurs is highly gendered.
    Keywords: Social protection, Institutions, Public policies, Ethiopia
    JEL: H11 H53 I38 O15
    Date: 2018–03–26
  5. By: Simplice Asongu (Yaoundé/Cameroun); Sara le Roux (Oxford, UK)
    Abstract: Motivated by a recent World Bank report on achieving of Millennium Development Goals which shows that poverty has been declining in all regions of the world with the exception of sub-Saharan Africa (SSA), this study puts some empirical structure to theoretical and qualitative studies on the reconciliation of the Beijing Model with the Washington Consensus. It tests the hypothesis that compared to middle income countries, low income countries would achieve more inclusive development by focusing on economic governance as opposed to political governance. The empirical evidence is based on interactive and non-interactive fixed effects regressions and 49 countries in SSA for the period 2000-2012. The findings confirm the investigated hypothesis. As the main policy implication, in order to address inclusive development challenges in the post-2015 development agenda in SSA, it would benefit low income countries in the sub-region to prioritise economic governance. Other theoretical and practical contributions are also discussed.
    Keywords: Inclusive development; Middle Class; Governance; Sub-Saharan Africa; Beijing Model; Washington Consensus
    JEL: D31 I10 I32 K40 O55
    Date: 2018–01
  6. By: Goodfellow, Tom
    Abstract: Of the African states experiencing sustained growth and poverty reduction in recent decades, Rwanda and Ethiopia stand out due to the scope of their development visions and relatively effective state-driven transformation, leading them to be compared to the East Asian ‘developmental states’. This article argues that these two states are better conceived as ‘neo-developmental’ due to important differences in the international and national constraints they face compared with the East Asian ‘tigers’. One effect of these differences is the difficulty of attracting investment into manufacturing industry, and the consequent concentration of capital in high-end urban real estate. This underscores the need for effective land value capture and property taxation, which featured strongly in the East Asian cases. Currently, however, both Rwanda and Ethiopia lack effective mechanisms for capturing the value of urban property in a way that is sustainable, redistributive and developmental. The article explores the politics of efforts to introduce property tax in both cases. It argues that property taxation has been obstructed by conflicting imperatives on land reform and tax reform, alongside resistance from vested interests created by the rapid generation of real estate-based wealth in the absence of other sufficiently lucrative investment options.
    Keywords: Governance,
    Date: 2017
  7. By: Arouri, Hassan; Ben Youssef, Adel; Quatraro, Francesco; Vivarelli, Marco
    Abstract: The aim of this paper is to investigate the growth dynamics of young small firms (in contrast with larger and older incumbents) in a developing country context, using a unique and comprehensive dataset of non-agricultural Tunisian companies. Our results suggest that significant differences between young and mature firms can be found as far as the drivers of their growth are concerned. The key finding being that - while consistently with the extant literature Gibrat’s law is overall rejected - the negative impact of the initial size is significantly larger for young than mature firms. This result has interesting policy implications: since smaller young firms are particularly conducive to employment generation, they can be considered good candidate for targeted accompanying policies addressed to sustain their post-entry growth.
    Keywords: firm’s growth,young firms,Gibrat’s law,Tunisia
    JEL: O12 L26
    Date: 2018

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