nep-afr New Economics Papers
on Africa
Issue of 2018‒09‒03
eight papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. From agricultural to economic growth: Targeting investments across Africa By Getahun, Tigabu; Baumüller, Heike; Nigussie, Yalemzewd
  2. Understanding Sub-Saharan Africa’s Extreme Poverty Tragedy By Asongu, Simplice; le Roux, Sara
  3. Possible health and growth implications of prostitution in Nigeria: A theoretical perspective By Sulaimon, Mubaraq Dele; Muhammad, Adamu Auwal; Shofoyeke, Oluwafunmilayo
  4. Can Big Companies’ Initiatives to Promote Mechanization Benefit Small Farms in Africa? A Case Study from Zambia By Adu-Baffour, Ferdinand; Daum, Thomas; Birner, Regina
  5. Lessons from a Survey of China’s Economic Diplomacy By Asongu, Simplice; Nwachukwu, Jacinta; Aminkeng, Gilbert A. A
  6. Informal sector innovation in Ghana: Data set and descriptive analysis. By Avenyo, Elvis
  7. Conflict Heterogeneity in Africa By Carolyn Chisadza; Matthew Clance
  8. The Six Linkages between Foreign Direct Investment, Domestic Investment, Exports, Imports, Labor Force and Economic Growth: New Empirical and Policy Analysis from Nigeria By Bakari, Sayef; Mabrouki, Mohamed; Othmani, Abdelhafidh

  1. By: Getahun, Tigabu; Baumüller, Heike; Nigussie, Yalemzewd
    Abstract: This paper examines whether investment in the agriculture and food sectors in Africa significantly increases overall economic growth and, hence, reduces food and nutrition insecurity. To this end, the study examines the causal link between agricultural growth, food production, quality of governance, and overall economic growth using panel data compiled from 44 African countries for a 53-year period from 1961 to 2014. The estimation result from the fully modified least squares, the panel cointegration, and Granger causality tests suggest that agricultural growth, government commitment, and quality of governance Granger causes overall economic growth. The study also identifies the 10 African countries where investment in the agriculture and food sectors is expected to yield the highest returns and the 10 African countries having the lowest returns in terms of reducing food insecurity and poverty. The result indicates that Botswana, Burkina Faso, Ethiopia, Kenya, Malawi, Mali, Mozambique, Rwanda, Seychelles, and Sierra Leone are the top 10 African countries where such an investment is expected to yield the highest returns. Cameroon, Congo, Egypt, Equatorial Guinea, Eritrea, Gabon, Gambia, Libya, Mauritania, and Somalia are the bottom 10 countries where such investment is expected to yield the lowest return.
    Keywords: Agricultural and Food Policy, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies
    Date: 2018–03–28
  2. By: Asongu, Simplice; le Roux, Sara
    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
  3. By: Sulaimon, Mubaraq Dele; Muhammad, Adamu Auwal; Shofoyeke, Oluwafunmilayo
    Abstract: The desire to meet the basic needs of life in the face of poverty and increasing income inequality has propelled individuals in the country to look outward and beam their search light on alternative sources of income to either complement or substitute existing source. Prostitution, although demeaning and widely socially impugned, has been identified by some individuals as one of the feasible solutions to addressing the problem of financing basic human needs (BHNs) in the present Nigerian economic situation. Thus, the paper examines the possible health and growth implications of prostitution in Nigeria. The paper views the primary driver of prostitution through the conflict theory’s lens. As a result, the study identifies the unemployed, orphans, widows, divorcees, and members of low income households as the vulnerable groups in the economy. The paper concludes that the growth of poverty and income inequality will continue to drive prostitution among vulnerable groups, and the developmental efforts of the country will be undermined as a result of its possible associated health crisis and the sapping of human resources that otherwise could have been channeled to productive sectors of the economy. Thus, the paper suggests appropriate policy remedies that may assist in reducing the growth of prostitution among individuals and set the country on the path of growth and sustainable development.
    Keywords: Growth; Health; HIV/AIDS; Nigeria; Prostitution
    JEL: I15
    Date: 2018–08–06
  4. By: Adu-Baffour, Ferdinand; Daum, Thomas; Birner, Regina
    Abstract: After many years of neglect, there is a renewed interest in agricultural mechanization in Africa. Since government initiatives to promote mechanization, e.g., by importing and subsidizing tractors, are confronted with major governance challenges, private-sector initiatives offer a promising alternative. This paper analyzes an initiative of the agricultural machinery manufacturer John Deere and its dealership partner AFGRI to promote smallholder mechanization in Zambia through a contractor model. The analysis focuses on the impact of this initiative on smallholder farmers who receive tractor services and on the demand for hired labor. The analysis is based on a survey of 250 smallholders and focus group discussions using Participatory Impact Diagrams. The results of a Propensity Score Matching (PSM) analysis indicate that farmers who access tractor services for land preparation can almost double their income by cultivating a much larger share of the land that they own. The analysis also suggests that the increased income is used for children’s education and for purchasing more food, but does not result in increased food diversity. The findings indicate that the demand for hired labor increases due to the expansion of the cultivated area and due to a shift from family labor, including that of children, to hired labor. Questions that require further investigation are identified, including policies and strategies to increase the incentives of tractor owners to provide services to smallholders, to use mechanization more effectively to increase land productivity, and to avoid new forms of dependency of agricultural laborers that may result.
    Keywords: Agricultural and Food Policy, Consumer/Household Economics, Farm Management, International Relations/Trade, Labor and Human Capital, Research and Development/Tech Change/Emerging Technologies
    Date: 2018–06–12
  5. By: Asongu, Simplice; Nwachukwu, Jacinta; Aminkeng, Gilbert A. A
    Abstract: Today, the West faces a considerable dilemma in their support for the Washington Consensus as a dominant approach for development because the Beijing model has grown to become an unavoidable process which can only be neglected at the cost of standing on the wrong side of economic history. The Washington Consensus, the hitherto dominant scheme, is being encroached on by the Beijing model. Many African nations are increasingly embracing this later method because the prevailing Western model has failed to deliver on a number of objectives. This is increasingly evident because China’s economic diplomacy has been politely and strategically coined to achieve it. A case study is used herein to articulate the different strands of the survey. The paper puts some structure on China’s economic diplomatic strategies and discusses lessons for Africa, China and the West. It contributes to existing literature by critically assessing why it is necessary for the West to modify the conception and definition of the Washington Consensus as a counterpart to the Beijing model. In order to remain relevant in the 21st century and beyond, the Washington Consensus should incorporate those ideas which are in conformity with Moyo’s (2013) conjecture. This postulates that, while the Beijing model is optimal in the short-run, the Washington Consensus remains the ideal long-term development model because it is more inclusive of the rights demanded by individuals at different income categories.
    Keywords: Economic relations; China; Africa
    JEL: F19 F21 O10 O19 O55
    Date: 2018–01
  6. By: Avenyo, Elvis (UNU-MERIT)
    Abstract: While informal enterprises and their activities dominate sub-Saharan African (SSA) economies, data on 'informal' innovation activities remain lacking. This paper presents descriptive statistics from survey data collected in 2016, on the types of innovations informal enterprises adopt and/or adapt in urban Ghana (Accra and Tema). Using zones defined in the Ghana Informal Enterprise Survey (GIFS) of the World Bank as area-based frame, and randomly selecting and canvassing 17 zones, the study identified and interviewed 513 informal enterprises. The analysis reveals that informal enterprises do innovate. Innovations, as found in formal enterprises as well, are not big swings, that is, not radical but incremental, and are found to occur over several years. These suggest that incremental innovations, notwithstanding, are important to the survival of sampled informal enterprises.
    Keywords: Innovation, Informal Sector, Survey, Ghana, sub-Saharan Africa
    JEL: C83 D22 H32 L11 O17 O31
    Date: 2018–08–08
  7. By: Carolyn Chisadza (Department of Economics, University of Pretoria, Pretoria, South Africa); Matthew Clance (Department of Economics, University of Pretoria, Pretoria, South Africa)
    Abstract: One of the Sustainable Development Goals is to significantly reduce all forms of violence and related death rates everywhere. The economic development literature widely concurs that conflicts have adverse economic consequences that contribute to poverty, disinvestment, and lower human capital leading to widespread inequality and lower economic growth. As such, understanding the nature of conflict has been an important focus for political leaders, policymakers and researchers alike. However, the existing literature does not typically distinguish between the types of conflict, and empirical evidence relies on the assumption that effects are similar across the world. Using panel data analysis and a comprehensive disaggregated georeferenced conflict dataset from 1997 to 2016, we find significant evidence of heterogeneity in the predictors' effects on different types of conflicts in Africa.
    Keywords: conflict, regional heterogeneity, panel data
    JEL: C33 H56 O10 O43
    Date: 2018–08
  8. By: Bakari, Sayef; Mabrouki, Mohamed; Othmani, Abdelhafidh
    Abstract: The contribution of this study is to search the six linkages between Foreign Direct Investment, Domestic Investment, Exports, Imports, Labor Force and Economic Growth in Nigeria by using vector error correction model for the period 1981 – 2015. The empirical results indicate that there is no relationship between the six variables in the long run. In the short run imports cause economic growth and domestic investment; exports and FDI cause labor; and labor causes FDI. These findings present the critical situation of Nigeria, which requires an entry of urgent economic reforms.
    Keywords: Economic Growth, Domestic investment, FDI, Labor, Exports, Imports, VECM, Nigeria.
    JEL: E22 F14 J21 N77 O16 O47 O55
    Date: 2018

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