nep-afr New Economics Papers
on Africa
Issue of 2019‒05‒27
seven papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Hysteresis of Unemployment Rates in Africa: New Findings from Fourier ADF test By Yaya, OlaOluwa S; Ogbonna, Ahamuefula; Mudida, Robert
  2. The Effects of Conflict on Fertility: Evidence from the Genocide in Rwanda By Kraehnert, Kati; Brück, Tilman; Di Maio, Michele; Nistico, Roberto
  3. Tourism and economic wellbeing in Africa By Adeola, Ogechi; Evans, Olaniyi; Hilson, Ebo
  4. Two Africas? Why Africa’s ‘growth miracle’ has barely reduced poverty By Rumman Khan; Oliver Morrissey; Paul Mosley
  5. Credit Market Access and Efficiency in South Africa By Alex Smith
  6. Boosting quality education with inclusive human development: empirical evidence from sub-Saharan Africa By Asongu, Simplice; Odhiambo, Nicholas
  7. Modeling and forecasting Botswana's Growth Domestic Product (GDP) per capita By NYONI, THABANI; MUCHINGAMI, LOVEMORE

  1. By: Yaya, OlaOluwa S; Ogbonna, Ahamuefula; Mudida, Robert
    Abstract: We investigate unit root in the unemployment rates of 42 African countries. The essence is to clarify if the hypothesis of hysteresis holds or unemployment rate is dubbed as having natural rate, that is, stationarity. Having considered a novel approach that considers the nonlinear Fourier and a structural break in the unit root testing framework, we find the classical unit root test wrongly accepting the hysteresis hypothesis of unemployment rate in selected African countries more than 60% of the cases. Meanwhile, our approach finds fewer cases of hysteresis in the unemployment rate than initially detected by the conventional classical test: the hysteresis hypothesis is found to hold in only 7 countries (Algeria, Botswana, Cabo Verde, Congo DR, Guinea-Bissau, Liberia and Tanzania) out of the 42 African countries. This implies that with the exception of the seven countries mentioned, shocks to unemployment will be transitory and strong policy action will not be required to address unemployment challenges. This suggests that hysteresis effects will be offset in overall since these are concentrated in smaller African economies and portends for a faster recovery to shocks in the broader African context. Robustness check proves the superiority of the Fourier unit root tests with structural break over other lower alternatives.
    Keywords: Africa; Fourier function; Hysteresis hypothesis; Structural breaks; Natural rate of unemployment; Unemployment rate; Unit root test
    JEL: C22 E2 E24 J4 J6 J64
    Date: 2019–02
  2. By: Kraehnert, Kati (DIW Berlin); Brück, Tilman (ISDC - International Security and Development Center); Di Maio, Michele (University of Naples Parthenope); Nistico, Roberto (University of Naples Federico II)
    Abstract: This paper analyzes the fertility effects of the 1994 genocide in Rwanda. We study the effects of violence on both the hazard of having a child in the early post-genocide period and on the total number of post-genocide births up to 15 years following the conflict. We use individual-level data from Demographic and Health Surveys to estimate survival and count data models. The paper contributes to the literature on the demographic effects of violent conflict by testing two channels through which conflict influences fertility. First, the type of violence exposure as measured by the death of a woman's child or sibling. Second, the conflict-induced change in local demographic conditions as captured by the change in the district-level sex ratio. Results indicate that the genocide had heterogeneous effects on fertility, depending on the type of violence experienced by the woman, her age cohort, parity, and the time horizon (5, 10 and 15 years after the genocide). There is strong evidence of a replacement effect. Having experienced the death of a child during the genocide increases both the hazard of having a child in the five years following the genocide and the total number of post-genocide births. Experiencing sibling death during the genocide significantly lowers post-genocide fertility in both the short run and the long run. Finally, a reduction in the local sex ratio negatively impacts the hazard of having a child in the five years following the genocide, particularly for older women.
    Keywords: child death, fertility, genocide, Rwanda, sex ratio, sibling death
    JEL: J13 N47 O12
    Date: 2019–05
  3. By: Adeola, Ogechi; Evans, Olaniyi; Hilson, Ebo
    Abstract: The importance of tourism as a driver of economic growth and development in countries is well explored in the literature. In this chapter, we extend this line of research by incorporating the concept of economic wellbeing to tourism research in Africa. The chapter explores the effect of tourism on economic wellbeing for 44 African countries for the period 1995-2015 using fully modified least square method. The empirical evidence shows there is a strong, positive and statistically significant relationship between tourism and economic wellbeing, indicating that increased tourism is associated with increased economic wellbeing. The evidence also indicates bi-directional causal linkages between tourism and economic wellbeing in the short and long run, implying that tourism leads to economic wellbeing while economic wellbeing also leads to the expansion of tourist activities both in the short and long run. The chapter therefore contributes to a deeper understanding of tourism as an important factor for the economic wellbeing of destination countries.
    Keywords: Tourism, economic wellbeing, Africa
    JEL: F2 I3 P5
    Date: 2018
  4. By: Rumman Khan; Oliver Morrissey; Paul Mosley
    Abstract: Growth improved substantially in most countries in sub-Saharan Africa (SSA) since 1990, but poverty in SSA as a whole has fallen by about a third, compared to by half or more in other developing regions. While some countries have had little or no success in reducing poverty, many have had significant achievements. The paper argues that inter-country differences, traceable to colonial experience, are crucial to understanding this varied SSA performance. This is based on a distinction between relatively labour-intensive ‘smallholder’ colonial economies and capital-intensive ‘extractive economies’ exporting minerals and plantation crops. Because of the more equitable income distribution and African political inclusion generated in smallholder economies, at independence they were in a better position than extractive economies to translate growth into poverty reduction. Since the 1990s (when poverty data are available) the distinction in terms of poverty reduction can be observed. The empirical analysis estimates the growth elasticity of poverty using various specifications, some including inequality. There are two key robust findings: i) smallholder economies significantly outperform extractive economies in poverty reduction; and ii) growth rates do not differ on average between the two groups, but the growth elasticity of poverty is higher in smallholder economies.
    Keywords: Poverty, sub-Saharan Africa, colonial legacy, inclusive growth
    Date: 2019
  5. By: Alex Smith
    Abstract: This paper explores whether frictions in the credit market are constraining the efficient allocation of capital in South Africa. The analysis focuses on firm level data for manufacturers. The results indicate that access to finance in South Africa is, for most manufacturing firms, not a major constraint on their business. In fact, South Africa has a lower proportion of firms reporting access to finance constraints than most of its emerging market peers. However, small firms and those receiving payments largely in cash are more likely to report a financing constraint. The extent to which a firm faces financing obstacles does not correlate with variations in the firm level marginal product of capital (MPK), which suggests that credit access is not an important limitation on allocative efficiency in the manufacturing sector. Indeed, smaller firms are found to have a lower MPK, which would explain their relatively higher probability of facing a financing constraint. Furthermore, this paper provides tentative evidence that structural obstacles such as crime and regulatory challenges are constraining the productive allocation of firm capital. The use of a unique firm level dataset was important for understanding the dynamics described above. However, this data was collected in 2007, so the results should be considered tentative as some variables may have changed in the interim
    Date: 2019–05–20
  6. By: Asongu, Simplice; Odhiambo, Nicholas
    Abstract: This study examines the importance of inclusive human development in promoting education quality in a panel of forty-nine Sub-Saharan African countries for the period 2000-2012. The empirical evidence is based on Ordinary Least Squares (OLS), Fixed Effects (FE) and Quantile Regression (QR) estimations. It is apparent from the OLS and FE findings that inclusive human development has a negative effect on the outcome variable. This negative effect implies that inclusive human development improves education quality. This result should be understood in the light of the fact that the adopted education variable is a negative economic signal given that it is computed as the ratio of pupils to teachers. Therefore, a higher ratio reflects diminishing education quality. From QR, with the exception of the highest quantile, the tendency of inclusive human development in reducing poor quality education is consistent throughout the conditional distribution of poor education quality. Policy implications are discussed.
    Keywords: Education; inclusive human development; Africa
    JEL: G20 I10 I32 O40 O55
    Date: 2019–01
    Abstract: Using annual time series data on GDP per capita in Botswana from 1960 to 2017, the study analyzes GDP per capita using the Box – Jenkins ARIMA methodology. The diagnostic tests such as the ADF tests show that Botswana GDP per capita data is I (1). Based on the AIC, the study presents the ARIMA (3, 2, 3) model. The diagnostic tests further show that the presented model is not only stable but also suitable. The results of the study indicate that living standards in Botswana will definitely continue to improve over the next decade. Indeed, Botswana’s success story is a reality. The study offers 4 policy recommendations in an effort to help policy makers in Botswana on how to promote and maintain the much needed better living standards for all Batswana.
    Keywords: Botswana; forecasting; GDP per capita
    JEL: C53 E37 O47
    Date: 2019–05–06

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