nep-afr New Economics Papers
on Africa
Issue of 2021‒11‒01
five papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. The rise and fall of the energy-carbon Kuznets curve: Evidence from Africa By Olatunji A. Shobande; Simplice A. Asongu
  2. Foreign Aid and Intergenerational Mobility in Africa By Ali Compaore; Roukiatou Nikièma; Rasmané Ouédraogo
  3. The impact of digitalization on poverty alleviation in Africa By Kohnert, Dirk
  4. Mental Health Therapy as a Core Strategy for Increasing Human Capital: Evidence from Ghana By Nathan Barker; Gharad T. Bryan; Dean Karlan; Angela Ofori-Atta; Christopher R. Udry
  5. The Tax Side of the Pandemic: Compliance Shifts and Funding for Recovery in Rwanda By Mascagni, Giulia; Santoro, Fabrizio

  1. By: Olatunji A. Shobande (University of Aberdeen, UK); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Purpose – This paper provides an analysis of the energy-carbon Kuznets curve hypothesis (CKC) using a second-generation panel methodology. Design/methodology/approach – Specifically, we investigate whether energy consumption, natural resources, and governance explain the CKC proposition. Our empirical strategy is based on the Westerlund panel cointegration test, augmented mean group (AMG), and vector autoregressive (VAR) panel Granger-causality tests. Findings – The results suggest that the CKC hypothesis is incomplete without these mechanisms, as they play a critical role in reducing carbon emissions in Africa. We recommend improving the environmental standards and proper regulatory and monitoring systems to reduce carbon emissions and promote sustainable development in the continent. Originality/value –The study revisits the CKC hypothesis with particular emphasis on governance and more robust empirical estimation techniques.
    Keywords: carbon cuts; Energy consumption; Governance; Climate crisis; Panel analysis; Africa
    Date: 2021–01
  2. By: Ali Compaore (UCA - Université Clermont Auvergne, CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Roukiatou Nikièma (Université Norbert ZONGO de Koudougou); Rasmané Ouédraogo (IMF - "Research Department International Monetary Fund (IMF)" - International Monetary Fund (IMF))
    Abstract: While there is extensive literature examining the growth and development effects of foreign aid, very little attention has been paid to its potential impact on social mobility. Thus, this paper provides the first empirical evidence on the effect of foreign aid on intergenerational educational mobility in Africa. Drawing on a sample of 28 countries over the period 1970-2010 and using the popular and wellknown probit estimator, we find strong evidence that foreign aid raises the likelihood of experiencing upward educational mobility in the region, while the probability of downward educational mobility tends to be lower in countries that receive a high level of foreign aid. These effects mainly operate through the increased financing for education, the improved education system, and policy, as well as improved education conditions. More interestingly, focusing on the sectoral decomposition of total aid receivedi.e., education sector versus the rest of the economy-, the study highlights that foreign aid to the education sector tends to increase the likelihood of upward educational mobility, contrary to aid allocated to the rest of the economy. Our finding suggests that foreign aid has contributed to improving social mobility in African countries.
    Keywords: F35,055,I24,C35,J62,Foreign Aid,Intergenerational Mobility,Africa
    Date: 2021–10–17
  3. By: Kohnert, Dirk
    Abstract: Digitalization in Sub-Saharan Africa enhanced the accessibility of communications by the majority of the poor who had been excluded among others from social media, independent information channels, mobile banking and e-commerce. The creation of new economic opportunities, e.g. the pay-as-you-go business, and increased flow of information also boosted people’s self-esteem, sense of belonging and citizenship. The smartphone became the main source of internet access which also bridged the divide between urban and rural communities. Thus, mobile telecommunications contributed positively to economic growth even in less developed regions, and there is apparently still ample space for further improvement. Yet, Africans were also confronted with new forms of the digital divide between the poor and the rich, between advanced and less advanced African countries, as well as between Africa and the rest of the world. Moreover, the digitalization of the public sphere became a double-edged sword. Autocratic governments like Sudan and Togo shut down the internet during elections to facilitate the rigging of the polls. The lack of transparency and objectivity fuelled fake news which rapidly spread in social media, notably in times of the Corona crisis. Last, but not least, not everybody surfing in the internet had the same access to quality information. For example, disinformation was supported clandestinely by foreign powers to destabilize political regimes, or spy software was provided to governments to control the opposition. Both false news in social media and spy-software impeded poverty relieve in Africa significantly.
    Keywords: Digitalization, Africa, Sub-Sahara Africa, digital inclusion, poverty alleviation, pro-poor growth, transparency, social media, fake news, African Studies,
    JEL: D31 D63 D83 E26 F35 F54 F63 G21 N37 O17 O33 O55 Q48 Z13
    Date: 2021–10–19
  4. By: Nathan Barker; Gharad T. Bryan; Dean Karlan; Angela Ofori-Atta; Christopher R. Udry
    Abstract: We study the impact of cognitive behavioral therapy (CBT) for individuals selected from the general population of poor households in rural Ghana. Results from 2-3 months after a randomized intervention show strong impacts on mental and physical health, cognitive and socioemotional skills, and downstream economic outcomes. We find no evidence of heterogeneity by baseline mental distress; we argue that this is because CBT can improve human capital for a general population of poor individuals through two pathways. First, CBT reduces vulnerability to deteriorating mental health; and second, CBT directly improves bandwidth, increasing cognitive and socioemotional skills and hence economic outcomes.
    JEL: H0 H00 I0 I00 I3 J0 J01 J10 J21 J24 O0 O1 O10
    Date: 2021–10
  5. By: Mascagni, Giulia; Santoro, Fabrizio
    Abstract: While much knowledge is being generated on the impact of the pandemic, we still know very little on its implications on taxation in low-income countries. Yet, tax is crucial to fund crisis response and recovery, in addition to broader development plans and expanded government expenditure. This paper starts addressing this gap using a unique dataset of survey and administrative data from Rwanda. We document two significant shifts in taxpayers’ views: perceptions about the fairness of the tax system improve by 40 per cent, and their attitudes to compliance become more conditional on the provision of public services of sufficiently good quality. Importantly, these shifts are accompanied by improvements in actual compliance behaviour: using data from tax returns, we show that firms that declare after the onset of the crisis are substantially more compliant than others. We then investigate public support for increasing various tax options to fund crisis response and recovery. Taxing large companies and the richest enjoy the greatest support, which, however, declines as income increases. These results allow us to make some recommendations and considerations on tax policy responses to the crisis.
    Keywords: Finance,
    Date: 2021

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