nep-afr New Economics Papers
on Africa
Issue of 2021‒11‒29
eight papers chosen by
Sam Sarpong
The University of Mines and Technology

  1. Impact of mining boom on the quality of public goods in Sub-Saharan Africa By Luisito Bertinelli; Arnaud Bourgain
  2. Public Debt and Inflation Dynamics: Empirical Evidence from Zimbabwe By Saungweme; Odhiambo
  3. Does International Tourism Spur International Trade in SSA Countries? A Dynamic Panel Data Analysis By Odhiambo; Saungweme
  4. Harmful Norms: Can Social Convention Theory Explain the Persistence of Female Genital Cutting in Africa? By Congdon Fors, Heather; Isaksson, Ann-Sofie; Lindskog, Annika
  5. Measuring Youth Empowerment: An Illustration Using the Example of Tunisia By Goedhuys, Micheline; Grimm, Michael; Meysonnat, Aline; Nillesen, Eleonora; Reitmann, Ann-Kristin
  6. What Drives Financial Sector Development in Africa? Insights from Machine Learning By Isaac K. Ofori; Christopher Quaidoo; Pamela E. Ofori
  7. Overcoming a legacy of racial discrimination: Competing policy goals in South African academia. By Robin Cowan; Moritz Müller; Alan Kirman; Helena Barnard
  8. A Simple Macrofiscal Model for Policy Analysis: An Application to Morocco By Daniel Baksa; Mr. Ales Bulir; Mr. Roberto Cardarelli

  1. By: Luisito Bertinelli (Department of Economics and Management, Université du Luxembourg); Arnaud Bourgain (Department of Economics and Management, Université du Luxembourg)
    Abstract: "In this paper, we investigate the impact of public mining revenues on perception " indicators of public goods quality in five mining countries that have recently experienced a boom in their government revenues: Burkina Faso, Ghana, D.R. Congo, Tanzania, and Zambia. The effect of the tax revenue boom is identified using a difference-in-differences estimation strategy. Our estimations indicate that people living in mining regions as having a sense of structural disadvantage in terms of the provision of public goods; however, this perception is pro-cyclical in the presence of resource booms/busts. Our results hold even after taking account of the possible endogeneity of our measure of resource revenue.
    Keywords: mining; resource boom; public goods; mining areas; Sub-Saharan Africa.
    JEL: I31 O13 O55 Q33
    Date: 2021
  2. By: Saungweme; Odhiambo
    Abstract: The study seeks to empirically test the hypothesis that public debt has a significant influence on inflation in Zimbabwe, covering the period 1980-2020. The study was motivated by recent trends in public debt and domestic inflation in Zimbabwe, and the need to guide debt-inflation related policy. These latest trends have started to ring alarming bells, which raises questions on the effectiveness of fiscal and monetary policies in bringing macroeconomic stability in the country. Applying the Autoregressive Distributed Lag (ARDL) bounds testing procedure to cointegration and an error correction mechanism (ECM), expanded by incorporating structural breaks, the study finds evidence in support of positive and significant impact of public debt on inflation dynamics in Zimbabwe, particularly in the long run. Based on the findings, public debt dynamics matter for inflation process in Zimbabwe. That is, fiscal policy can be considered to be an important determinant of the effectiveness of monetary policy in Zimbabwe. Therefore, the government should be mindful of increases in public debt as this was found to be inflationary.
    Date: 2021–10
  3. By: Odhiambo; Saungweme
    Abstract: In this study, the relationship between tourism development and trade in 12 sub-Saharan African (SSA) countries is examined during the period 1995-2019. Three proxies of trade are used, namely the total trade, total exports, and total imports of goods and services to examine this linkage, thereby leading to three separate model specifications. A wide range of modern econometric techniques were also employed to examine the relationship between the various proxies of trade and tourist arrivals. These include i) cross-sectional dependence tests based on Breusch-Pagan (1980) LM, Pesaran (2004) scaled LM, Baltagi et al. (2012) bias-corrected scaled LM, and Pesaran (2004) CD; ii) a slope homogeneity test based on Pesaran and Yamagata (2008); iii) an ECM panel cointegration test based on Westerlund (2007); and iv) a heterogeneous panel causality model based on Dumitrescu and Hurlin (2012), among others. Using the dynamic ordinary least squares (DOLS) and the fully modified ordinary least squares (FMOLS), the study found that, overall, international tourism has a positive and significant impact on trade in SSA countries. This finding is also corroborated by the heterogeneous Granger causality test, which found a distinct unidirectional causal flow from international tourism arrivals to trade. The study, therefore, recommends that SSA countries should implement policies aimed at promoting international tourism in order to increase their international trade and boost their overall trade balance.
    Date: 2021–11
  4. By: Congdon Fors, Heather (University of Gothenburg, Department of Economics); Isaksson, Ann-Sofie (Research Institute of Industrial Economics (IFN)); Lindskog, Annika (University of Gothenburg, Department of Economics)
    Abstract: This paper investigates the explanatory power of social convention theory for explaining the persistence of female genital cutting (FGC) in a broad sample of African countries. While influential in policy circles, the idea that FGC is best described as a bad equilibrium in a social coordination game has recently been challenged by quantitative evidence from selected countries. These studies have pointed towards the importance of private preferences. We use novel approaches to test whether FGC is social interdependent when decisions also depend on private preferences. We test implications of the simple fact that according to social convention theory mothers will sometimes cut their daughters even if they do not support the practice. The substantial regional variation in FGC practices warrants investigation in a broad sample. Empirical results drawing on Demographic and Health Survey data from 34 surveys performed between 1992-2018 in 11 African countries suggest that cutting behavior is indeed often socially interdependent, and hence that it can be understood as a social convention. Our findings indicate that even if social convention theory does not provide the full picture, it should not be dismissed. Accordingly, interventions that acknowledge the social interdependence of cutting behavior are likely to be more successful than interventions that do not.
    Keywords: Female genital cutting; Social convention theory; Norms; Africa
    JEL: D71 D91 I15 O55
    Date: 2021–11–15
  5. By: Goedhuys, Micheline (UNU-MERIT); Grimm, Michael (University of Passau); Meysonnat, Aline (UNU-MERIT); Nillesen, Eleonora (UNU-MERIT); Reitmann, Ann-Kristin (University of Passau)
    Abstract: Youth empowerment, i.e., the ability of young people to take control over key aspects of their lives, has become a growing concern to achieving sustainable development worldwide. An increasing number of policy interventions is targeting the youth, but to monitor the progress a better understanding on what constitutes youth empowerment is needed. However, in contrast to the area of women's empowerment, little progress has been made on determining which domains of empowerment are important for youth and how they can be operationalized with indicators for measurement. We propose four domains of youth empowerment with corresponding indicators and use a well-established methodology for constructing a composite index. Using data from a household survey in Tunisia including a sample of young adults (18 to 30 years old), we assess youth empowerment in the proposed domains, explore correlates to empowerment and assess the link between youth empowerment and youth well-being. The proposed approach can help to monitor youth empowerment in various contexts and to evaluate the effectiveness of youth interventions.
    Keywords: youth empowerment, measurement, multidimensional index, well-being, Middle East and North Africa region
    JEL: C43 D91 D39 J13
    Date: 2021–10
  6. By: Isaac K. Ofori (University of Insubria, Varese, Italy); Christopher Quaidoo (University of Insubria, Varese, Italy); Pamela E. Ofori (University of Insubria, Varese, Italy)
    Abstract: This study uses machine learning techniques to identify the key drivers of financial development in Africa. To this end, four regularization techniques— the Standard lasso, Adaptive lasso, the minimum Schwarz Bayesian information criterion lasso, and the Elasticnet are trained based on a dataset containing 86 covariates of financial development for the period 1990 – 2019. The results show that variables such as cell phones, economic globalisation, institutional effectiveness, and literacy are crucial for financial sector development in Africa. Evidence from the Partialing-out lasso instrumental variable regression reveals that while inflation and agricultural sector employment suppress financial sector development, cell phones and institutional effectiveness are remarkable in spurring financial sector development in Africa. Policy recommendations are provided in line with the rise in globalisation, and technological progress in Africa.
    Keywords: Africa, Elasticnet, Financial Development, Financial Inclusion, Lasso, Regularization, Variable Selection
    JEL: C01 C14 C52 C53 C55 E5 O55
    Date: 2021–01
  7. By: Robin Cowan; Moritz Müller; Alan Kirman; Helena Barnard
    Abstract: Because discrimination is systemic, efforts to counter it, and thus policy interventions, must also be systemic. The South African case is particularly instructive because it is so extreme: Apartheid deliberately excluded the vast majority of the population, black South Africans, from fully participating in society, but post-Apartheid efforts to achieve transformation have had limited success. This paper hones in on a key enabler of transformation, the university system. A successful transformation will be characterized by a larger academic system to accommodate the many previously disadvantaged students, by growing scientific quality and by more black academics so that the proportion of black to white academics resembles that of South Africans generally. This will require more black South Africans to do PhDs, to select academic careers, and to be selected into the top South African universities. Policy interventions can be developed for each of these many constituent elements, but it is not known whether policies will be complementary or contradictory. To determine the outcomes of different options, this paper uses computer simulations, calibrated with evidence from South Africa since the end of Apartheid. The simulations reveal very few direct trade-offs, although different combinations result in different benefits. By highlighting the (larger and smaller) gains and costs of different combinations of policies, the paper can therefore support informed policy-making about a highly complex issue.
    Keywords: discrimination; universities; public policy; labor market institutions; social change; Africa.
    JEL: I2 J15 J7
    Date: 2021
  8. By: Daniel Baksa; Mr. Ales Bulir; Mr. Roberto Cardarelli
    Abstract: The paper describes a semistructural macrofiscal approach to simulating and forecasting macroeconomic policies. The model focuses on only a few variables that are consistent with the New Keynesian framework. Thanks to its simplicity, it facilitates an initial and intuitive understanding of monetary and fiscal policy transmission channels, and their main impact on economic activity. The model is adapted to Morocco and we demonstrate its application with an illustrative scenario of policy responses to a slower-than-expected recovery from the Covid-19 pandemic, under different monetary policy and exchange rate regimes.
    Keywords: Fiscal Policy, Morocco, Fiscal Multiplier; fiscal policy transmission channels; Policy reaction function; B. aggregate supply; peg regime; fiscal policy transmission mechanisms; Exchange rate arrangements; Real exchange rates; Output gap; Inflation targeting; Maghreb; Global
    Date: 2021–07–16

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