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  • Author: Samuel Kobina Annim
  • Publication Date: 01-2011
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper examines the combined effect of interest rates and poverty levels of microfinance clients on loan size. Cross section data on 2,691 clients and non-clients households from Ghana is used to test the hypothesis of loan price inelasticity. Quantile regression and variants of least squares methods that explore endogeneity are employed. We find the expected inverse relationship only for the 20th to 40th quantile range. The semi-elasticity of loan amount responsiveness to a unit change in interest rate is more than proportionate and significant for the poorest group only. Market segmentation based on poverty level is suggested in targeting and sustaining microfinance clients.
  • Topic: Development, Economics, Markets, Poverty, Foreign Aid
  • Political Geography: Africa
  • Author: Mahvash Saeed Qureshi, Charalambos G. Tsangarides
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper revisits the link between exchange rate regimes and trade in the context of Africa's exchange rate arrangements. Applying an augmented gravity model that includes measures of currency unions and pegged regimes, the paper compares Africa's experience with that of the world. Our results suggest that both currency unions and direct pegs promote bilateral trade in Africa vis-à-vis more flexible exchange rate regimes,and that their effect is almost double for the region than that for an average country in the world sample. Further, we find evidence that the effect of conventional pegs is at least as large as that of currency unions in Africa, and that the benefits of fixed exchange rate regimes stem through channels in addition to reduced exchange rate volatility.
  • Topic: Economics, International Trade and Finance, Bilateral Relations, Monetary Policy
  • Political Geography: Africa
  • Author: Markus Brückner
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: A common finding in the empirical civil war literature is that population size and per capita income are highly significant predictors of civil war incidence and onset. This paper shows that the common finding of population size and per capita income having a significant average effect on civil war risk in a world sample breaks down once country- and year-specific unobservables are accounted for. However, for Sub-Saharan Africa there continues to be a highly significant average effect of population size and per capita income on civil war risk that is robust to the use of country- and year-fixed effects and instrumental variable techniques.
  • Topic: Civil War, Demographics, Economics
  • Political Geography: Africa
  • Author: Steve Onyeiwu
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper reviews the innovative capabilities and absorptive capacities of African countries, and investigates whether they have played significant roles in the region's slow and episodic economic growth. Results from cross-country regressions covering 31 Sub-Saharan African countries suggest that growth in Africa is not simply a question of capital accumulation, fertility rates, aid dependency, and stable macroeconomic environment. It is also about strengthening the capacity of African countries to assimilate and effectively use knowledge and technology. Contrary to the views held by many analysts, the growth of African economies does not depend so much on their ability to innovate, but rather on their capacity to absorb and effectively use new technologies. Beyond technological issues, the paper confirms the stylized facts that the size of the government and political stability are important for the growth performance of African countries.
  • Topic: Development, Economics, Science and Technology
  • Political Geography: Africa
  • Author: Amelia U. Santos-Paulino
  • Publication Date: 03-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper analyses the patterns of export productivity and trade specialization profiles in the China, Brazil, India and South Africa, and in other regional groupings. In doing so, the investigation calculates a time varying export productivity measure using highly disaggregated product categories. The findings indicate that export productivity is mainly determined by real income and human capital endowments. Importantly, the study reveals significant differences in the export productivity and specialization patterns of countries with comparable per capita income levels. For instance, China's export productivity and implied export sophistication is in line with that of countries with higher per capita incomes, including some OECD industrial economies.
  • Topic: Economics, International Trade and Finance
  • Political Geography: Africa, China, India, Asia, South Africa, Brazil, South America
  • Author: Dominique van der Mensbrugghe, Maurizio Bussolo, Rafael E. De Hoyos, Denis Medvedev
  • Publication Date: 03-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Over the past 20 years, aggregate measures of global inequality have changed little even if significant structural changes have been observed. High growth rates of China and India lifted millions out of poverty, while the stagnation in many African countries caused them to fall behind. Using the World Bank's LINKAGE global general equilibrium model and the newly developed Global Income Distribution Dynamics (GIDD) tool, this paper assesses the distribution and poverty effects of a scenario where these trends continue in the future. Even by anticipating a deceleration, growth in China and India is a key force behind the expected convergence of per capita incomes at the global level. Millions of Chinese and Indian consumers will enter into a rapidly emerging global middle class—a group of people who can afford, and demand access to, the standards of living previously reserved mainly for the residents of developed countries. Notwithstanding these positive developments, fast growth is often characterized by high urbanization and growing demand for skills, both of which result in a widening of income distribution within countries. These opposing distributional effects highlight the importance of analysing global disparities by taking into account—as the GIDD does—income dynamics between and within countries.
  • Topic: Development, Economics, Poverty
  • Political Geography: Africa, China, India, Asia
  • Author: Mark McGillivray, Wim Naudé, Stephanié Rossouw
  • Publication Date: 05-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: A small but growing literature has been concerned about the economic (and environmental) vulnerability on the level of countries. Less attention is paid to the economic vulnerability of different regions within countries. By focusing on the vulnerability of subnational regions, our paper contributes to the small literature on the 'vulnerability of place'. We see the vulnerability of place as being due to vulnerability in various domains, such as economic vulnerability, vulnerability of environment, and governance, demographic and health fragilities. We use a subnational dataset on 354 magisterial districts from South Africa, recognize the potential relevance of measuring vulnerability on a subnational level, and construct a local vulnerability index (LVI) for the various districts. We condition this index on district per capita income and term this a vulnerability intervention index (VII) interpreting this as an indicator of where higher income per capita, often seen in the literature as a measure of resilience, will in itself be unlikely to reduce vulnerability.
  • Topic: Security, Demographics, Development, Economics
  • Political Geography: Africa, South Africa
  • Author: Mina Baliamoune-Lutz
  • Publication Date: 09-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Using a vector error-correction model, I explore the short-run dynamics and long-run linkages between financial reform and the mobilization of domestic saving in Morocco. In the short run, financial depth (volume of intermediation) is shown to have a positive influence on private saving, while increases in real interest rates have a negative impact. The effectiveness of financial intermediation does not seem to have a direct effect on saving but has a significant influence on the volume of intermediation. In the long run, savings have a stable relationship with financial reform but the influence of interest rates remains negative, implying that the income effect dominates in the long run as well.
  • Topic: Development, Economics
  • Political Geography: Africa, Morocco
  • Author: Machiko Nissanke, Ernest Aryeetey
  • Publication Date: 08-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The paper examines the source of financial market fragmentation in sub-Saharan Africa in the framework of institutional economics. Based on fieldwork data from Ghana, Malawi, Nigeria, and Tanzania, it analyses financial risk management, the transaction costs for loan screening and monitoring, and contract enforcement. It shows how, faced with various institutional constraints, the range of clientele selected by formal and informal lenders becomes both narrow and at the extreme market-ends. It evaluates the prevailing state of managing risks for market structure, and binding institutional constraints for market transformation and deepening in sub-Saharan Africa.
  • Topic: Development, Economics, Markets
  • Political Geography: Africa, Tanzania, Nigeria, Ghana, Malawi
  • Author: Julius Kiiza
  • Publication Date: 07-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper examines the relationship between institution building and economic performance in Mauritius, Botswana and Uganda. The rationale for comparing these cases is simple. While the three have been super-economic stars in their own right, they have achieved substantially different outcomes. Mauritius has achieved Asia-type rapid growth, backed by the structural transformation of the economy from colonial commodity production (sugar) to postcolonial higher value-added industrial and information outcomes. Botswana has delivered rapid and sustained growth with no structural economic transformation. Uganda has attained rapid growth for a shorter postcolonial period (since 1992) and with no structural transformation. This paper contends that these cross-national differences largely arise from the presence of developmental nationalism plus Weberian bureaucracies in Mauritius and Botswana, and their absence in Uganda.
  • Topic: Development, Economics, Nationalism
  • Political Geography: Uganda, Africa, Mauritius, Botswana
  • Author: Hyun H. Son, Nanak Kakwani
  • Publication Date: 05-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper suggests how the targeting efficiency of government programmes may be better assessed. Using the 'pro-poor policy' (PPP) index developed by authors, the study investigates the pro-poorness of not only government programmes geared to the poorest segment of the population, but also basic service delivery in education, health and infrastructure. This paper also shows that the targeting efficiency for a particular socioeconomic group should be judged on the basis of a 'total-group PPP index', to capture the impact of operating a programme within the group. Using micro-unit data from household surveys, the paper presents a comparative analysis for Thailand, Russia, Vietnam and 15 African countries.
  • Topic: International Relations, Economics, Government, Poverty
  • Political Geography: Africa, Russia, Vietnam, Thailand
  • Author: Alemayehu Geda, Daniel Zerfu, Abebe Shimeles
  • Publication Date: 05-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: In this paper, using the rich household panel data of urban and rural Ethiopia that covers the period from 1994 to 2000, we attempted to establish the link between finance and poverty in Ethiopia. Our results show that access to finance is an important factor in consumption smoothing and hence poverty reduction. We also found evidence for a poverty trap due to liquidity constraints that limits the ability of the rural households from consumption smoothing. The empirical findings from this study could inform finance policies aimed at addressing issues of poverty reduction.
  • Topic: Development, Economics, Poverty
  • Political Geography: Africa, Ethiopia
  • Author: Stephen Klasen, David Lawson, Sudharshan Canagarajah, Mark Blackden
  • Publication Date: 04-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The study suggests that gender inequality acts as a significant constraint to growth in sub-Saharan Africa, and that removing gender-based barriers to growth will make a substantial contribution to realizing Africa's economic potential. In particular we highlight gender gaps in education, related high fertility levels, gender gaps in formal sector employment, and gender gaps in access to assets and inputs in agricultural production as particular barriers reducing the ability of women to contribute to economic growth. By identifying some of the key factors that determine the ways in which men and women contribute to, and benefit (or lose) from, growth in Africa, we argue that looking at such issues through a gender lens is an essential step in identifying how policy can be shaped in a way that is explicitly gender-inclusive and beneficial to growth and the poor. We also argue that in some dimensions and channels of the gender-growth nexus, the evidence is only suggestive and needs further detailed research and analysis. Investigations of the linkage between gender inequality and growth should therefore be a priority for development economics research in coming years.
  • Topic: Development, Economics, Gender Issues
  • Political Geography: Africa
  • Author: Ayodele Odusola
  • Publication Date: 01-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Nigeria is governed by a federal system, hence its fiscal operations also adhere to the same principle, a fact which has serious implications on how the tax system is managed. The country's tax system is lopsided, and dominated by oil revenue. It is also characterized by unnecessarily complex, distortionary and largely inequitable taxation laws that have limited application in the informal sector that dominates the economy. The primary objective of this paper is to prepare a case study on tax policy reforms in Nigeria, with the specific objectives of examining the main tax reforms in the country; highlighting tax revenue profile and composition; analysing possible distributional impacts on the poor; discussing major problems that could prevent effective tax implementation in the country; and offering suggestions for reforms.
  • Topic: Development, Economics, International Trade and Finance
  • Political Geography: Africa, Nigeria
  • Author: Peter Quartey
  • Publication Date: 12-2005
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The paper primarily investigates the interrelationship between financial sector development and poverty reduction in Ghana. This is done using time-series data from the World Development Indicators from 1970-2001. The main findings are, first, that even though financial sector development does not Granger-cause savings mobilization in Ghana, it induces poverty reduction; and second, that savings do Granger-cause poverty reduction in Ghana. Also, the effect of financial sector development on poverty reduction is positive but insignificant. This is due to the fact that financial intermediaries in Ghana have not adequately channelled savings to the pro-poor sectors of the economy because of government deficit financing, high default rate, lack of collateral and lack of proper business proposals. Another interesting finding is that there is a long-run co integration relationship between financial sector development and poverty reduction.
  • Topic: Development, Economics, Poverty
  • Political Geography: Africa, Ghana
  • Author: Stephen Njuguna Karingi, Bernadette Wanjal
  • Publication Date: 12-2005
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: In evaluating tax reform in the developing countries, one first needs to determine what is the unique role of the tax system in each particular country. One of the key reasons for undertaking tax reforms in Kenya was to ad dress issues of in equality and to create a sustainable tax system that could generate adequate revenue to finance public expenditures. In this respect, the tax modernization programme introduced in the country was to achieve a tax system that was sustainable in the face of changing conditions domestically and internationally. Policy was shifted towards greater reliance on indirect taxes as opposed to direct taxes. Consumption taxes were seen to be more favourable to investments and hence growth. Trade taxes, instead of being used for protection or revenue-maximization purposes, were viewed more as instruments to foster export-led industrialization. Trade taxes were therefore used to create a competitive exports sector rather than protect the import-competing manufacturing sector, as had been done in the past.
  • Topic: International Relations, Development, Economics
  • Political Geography: Kenya, Africa
  • Author: Peter Quartey, Robert Darko Osei
  • Publication Date: 12-2005
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Ghana's tax reforms constitute the major policy instrument needed to accelerate growth and poverty reduction. Over the past two decades, the government has consistently spent more revenue than it is able to generate and the gap is often financed with foreign aid which has perpetuated the country's aid dependency. Two options can be explored to reduce the gap between government revenue and expenditure; generate more revenue or reduce government expenditure. Although the latter sounds reasonable, the government needs to spend more on key sectors like education, health and infrastructure if the country is to significantly reduce poverty. The critical issue has been how to generate the needed resources domestically, using tax instruments that are least harmful to the poor. This will obviously involve reforming the tax system to ensure efficiency by widening the tax net without necessarily increasing the tax rate. This paper provides an assessment of the changing structure of the tax system in Ghana over the last two decades and suggests ways to improve tax administration in the country.
  • Topic: International Relations, Development, Economics
  • Political Geography: Africa, Ghana
  • Author: Alemayehu Geda, Abebe Shimeles
  • Publication Date: 12-2005
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: In 1991 the Ethiopian Revolution Democratic Front (EPRDF) toppled the old 'socialist' regime that had ruled the country for seventeen years. In contrast to the previous policy regime of hard control, EPRDF initiated a wide range of reforms that covered not only the tax system but also the exchange rate, interest rates, trade, domestic production and distribution. This pa per attempts to explore the contribution of the tax reform, the change s in its structure and institutional reform in order to understand its role in raising revenue.
  • Topic: Democratization, Economics, Government
  • Political Geography: Africa, Ethiopia
  • Author: Robert Osei, Oliver Morrissey, Tim Lloyd
  • Publication Date: 09-2005
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: An important feature of aid to developing countries is that it is given to the government. As a result, aid should be expected to affect fiscal behaviour, although theory and existing evidence is ambiguous regarding the nature of these effects. This paper applies techniques developed in the 'macroeconometrics' literature to estimate the dynamic linkages between aid and fiscal aggregates. Vector autoregressive methods are applied to 34 years of annual data in Ghana to model the effect of aid on fiscal behaviour. Results suggest that aid to Ghana has been associated with reduced domestic borrowing and increased tax effort, combining to increase public spending. This constructive use of aid to maintain fiscal balance is evident since the mid-1980s, following Ghana's structural adjustment programme. The pa per provides evidence that aid has been associated with improved fiscal performance in Ghana, implying that the aid has been used sensibly (at least in fiscal terms).
  • Topic: Development, Economics, Government
  • Political Geography: Africa, Ghana
  • Author: Oliver Morrissey, Karuna Gomanee, Sourafel Girma
  • Publication Date: 09-2005
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper is a contribution to the literature on aid and growth. Despite an extensive empirical literature in this area, existing studies have not addressed directly the mechanisms via which aid should affect growth. We identify investment as the most significant transmission mechanism, and also consider effects through financing imports and government consumption spending. With the use of residual generated regressors, we achieve a measure of the total effect of aid on growth, accounting for the effect via investment. Pooled panel results for a sample of 25 Sub-Saharan African countries over the period 1970 to 1997 point to a significant positive effect of foreign aid on growth, ceteris paribus. On average, each one percentage point increase in the aid/GNP ratio contributes one-quarter of one percentage point to the growth rate. Africa's poor growth record should not therefore be attributed to aid ineffectiveness.
  • Topic: International Relations, Development, Economics
  • Political Geography: Africa
  • Author: Peter Quartey
  • Publication Date: 09-2005
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: There has been significant amount of aid inflow s to developing countries including Ghana, but these have been very volatile. Aid flows have been associated with low domestic resource mobilization and have reduced Ghana to a country heavily dependent on aid. The amount of official development assistance (ODA) inflow s has fallen in recent years and has become unpredictable. It is general knowledge that aid has not yielded the desired benefit. In an attempt to improve aid effectiveness donors have used tie d aid not just to promote commercial interests but also to target aid to particular projects that have direct links with poverty. However, this has not yielded the maximum benefits required. Recently, the government of Ghana and its development partners agreed on an aid package dubbed the multi-donor budgetary support (MDBS), which would ensure continuous flow of aid to finance the government's poverty related expenditures.
  • Topic: International Relations, Development, Economics
  • Political Geography: Africa, Ghana
  • Author: Justine Nannyonjo
  • Publication Date: 08-2005
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The long-running conflict in northern Uganda has led to major violations of human rights against civilians, destruction of infrastructure, reduced access to social services, and paralysed economic activity. Creating peace and fostering reconciliation in the region have not been successful either, thereby hindering development and relief activities, which are further constrained by in sufficient funding, and lack of capacity at the district and community levels. The main challenges for reconstruction in northern Uganda are therefore to: (i) achieve peace and reconciliation (ii) provide basic social services to the affected areas (iii) strengthen government capacity to coordinate development and relief activities and (iv) harmonize interventions by the various stakeholders to achieve increased flexibility and transparency.
  • Topic: Conflict Resolution, Economics, Poverty
  • Political Geography: Uganda, Africa
  • Author: Léonce Ndikumana
  • Publication Date: 08-2005
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper examines the causes of conflict in Burundi and discusses strategies for building peace. The analysis of the complex relationships between distribution and group dynamics reveals that these relationships are reciprocal, implying that distribution and group dynamics are endogenous. The nature of endogenously generated group dynamics determines the type of preferences (altruistic or exclusionist), which in turn determines the type of allocative institutions and policies that prevail in the political and economic system. While unequal distribution of resources may be socially inefficient, it nonetheless can be rational from the perspective of the ruling elite, especially because inequality perpetuates dominance. However, as the unequal distribution of resources generates conflict, maintaining a system based on inequality is difficult because it requires ever increasing investments in repression. It is therefore clear that if the new Burundian leadership is serious about building peace, it must engineer institutions that uproot the legacy of discrimination and promote equal opportunity for social mobility for all members of ethnic groups and regions.
  • Topic: Conflict Resolution, Economics, Peace Studies
  • Political Geography: Africa, Burundi
  • Author: B. Oluwatayo
  • Publication Date: 09-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper examines the impact of income risk on the level of well-being of rural households in Nigeria. While income risk is defined as the risks associated with variability in income well-being is defined in terms of the level of utility reached by a given individual. This level is a function of goods and services that the individual consumes. The study is based on primary data collected from a sample of 285 households in Ekiti State, Nigeria. Analysis of the data revealed that household heads' age, years of formal education, household size, size of land cultivated and total expenditure (on food and non-food items) are major determinants of income risks among households in the study area. Also, going by the indices of various social indicators of well-being considered, it was revealed that income risk impacts negatively on the well-being of households in the study area.
  • Topic: Demographics, Economics, Human Welfare
  • Political Geography: Africa, Nigeria
  • Author: Abebe Shimeles, Arne Bigsten
  • Publication Date: 07-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper examines trends in income distribution and its linkages to economic growth and poverty reduction in order to understand the prospects for achieving poverty reduction in Africa. We examine the levels and trends in income distribution in some African countries and calculate pro-poor growth indices. Different growth patterns are simulated for Ethiopia, Uganda, Mozambique, and South Africa. We conclude that the balance between policies aimed at growth and measures aimed at redistribution should depend on the elasticity of the growth-equity tradeoff. We also discuss what the appropriate ingredients of a pro-poor strategy would be in the African setting.
  • Topic: Economics, Human Welfare, Poverty
  • Political Geography: Uganda, Africa, South Africa, Mozambique, Ethiopia
  • Author: Abebe Shimeles, Arne Bigsten
  • Publication Date: 06-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper addresses issues related to the dynamics of income poverty using unique household panel data for urban and rural areas of Ethiopia covering the period 1994-97. The percentage of households that remained in poverty was twice as large in urban areas as in rural areas. This suggests that income variability is a serious problem in rural areas, while the persistence is a key feature of urban poverty. The paper also discusses household characteristics that are correlated with the incidence of chronic poverty as well as vulnerability to poverty. A strategy that promotes consumption smoothing through say access to credit can work well in rural areas, while income or employment generation are required for poverty alleviation in urban areas.
  • Topic: Economics, Human Welfare, Poverty
  • Political Geography: Africa, Ethiopia
  • Author: Mozaffar Qizilbash
  • Publication Date: 06-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: It is often argued that multi-dimensional measures of well-being and poverty—such as those based on the capability approach and related views—are ad hoc. Rankings based on them are not, for this reason, robust to changes in the selection of weights used. In this paper, it is argued that the extent of potential arbitrariness and the range of issues relating to robustness have been underestimated in this context. Several issues relating to both the identification of the poor and the use of dimension-specific data are distinguished. These issues are then discussed in the context of the inter-provincial ranking of poverty in South Africa in 1995-6. It turns out that this ranking is fairly robust, and that some important policy-relevant results about the distinction between 'income'/'expenditure' and 'human' poverty for the South African context are reinforced rather than undermined by checking for robustness. In particular, while KwaZulu Natal is in the best three in terms of the standard expenditure measures for various choices of poverty line, it is third worst in terms of all the multi-dimensional rankings presented here.
  • Topic: Economics, Human Welfare, Poverty
  • Political Geography: Africa, South Africa
  • Author: Michael Grimm
  • Publication Date: 05-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: I use a dynamic microsimulation model to analyse the distributional effects of an expansion of education in Côte d'Ivoire in the medium and long term. The simulations are performed in order to replicate several policies in force or subject to debate in this country. Various hypotheses concerning the evolution of returns to education and labour demand are tested. The direct effects between education and income as well as the different transmission channels, such as occupational choices, fertility, and household composition, are analysed. The effects of educational expansion on the growth of household incomes, their distribution and poverty depend very crucially on the hypothesis made on the evolution of returns to education and labour demand. If returns to education remain constant and the labour market segmented, the effects will be very modest.
  • Topic: Economics, Education, Human Welfare
  • Political Geography: Africa
  • Author: David Fielding, Kevin Lee, Kalvinder Shields
  • Publication Date: 03-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: In this paper we fit a VECM in output and prices to data from ten countries of the CFA Franc Zone. This model allows for various cross-country interactions in both the short run and the long run. The VECM parameters are used to estimate persistence profiles of different kinds, in order to identify the degree of homogeneity in the way in which the countries respond to macroeconomic shocks. In this way we can shed light on questions about the likely size of the costs incurred from these countries' membership of a monetary union.
  • Topic: Economics, International Organization, International Political Economy, International Trade and Finance
  • Political Geography: Africa
  • Author: Anja Shortland, David Stasavage
  • Publication Date: 02-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper examines to what extent the central bank for the West African Economic and Monetary Union (BCEAO) has used interest rate policy in response to domestic economic developments. We show that while in the long run the BCEAO matches changes in French (Eurozone) interest rates one for one, in the short run it retains freedom to react to domestic economic variables, such as inflation, the output gap, its foreign exchange position and government borrowing.
  • Topic: Economics, International Organization, International Political Economy, International Trade and Finance
  • Political Geography: Africa, France, West Africa
  • Author: Jean-Paul Azam
  • Publication Date: 02-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper brings out that poverty increased massively in the wake of the 1994 devaluation of the CFA franc, despite a significant recovery of economic growth. Although this increase affected all the social groups, it fell mostly on the urban poor. An analytical model is presented, which explains this puzzle by the stratification of the labour market, assuming that the formal sector workers are at the same time the investors in the informal sector. Then, capital intensity in the latter increases as the former anticipate the cut in formal sector wages that the long-awaited devaluation brings about. Ex post, they run down their assets for consumption-smoothing purposes, thus de-capitalizing the informal sector firms, with a negative impact on incomes in the (urban) informal sector.
  • Topic: Economics, International Organization, International Political Economy, International Trade and Finance
  • Political Geography: Africa
  • Author: David Fielding, Kalvinder Shields
  • Publication Date: 02-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: In this paper we use data from 17 African nations in order to investigate the hypothesis that monetary union – represented in this case by the CFA Franc Zone – augments the extent of macroeconomic integration. The paper covers a number of dimensions of integration including the volume of bilateral trade, real exchange rate volatility and the magnitude of cross-country business cycle correlation.
  • Topic: Economics, International Organization, International Political Economy, International Trade and Finance
  • Political Geography: Africa
  • Author: Anja Shortland, David Stasavage
  • Publication Date: 02-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper examines whether the BCEAO has made use of the various policy instruments at its disposal for steering credit in the individual CFA zone member countries to complement interest rate policy at the zone level. We estimate whether private sector credit has responded systematically to different monetary policy variables using iterated 3-stage least squares regressions for Burkina Faso, Côte d'Ivoire, Mali, Senegal and Togo. If we constrain the coefficient estimates there is some support for the hypothesis that the BCEAO has contracted private sector credit in response to a higher inflation differential with France. However, there seems to be no policy rule to restrict private sector credit in response to increasing government borrowing from the central bank or increased foreign borrowing. If the coefficient estimates are unconstrained, there does not appear to be any systematic policy to control credit expansion at the domestic level.
  • Topic: Economics, International Organization, International Political Economy, International Trade and Finance
  • Political Geography: Africa, France
  • Author: Mireille Linjouom
  • Publication Date: 02-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The paper determines an analytical framework defining the choice of an optimal exchange rate regime for a typical CFA country. The policymakers behave strategically to decide to adopt alternative exchange rate regime by minimizing their loss function under specific constraints like economic characteristics and political consideration. One concludes a CFA economy with less inflationary propensity and greater external shocks volatility will tend to select a flexible exchange rate regime. Moreover, the model suggests that a CFA country with a more unstable political system and a higher propensity to apply inflationary policies will prefer a flexible arrangement than a fixed one.
  • Topic: Economics, International Organization, International Political Economy, International Trade and Finance
  • Political Geography: Africa
  • Author: Simeon Coleman
  • Publication Date: 02-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper investigates the impacts and responses of macroeconomic shocks in some domestic economies in Sub-Saharan Africa over the period 1961-99; more specifically, it seeks to answer the question of whether there are any systematic differences in the responses of the CFA franc zones and the non-CFA franc zone countries to macroeconomic shocks. Based on the Blanchard-Quah methodology, we identify shocks to the changes in real exchange rate and output using a structural VAR (SVAR) model for these small open economies. Our finding that the real exchange rate innovations in the CFA franc zones are largely independent of domestic variables suggests that external influence is more important in the CFA zones. There is also some evidence that money demand shocks are more significant in the non-CFA franc zone countries.
  • Topic: Economics, International Political Economy, International Trade and Finance
  • Political Geography: Africa
  • Author: W.F. Krugell, W.A. Naudé
  • Publication Date: 01-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: South Africa is characterized by significant inequality in spatial economic activity. Whether future growth and development on a subnational level in South Africa will be such as to reduce this inequality may depend on the economic growth and development of South Africa's largest cities. Our local economic growth empirics show some indications of conditional convergence in output between poorer towns as well as overall between all cities and towns. Between 1990 and 2000 some limited sigma convergence was found but this was driven by declines in the standard deviation of per capita income amongst the poorest quintile of towns. An estimate of conditional beta convergence of 1.2 percent over the period 1990-2000 confirms that overall convergence has been taking place. From an estimation of the determinants of economic growth on a local level, using a dataset on 353 local areas in South Africa between 1990-2000 we found the most significant determinants to be stocks of human capital and distance from harbours and markets. The effect of human capital on economic growth was strongly associated with the presence of large cities, as one would predict from endogenous growth theory.
  • Topic: Demographics, Development, Economics
  • Political Geography: Africa, South Africa
  • Author: Mattia Romani
  • Publication Date: 01-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: There is increasing evidence to suggest that a fundamental source of information for farmers on how to access and use new agricultural technologies comes from interacting with neighbours. Economic research on adoption of innovations in a rural context has only partially addressed the issue of how the social structure of a village can affect adoption and the final impact on productivity of farmers. This paper investigates the role of proximity interpreted not only in geographical terms but also along the line of ethnic similarities among neighbours (what we define as 'social proximity'). We use a panel dataset collected in Côte d'Ivoire to define the probability of accessing the knowledge network. The main results indicate that farmers from ethnic minorities are less likely to access, and benefit less from, extension services. But they seem to try to re-equalize their condition by putting more effort than dominant ethnic group neighbours in sharing information among themselves.
  • Topic: Agriculture, Demographics, Economics, Human Welfare
  • Political Geography: Africa
  • Author: Michael Bleaney, Akira Nishiyama
  • Publication Date: 01-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The causes of the slow growth of CFA countries are investigated. There is little difference in this respect between the CFA and other sub-Saharan African countries. Since 1970, GDP growth in the CFA countries has shown no significant trend but one or two medium-term fluctuations (positive in 1979-83 and negative in 1989-93). Internationally, the income share of the poorest 20 per cent of the population of any country has improved most in poor countries, and there is no evidence that this does not apply to CFA countries also.
  • Topic: Economics, Human Welfare, International Political Economy, International Trade and Finance
  • Political Geography: Africa
  • Author: David Fielding
  • Publication Date: 01-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The West African Economic and Monetary Union (UEMOA) has a history of monetary stability and low inflation. Nevertheless, there is substantial variation in relative prices within some UEMOA countries, in particular in the price of food relative to other elements of the retail price index (IHPC). Using monthly time-series data for cities within the region, we analyze the impact of changes in monetary policy instruments on the relative prices of components of the IHPC. We are then able to explore how the burden of monetary policy innovations is likely to be shared between the rich and poor.
  • Topic: Economics, Human Welfare, International Political Economy, International Trade and Finance
  • Political Geography: Africa
  • Author: George Mavrotas
  • Publication Date: 12-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The paper uses an aid disaggregation approach to examine the impact of different types of aid on the fiscal sector of the aid-recipient country. It uses time-series data on different types of aid (project aid, programme aid, technical assistance and food aid) for Uganda, an important aid recipient in recent years, to estimate a model of fiscal response in the presence of aid which combines aid disaggregation and endogenous aid. The empirical findings clearly suggest the importance of the above approach for delving deeper into aid effectiveness issues since different aid categories have different effects on key fiscal variables—an impact that could not be revealed if a single figure for aid was employed. More precisely, project aid and food aid appear to cause a reduction in public investment whereas programme aid and technical assistance are positively related to public investment. The same applies for government consumption. A negligible impact on government tax and non-tax revenues, and a strong displacement of government borrowing are also found.
  • Topic: Economics, International Trade and Finance, Poverty
  • Political Geography: Uganda, Africa
  • Author: Luc Christiaensen, Lionel Demery, Stefano Paternostro
  • Publication Date: 09-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This study traces the interactions between economic growth, income inequality and consumption poverty in a sample of African countries during the 1990s. It draws on the much-improved household data sets now available in the region. It finds that experiences have varied: some countries have seen sharp falls in income poverty; others have witnessed marked increases. Economic growth has been 'pro-poor' in that the incomes of poor households have typically grown at similar or faster rates than average income. But the aggregate numbers hide significant and systematic distributional effects which have caused some groups and regions to be left behind. The paper explores the contours of these effects, and draws three key conclusions. First, agricultural market liberalization has been conducive to reductions in rural poverty. Second, market connectedness is crucial for poor producers to take advantage of the opportunities offered by economic growth. Some regions and households by virtue of their sheer remoteness have been left behind when growth picks up. The availability of infrastructure (especially roads) and proximity to markets are crucial. And finally risks, such as rainfall variations and ill health are found to have profound effects on poverty outcomes, underscoring the significance of social protection in poverty reduction strategies in Africa.
  • Topic: Economics, Poverty
  • Political Geography: Africa
  • Author: Oliver Morrissey, Dirk Willem te Velde
  • Publication Date: 09-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper uses data on individual earnings in manufacturing industry for five African countries in the early 1990s to test whether firms located in the capital city pay higher wages than firms located elsewhere, and whether such benefits accrue to all or only certain types of workers. Earnings equations are estimated that take into account worker characteristics (education and tenure) and relevant firm characteristics (notably size and whether foreign owned). Any location effect identified is therefore additional to appropriate control variables. There are two main findings. First, we find evidence of a 'pure capital city premium' equivalent to between 12 per cent and 28 per cent of nominal average earnings in the five countries. In some countries this location premium exceeds plausible consumer price differentials, between the capital and other urban areas. This does suggest that real (purchasing power) manufacturing wages are higher in the capital city (although this real premium is no more than ten per cent). Second, we find that skilled workers earn a higher wage premium in the capital city than those less skilled. However, this is not because of location effects on earnings per se, but rather because of other firm characteristics of firms located in the capital city, such as size and foreign ownership. This suggests that spatial inequality in itself does not directly contribute to skilled–less-skilled wage differentials.
  • Topic: Economics, Industrial Policy
  • Political Geography: Africa
  • Author: Chris Elbers, Peter Lanjouw, Johan Mistiaen, Berk Ozler, Ken Simler
  • Publication Date: 07-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Based on a statistical procedure that combines household survey data with population census data, this paper presents estimates of inequality for three developing countries at a level of disaggregation far below that allowed by household surveys alone. We show that while the share of within-community inequality in overall inequality is high, this does not necessarily imply that all communities in a given country are as unequal as the country as a whole. In fact, in all three countries there is considerable variation in inequality across communities. We also show that economic inequality is strongly correlated with geography, even after controlling for basic demographic and economic conditions.
  • Topic: Development, Economics
  • Political Geography: Africa, South America
  • Author: Jon D. Haveman, Howard J. Shatz
  • Publication Date: 06-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The Doha Ministerial Declaration emphasized that priority should be given to improving market access for products originating in the Least Developed Countries (LDCs). In this paper, we analyze the importance of this proposition with respect to market access in the Triad economies. We first present a brief history of non-reciprocal preferences granted by the Triad. This covers Generalized System of Preference (GSP) programmes in each, and further preferences granted to African, Caribbean and Pacific countries by the EU and preferences granted to Caribbean Basin, Andean, and African countries by the US. This history is followed by an assessment of trade generated by these preferences in the year 2000, and of the extent to which LDC exports might be expected to increase should the preferences be made comprehensive. Preferences in 2000 are shown to have led to an increase of US$3.5 billion in LDC exports, while a complete duty-free treatment could expand LDC exports by as much as US$7.6 billion, 90 per cent of which will be absorbed by the US. As this represents a doubling of LDC exports to these countries, we interpret these results as an endorsement of this priority in the Doha Round of negotiations.
  • Topic: Development, Economics, International Trade and Finance
  • Political Geography: Africa, United States, Caribbean
  • Author: Mark McGillivray, Bazoumana Ouattara
  • Publication Date: 04-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper examines the impact of foreign aid on public sector fiscal behaviour in Côte d'Ivoire. A special interest is the relationship between aid, debt servicing and debt, given that Côte d'Ivoire is a highly indebted country. The theoretical model employed differs from those of previous studies by highlighting the interaction between debt servicing and the other fiscal variables. This model is estimated using 1975–99 time series data. Key findings are that the bulk of aid is allocated to debt servicing and that aid is associated with increases in the level of public debt.
  • Topic: Debt, Development, Economics, International Trade and Finance
  • Political Geography: Africa
  • Author: Kym Anderson
  • Publication Date: 03-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper offers an economic assessment of the opportunities and challenges provided by the WTO's Doha Development Agenda, particularly through agricultural trade liberalization, for low-income countries seeking to trade their way out of poverty. After discussing links between poverty, economic growth and trade, it reports modelling results showing that farm product markets remain the most costly of all goods market distortions in world trade. It focuses on what such reform might mean for countries of South Asia and sub-Saharan Africa in particular, both without and with their involvement in the MTN reform process. What becomes clear is that if those countries want to maximize their benefits from the Doha round, they need also to free up their own domestic product and factor markets so their farmers are better able to take advantage of new market-opening opportunities abroad. Other concerns of low-income countries about farm trade reform also are addressed: whether there would be losses associated with tariff preference erosion, whether food-importing countries would suffer from higher food prices in international markets, whether China's WTO accession will provide an example of trade reform aggravating poverty via cuts to prices received by Chinese farmers, and the impact on food security and poverty alleviation. The paper concludes with lessons of relevance for low-income countries for their own domestic and trade policies.
  • Topic: Agriculture, Economics, Emerging Markets, International Trade and Finance, Poverty
  • Political Geography: Africa, China
  • Author: George Mavrotas, Bazoumana Ouattara
  • Publication Date: 02-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The present paper examines the impact of different aid types, namely project aid, programme aid, technical assistance and food aid on the fiscal sector of the aid-recipient economy by using time-series data for Côte d'Ivoire over the period 1975–99. Empirical results obtained by estimating correctly the solution of the theoretical model show that when a single value (or aggregated) for aid is used, foreign aid is fully consumed in the case of Côte d'Ivoire. However, results obtained under the assumption of aid heterogeneity clearly suggest that the government responds differently according to the nature of the aid inflows. Our approach sheds plenty of light on how the aid-recipient government reacts to different categories of foreign aid inflows and the empirical findings clearly demonstrate the importance of the aid disaggregation approach for delving deeper into aid effectiveness issues.
  • Topic: Development, Economics, Emerging Markets, Non-Governmental Organization
  • Political Geography: Africa
  • Author: George Mavrotas, Samuel Manzele Maimbo
  • Publication Date: 02-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The paper explores the relationship between financial sector reforms and savings mobilization in Zambia. Although there exists an extensive literature on financial sector development and savings levels in developing countries, there does not seem to exist satisfactory work on the above nexus for sub-Saharan African countries, particularly Zambia. Along these lines, the paper examines the linkages between the financial reforms of the early 1990s and savings mobilization. It considers the characteristics of banks and non-bank financial institutions, especially micro finance institutions, and savings levels and identifies problems associated with the relatively poor performance of savings in recent years and concludes with a set of policy guidelines for strengthening savings mobilization, highlighting the expected effect on povertyreducing growth.
  • Topic: Development, Economics, Emerging Markets, International Trade and Finance
  • Political Geography: Africa, Nordic Nations
  • Author: George Mavrotas, Roger Kelly
  • Publication Date: 02-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The paper uses different measures of financial sector development for a dynamic heterogeneous panel of 17 African countries to examine the impact of financial sector development on private savings. An innovative econometric methodology is also employed related to a series of cointegration tests within a panel. This is an important contribution since traditional panel data analysis adopted in previous studies suffers from serious heterogeneity bias problems. The empirical results obtained vary considerably among countries in the panel, thus highlighting the importance of using different measures of financial sector development rather than a single indicator. The evidence is rather inconclusive, although in most of the countries in the sample a positive relationship between financial sector development and private savings seems to hold. The empirical analysis also suggests that a change in government savings is offset by an opposite change in private savings in most of the countries in the panel, thus confirming the Ricardian equivalence hypothesis. Liquidity constraints do not seem to play a vital role in most of the African countries in the group, since the relevant coefficient is negative and significant in only a small group of countries
  • Topic: Development, Economics, Emerging Markets, Poverty
  • Political Geography: Africa
  • Author: Clas Wihlborg
  • Publication Date: 02-2002
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Insolvency and debt recovery procedures are as crucial to a well-performing financial sector as credit provision itself. They are even more important in Africa, where attempts are underway to create fully-fledged financial markets. For the financial system to be credible, creditors must be ensured that lenders will meet their obligations and that cases against them will be brought to closure. A good legal framework for insolvency also ensures distressed firms a form of orderly exit, thereby enabling their owners to start afresh. However, institutions of this nature take time to take effect, and need to be supported politically and by reforms in other sectors of the economy.
  • Topic: Development, Economics, Government
  • Political Geography: Africa
  • Author: Steve Kayizzi-Mugerwa
  • Publication Date: 01-2002
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Although privatization has been a key feature of economic policy in Africa since the early 1990s its sequencing and intensity have varied from country to country, with donor leverage being an important determinant of the pace of implementation. However, although many privatization schemes were undertaken in response to donor demands for reduced government participation in business, the process soon achieved its own dynamics. The positive view of privatization suggests that it went ahead, in spite of domestic opposition, because politicians and bureaucrats perceived real benefits to themselves and their supporters. They could influence the sales to their own benefit, while, on the other hand, a more focused public sector improved service delivery.
  • Topic: Development, Economics, Government
  • Political Geography: Africa
  • Author: Youssoufou Congo
  • Publication Date: 01-2002
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This study tests the performance of microfinance institutions (MFIs) in Burkina Faso using indicators such as the sustainable interest rate and the subsidy dependence index. The results indicate that MFIs outreach performance remains very low compared with potential demand, and the factors responsible appear to be both the refusal of most MFIs to mobilize local savings and the high costs of supply of microfinancial services. The results also show that MFIs are not viable and sustainable. Their interest rates are kept low and do not allow them to cover all the costs. In addition, the results indicate that MFIs are dependent on subsidies. However, the oldest MFIs and/or institutions providing deposit services have the lowest subsidy dependence index. It is suggested that more attention should be placed on savings mobilization and ceilings on interest rates should be removed in order to allow MFIs to charge sustainable interest rates.
  • Topic: Development, Economics
  • Political Geography: Africa
  • Author: Tony Addison
  • Publication Date: 10-1998
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Reconstructing Africa's war damaged economies is an urgent task. This is especially so in a group of countries - Angola, Eritrea, Ethiopia, Guinea-Bissau, and Mozambique - which must also complete their economic and political transition from state socialism. Somalia, which shares their common history, must eventually be rebuilt. All of these countries must address their deep problems of underdevelopment and poverty. The challenges are therefore three-fold: to overcome underdevelopment, to make the transition from state socialism, and to reconstruct economies and societies.
  • Topic: Democratization, Development, Economics, Emerging Markets
  • Political Geography: Africa, Mozambique, Ethiopia, Somalia, Angola, Eritrea, Guinea-Bissau