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Begin New Search Topic Markets Content Type Working Paper Publishing Institution German Institute of Global and Area Studies

1. Credit-constrained in Risky Activities? The Determinants of the Capital Stocks of Micro and Small Firms in Western Africa

Author:
Jann Lay, Michael Grimm, and Simon Lange
Publication Date:
01-2012
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
Micro and small enterprises (MSEs) in developing countries are typically considered to be severely credit constrained. Additionally, high business risks may partly explain why the capital stocks of MSEs remain low. This article analyzes the determinants of the capital stocks of MSEs in poor economies focusing on credit constraints and risk. The analysis is based on a unique, albeit cross-sectional but backward-looking, micro data set on MSEs covering the economic capitals of seven West-African countries. The main result is that capital market imperfections indeed seem to explain an important part of the variation in capital stocks in the early lifetime of MSEs. Furthermore, the analyses show that risk plays a key role in capital accumulation. Risk-averse individuals seem to adjust their initially low capital stocks upwards when enterprises grow older. MSEs in risky activities owned by wealthy individuals even seem to over-invest when they start their business and subsequently adjust capital stocks downwards. As other firms simultaneously suffer from capital shortages, such behaviour may imply large inefficiencies.
Topic:
Development, Economics, International Trade and Finance, Markets, and Foreign Direct Investment
Political Geography:
West Africa

2. Chinese Commodity Imports in Ghana and Senegal: Demystifying Chinese Business Strength in Urban West Africa

Author:
Laurence Marfaing and Alena Thiel
Publication Date:
11-2011
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
Since the beginning of the twenty‐first century, Africa has seen the arrival of a new form of Chinese migration. Largely independent from big Chinese players, these “new entrepreneurial migrants” come to Africa not as workers in the highly prestigious state projects, but rather to follow their own economic interests. Engaging in business activities as diverse as petty manufacturing, printing, pharmaceutical and medical services, restaurants, beauty salons and last but not least, general trade, these independent Chinese migrants are often acknowledged for bringing affordable new commercial services and goods to low‐income households on the African continent. On the other hand, the high visibility of the Chinese entrepreneurial activities has also sparked anti‐Chinese sentiments among many African entrepreneurs.
Topic:
Economics, Imperialism, International Trade and Finance, and Markets
Political Geography:
Africa, China, and Ghana

3. Are the Chinese in Africa More Innovative than the Africans? Comparing Chinese and Nigerian Entrepreneurial Migrants' Cultures of Innovation

Author:
Dirk Kohnert
Publication Date:
07-2010
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
The remarkable influx of Chinese migrant entrepreneurs in West Africa has been met with growing resistance from established African entrepreneurs. Whether the former have a competitive edge over the latter because of distinctive sociocultural traits or whether the Chineseʹ s supposed effectiveness is just a characteristic feature of any trading diaspora is open to question. This comparative exploratory study of Chinese and Nigerian entrepreneurial migrants in Ghana and Benin provides initial answers to these questions. Apparently, the cultural stimuli for migrant drivers of change are not restricted to inherited value systems or religions, such as a Protestant ethic or Confucianism; rather, they are continually adapted and invented anew by transnational migration networks in a globalized world. There is no evidence of the supposed superiority of the innovative culture of Chinese entrepreneurial migrants versus that of African entrepreneurial migrants. Rather, there exist trading diasporas which have a generally enhanced innovative capacity vis‐à‐vis local entrepreneurs, regardless of the national culture in which they are embedded. In addition, the rivalry of Chinese and Nigerian migrant entrepreneurs in African markets does not necessarily lead to the often suspected cut‐throat competition. Often the actions of each group are complementary to those of the other. Under certain conditions they even contribute to poverty alleviation in the host country.
Topic:
Economics, Markets, and Migration
Political Geography:
Africa and China

4. Assets, Shocks, and Poverty Traps in Rural Mozambique

Author:
Lena Giesbert and Kati Schindler
Publication Date:
11-2010
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
Using a micro-level approach to poverty traps, this paper explores welfare dynamics among households in post-war rural Mozambique. Conceptually, the paper builds on an asset-based approach to poverty and tests empirically, with household panel data, for the existence of a poverty trap. Findings indicate that there is little differentiation in productive asset endowments over time and that rural households gravitate towards a single equilibrium, which is at a surprisingly low level. The analysis shows that shocks and household coping behavior help to explain the observed poverty dynamics. The single low-level equilibrium points to an overall development trap in the rural farm-based economy. This is attributed to the long-term impact of the civil war, which has consolidated unfavorable economic conditions in rural areas and limited new economic opportunities outside of the agricultural sector.
Topic:
Economics, Markets, and Poverty
Political Geography:
Africa

5. Asian Economic Integration and Cooperation: Challenges and Ways Forward for Pan-Asian Regionalism

Author:
Durgesh K. Rai
Publication Date:
11-2010
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
As the Asian economies have grown larger and become more complex, they have also be-come more integrated at both the regional and the subregional level. Yet although economic integration has increased, regionalism in the sense of economic cooperation at both the pan-Asian and subregional levels has lagged behind. Regionalism or economic cooperation in terms of bilateral or multilateral FTAs is a relatively new phenomenon, but one that has in-creased rapidly in recent years. However, the progress of Asian regionalism faces several challenges. Also, the increasing number of FTAs could lead to a "spaghetti-bowl effect" and reduce trade volume instead of increasing it. In addition to resolving the existing challenges, actors in the region need to convert some of the existing FTAs into a broader one that can serve as a hub for further integration. Given the potential economic gains and future eco-nomic dynamism of the region, this paper suggests the pursuit of the Comprehensive Economic Partnership in East Asia (CEPEA) rather than the East Asia Free Trade Area (EAFTA).
Topic:
Economics, Markets, and Regional Cooperation
Political Geography:
East Asia and Asia

6. Getting Off Lightly? The Impact of the International Financial Crisis on the Middle East and North Africa

Author:
Juliane Brach and Markus Loewe
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
The international financial crisis has hit the Middle East and North Africa (MENA), like other developing regions, unexpectedly, during a long phase of above-average growth. In contrast to other parts of the world, however, most MENA developing countries will able to get off lightly if the crisis does not last for too long. In Turkey and Israel, the region's more industrialized countries, different initial conditions apply and the situation is not comparable to the Arab MENA countries.
Topic:
Development, Economics, Emerging Markets, Markets, and Financial Crisis
Political Geography:
Middle East, Arabia, and North Africa

7. Oil-rent Boom in Iran?

Author:
Martin Beck
Publication Date:
10-2009
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
The present article aims to analyze the effects of high oil prices since 2003 on Iran. The theoretical basis of the analysis is the rentier state approach, the basic element of which is that rents are at the free disposal of the rentier. Empirically, the paper examines the issue areas of foreign policy, domestic policy and economic policy. After proving that the oil price—despite fluctuations—has constantly been at a high level in the first decade of the twenty‐first century, the discussion demonstrates that Iran has used the increased rent in‐come to support a populist policy. In terms of economic policy, the regime has pursued a redistributive strategy. The country's foreign policy, particularly the ostentatiously pursued atomic program, has been very expensive since it provoked sanctions whose costs were initially balanced only by high rent income. Yet, in his first term, Ahmadinejad failed to prepare Iran for the situation that has occurred as a result of the global financial crisis: the redistributive policy of the regime has meant that an oil price below US$70 or US$75 now constitutes a severe challenge for the Iranian state budget.
Topic:
Foreign Policy, Markets, Oil, and Financial Crisis
Political Geography:
Iran and Middle East

8. Handel, Hierarchien und Kooperation in der Globalisierung

Author:
Robert Kappel and Juliane Brach
Publication Date:
02-2009
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
In the course of globalization, the intensity of global interactions between nations, firms, and civil society actors has increased significantly and has led to the creation of transnational norm-building networks. These have an essential, but little-known influence on all aspects of life (business and work relationships, environment, security, law, trust, etc.). Their influence expands to nation-state and market relationships that are also subject to constant reorganization. Transnational networks are leading to a global civil society that is more and more independent of the nation-state. With this relative erosion of state domination, the standard economic perspective, which primarily focused on the nation-state, is eroding as well.
Topic:
International Relations, Security, Civil Society, Environment, Globalization, International Trade and Finance, and Markets

9. Upgrading in Agricultural Value Chains: The Case of Small Producers in Honduras

Author:
Ingrid Fromm
Publication Date:
12-2007
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
Local producers, in their interaction with local processors or exporters and international retailers have the possibility to acquire new skills and knowledge. The type of trust relationship and coordination pattern can determine how information flows and how firms upgrade. In addition, the implementation and compliance with standards provides opportunities for learning and acquiring skills and knowledge. Focusing on this kind of interactions, the study explains how local producers in Honduras engage in upgrading and whether this had an impact on the sales of those firms. The majority of the producers in the sample upgraded their products and internal processes. A limited number of producers engaged in functional upgrading. Most of the producers were aware of the important role of standards. They affirmed that in the process of implementing and complying with standards, they have gained new knowledge and were convinced that they succeeded in securing at better position in the value chain.
Topic:
Development, Economics, and Markets
Political Geography:
Central America

10. The Emergence of a New 'Socialist' Market Labour Regime in China

Author:
Gunter Schucher and Jutta Hebel
Publication Date:
12-2006
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
China's transition to a market economy has been a process of basic institutional changes and institution building. The institutional change from a socialist labour regime (SLR) as one of the backbones upholding the traditional leninist system to a new 'socialist' market labour regime (SMLR) became particularly important for the success of economic and political reforms. This analysis is based on the analytical framework of regimes and makes use of the idea of path dependence. An ensemble of institutions, mutually interconnected and influencing each other, forms the regime and shapes its trajectory. Six institutions are identified to constitute the employment regime: (1) the system of social control, (2) the production system, (3) the system of industrial relations, (4) the welfare system, (5) the family order, and (6) the educational system. The SMLR is still characterised by its socialist past and differs from other varieties of transformation labour regimes and bears little resemblance to labour regimes in Western market economies.
Topic:
Development, Economics, and Markets
Political Geography:
China and Asia

11. Economic Growth and Poverty: Does Formalisation of Informal Enterprises Matter?

Author:
Robert Kappel and Esther Ishengoma
Publication Date:
04-2006
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
The informal sector (IS) plays a significant role in developing countries viz. the provision of employment, income and supplying ignored markets. However, working and employment conditions within the sector are still poor. Its expansion and changing structures have thus drawn the attention of scholars and international policy makers to the factors hindering its formalisation. Among the factors addressed are the high costs of formalisation and the lack of incentives for operating in the formal sector. A variety of approaches have been adopted by different stakeholders to overcome these factors. This paper assesses these approaches along with the factors related to informality-formality trade-off and the issue of formalisation as a solution for firms' growth. By focussing on the problems faced by informal enterprises and the literature which addresses the options for accelerating the formalisation of informal enterprises, the paper will briefly summarise the weaknesses of these approaches.
Topic:
Economics, Markets, Politics, and Poverty

12. Context Matters - Rethinking the Resource Curse in Sub-Saharan Africa

Author:
Matthias Basedau
Publication Date:
06-2005
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
Natural resources in sub-Saharan Africa suffer from a bad reputation. Oil and diamonds, particularly, have been blamed for a number of Africa's illnesses such as poverty, corruption, dictatorship and war. This paper outlines the different areas and transmission channels of how this so-called “resource curse” is said to materialize. By assessing empirical evidence on sub-Saharan Africa it concludes that the resource curse theory fails to sufficiently explain why and how several countries have not or only partly been affected by the “curse”. Theoretically, the paper argues that whether or not natural resources are detrimental to a country's socio-economic and political development depends on a number of contextual variables, divided into country-specific conditions and resource-specific conditions (type, degree/level of abundance and dependence, resource revenue management, involved companies etc.). Methodologically, a future research agenda needs to examine the complex interplay of these contextual variables by adding sophisticated comparative research designs, especially “small and medium N” comparisons, to the tool box which has been widely confined to the juxtaposition of “large N” and country case studies.
Topic:
Government, Markets, and Political Economy
Political Geography:
Africa