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81. Financial Sector Development, Savings Mobilization and Poverty Reduction in Ghana

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, and Poverty
Political Geography:
Africa and Ghana

82. The Tax Reform Experience of Kenya

Author:
Stephen Njuguna Karingi and 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, and Economics
Political Geography:
Kenya and Africa

83. Tax Reforms in Ghana

Author:
Peter Quartey and 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, and Economics
Political Geography:
Africa and Ghana

84. Taxes and Tax Reform in Ethiopia, 1990-2003

Author:
Alemayehu Geda and 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, and Government
Political Geography:
Africa and Ethiopia

85. The Fiscal Effects of Aid in Ghana

Author:
Robert Osei, Oliver Morrissey, and 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, and Government
Political Geography:
Africa and Ghana

86. Aid and Growth in Sub-Saharan Africa: Accounting for Transmission Mechanisms

Author:
Oliver Morrissey, Karuna Gomanee, and 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, and Economics
Political Geography:
Africa

87. Innovative Ways of Making Aid Effective in Ghana: Tied Aid versus Direct Budgetary Support

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, and Economics
Political Geography:
Africa and Ghana

88. Beyond the Notion of Security Community: What Role for the African Regional Organizations in Peace and Security?

Author:
Liisa Laakso
Publication Date:
08-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
African regional organizations' increasing activity in security policy is usually approached through the concept of a 'security community', which can only partially clarify their difficult situation. A multilevel governance model is suggested as a more useful approach in a situation where economic cooperation is weak, member states' principles of governance diverge, and they themselves might be part of security problems. Security community is not a necessary condition for a regional organization to play a role in the field of security. By new intra-regional and cross-level relationships with the international community and civil society, regional organizations can become important security actors in Africa.
Topic:
Conflict Resolution, National Security, and Peace Studies
Political Geography:
Africa

89. Constitution Writing and Conflict Resolution

Author:
Jennifer Widner
Publication Date:
08-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Over 1975-2003 nearly 200 new constitutions were drawn up in countries at risk of conflict, as part of peace processes and the adoption of multiparty political systems. The process of writing constitutions is considered to be very important to the chances of sustaining peace, and The Commonwealth and the US Institute for Peace have developed good practice guidelines in this area. These emphasize consultation, openness to diverse points of view and representative ratification procedures. But assessing the impact of constitution-writing processes on violence is methodologically difficult, since there are many channels of influence in the relationship. This paper reports on preliminary findings from an ongoing research project into the effects of processes in constitution-writing. Regression analysis is used to control for important contextual features such as differences in income levels and ethnic diversity across countries. A key finding is that differences in the degree of participation in the drafting of constitutions has no major effect on post-ratification levels of violence in some parts of the world, such as Europe, but does make a difference in Africa, the Americas, and the Pacific together.
Topic:
Conflict Resolution, International Relations, Peace Studies, and Politics
Political Geography:
Africa, United States, America, and Europe

90. Diamonds, Foreign Aid, and the Uncertain Prospects for Post-Conflict Reconstruction in Sierra Leone

Author:
J. Andrew Grant
Publication Date:
08-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This article examines the external and internal dimensions of post-conflict reconstruction in Sierra Leone. The United Nations, bilateral donors such as the United Kingdom, and transnational non-governmental organizations and aid agencies have been instrumental in providing much-needed external assistance to Sierra Leone during the latter stages of its civil war and in the immediate post-war period. Although foreign aid is a welcome source of external support for reconstruction efforts, it is finite like any other resource. Reconstruction must also address intangible issues such as corruption as well as the healing of society through the Truth and Reconciliation Commission and the Special Court for Sierra Leone. Diamond exports hold potential as an internal source to spur economic growth and reconstruction. However, as the article illustrates, many obstacles remain, ranging from governance weaknesses in terms of capacity and domestic regulatory schemes on diamonds to the existence of illicit mining and smuggling of diamonds to regional instability.
Topic:
Foreign Policy, Debt, and International Trade and Finance
Political Geography:
Africa and United Kingdom