The economics of growth has come a long way since it regained center stage for economists in the mid-1980s. Here for the first time is a series of country studies guided by that research. The thirteen essays, by leading economists, shed light on some of the most important growth puzzles of our time. How did China grow so rapidly despite the absence of full-fledged private property rights? What happened in India after the early 1980s to more than double its growth rate? How did Botswana and Mauritius avoid the problems that other countries in sub--Saharan Africa succumbed to? How did Indonesia manage to grow over three decades despite weak institutions and distorted microeconomic policies and why did it suffer such a collapse after 1997?

	What emerges from this collective effort is a deeper understanding of the centrality of institutions. Economies that have performed well over the long term owe their success not to geography or trade, but to institutions that have generated market-oriented incentives, protected property rights, and enabled stability. However, these narratives warn against a cookie-cutter approach to institution building.

	The contributors are Daron Acemoglu, Maite Careaga, Gregory Clark, J. Bradford DeLong, Georges de Menil, William Easterly, Ricardo Hausmann, Simon Johnson, Daniel Kaufmann, Massimo Mastruzzi, Ian W. McLean, Lant Pritchett, Yingyi Qian, James A. Robinson, Devesh Roy, Arvind Subramanian, Alan M. Taylor, Jonathan Temple, Barry R. Weingast, Susan Wolcott, and Diego Zavaleta.

In Search of Prosperity: Analytic Narratives on Economic Growth

A vector error correction model of the Singapore stock market

This volume studies the role of natural resources in development and economic diversification. It brings together a variety of analytical perspectives, ranging from econometric analyses of economic growth to historical studies of successful development experiences in countries with abundant natural resources. This book addresses two key questions for policy makers in natural resource-rich regions such as Latin America: First, is natural resource wealth an asset or a liability for development and, if potentially the former, how can its contribution be enhanced? And second, can countries rich in natural resources efficiently diversify toward manufacturing or service-sector exports?

Natural Resources, Neither Curse nor Destiny

This paper provides a systematic review of the weak-form market efficiency literature that examines return predictability from past price changes, with an exclusive focus on the stock markets. Our survey shows that the bulk of the empirical studies examine whether the stock market under study is or is not weak-form efficient in the absolute sense, assuming that the level of market efficiency remains unchanged throughout the estimation period. However, the possibility of time-varying weak-form market efficiency has received increasing attention in recent years. We categorize these emerging studies based on the research framework adopted, namely non-overlapping sub-period analysis, time-varying parameter model and rolling estimation window. An encouraging development is that the documented empirical evidence of evolving stock return predictability can be rationalized within the framework of the adaptive markets hypothesis.

The evolution of stock market efficiency over time: A survey of the empirical literature

Pro-poor growth is often advocated but seldom defined. Some proposed definitions and associated measures are reviewed in this paper. Much of this literature stresses the importance of reducing economic inequality. A basic source of confusion is whether inequality reduction is desired as a means for reducing poverty or as an end in itself. This paper argues that if it is the former, as is usually said, the pro-poor growth literature tends to overstate the importance of reducing inequality, or avoiding an increase. Growth that is most effective at reducing poverty does not necessarily coincide with growth that reduces inequality. This literature is overly pre-occupied with statistical evaluation of the outcomes of economic events, based on changes in the distribution of household incomes or expenditures. What is most needed is solidly based empirical research on the manner and extent to which alternative growth strategies influence the rate of poverty reduction.

Pro-poor Growth

This paper identifies four categories of formal stock market in Africa: South Africa, medium-sized markets, small new markets which have experienced rapid growth, and small new markets which have yet to take off. The hypothesis that a stock market price index follows a random walk is tested for South Africa, five medium-sized markets (Egypt, Kenya, Morocco, Nigeria and Zimbabwe) and two small new markets (Botswana and Mauritius) using the multiple variance ratio test of Chow and Denning (Journal of Econometrics, 58, 385–401, 1993). The hypothesis is rejected in seven of the markets because of autocorrelation of returns. For the South African market, the stock price index follows a random walk. The paper also suggests factors which may contribute to whether or not an equity market follows a random walk.

http://irequejo.es/strathclyde/ECM%20Lecture%203/ECM%20Reading%20AFE%20Efficiency%20in%20African%20stock%20markets.pdf

African stock markets: multiple variance ratio tests of random walks

This paper classifies formal African stock markets into four categories and discuses the principal characteristics of the seven markets covered in this study: South Africa, Egypt, Morocco, Nigeria, Zimbabwe, Mauritius and Kenya. Using a GARCH approach with time-varying parameters, a test of evolving efficiency (TEE) is implemented for periods starting in the early 1990s and ending in June 2001. This test detects changes in weak form efficiency through time. The TEE finds that the Johannesburg stock market is weak form efficient throughout the period, and three stock markets become weak form efficient towards the end of the period: Egypt and Morocco from 1999 and Nigeria from early 2001. These contrast with the Kenya and Zimbabwe stock markets which show no tendency towards weak form efficiency and the Mauritius market which displays a slow tendency to eliminate inefficiency. The paper relates weak form efficiency to stock market turnover, capitalisation and institutional characteristics of markets. JEL Classification: G14, G15, O16 Keywords: African Stock Markets, efficiency, GARCH WITH THE POSSIBLE EXCEPTION of the JSE Securities Exchange (JSE), there have been relatively few studies of the weak form efficiency of African stock markets. While the evidence for the JSE is mixed, the few studies that have been carried out for other markets find, not surprisingly, that most are inefficient (in a financial sense, meaning that stock prices do not reflect all available information, and that stocks are not therefore being appropriately priced at their equilibrium values). A variety of empirical tests can be used to assess market efficiency. Thompson and Ward (1995) reviewed a wide range of literature covering empirical tests of the efficiency of the JSE and noted that, with different methodologies for testing efficiency giving different results, no clear conclusion is possible. Jefferis and Okeahalam (1999a) applied unit root tests to stock price indices to assess the efficiency of the stock markets in South Africa, Botswana and Zimbabwe over the period 1989-96, and find that the South African and Zimbabwean markets were efficient during this period, although Botswana was not, at least during the early part of the period. However the unit root test of market efficiency is not a powerful one, and subsequent analysis using different tests provided contrasting results. Jefferis and Okeahalam (1999b) used an event study of the same three markets to test the response of individual stock prices to information announcements, by evaluating the speed and efficiency with which information is incorporated into market prices. They found that the Botswana and Zimbabwe markets are inefficient, while the JSE is weak form efficient. This corresponds with the findings of Smith et al (2002), who tested whether eight African stock markets follow a random walk using multiple variance ratio tests. Of the eight markets (South Africa, Egypt, Kenya, Morocco, Nigeria, Zimbabwe, Botswana and

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The changing efficiency of african stock markets

The issue of whether stock markets reflect economic fundamentals or speculative bubbles is an important one for their potential role in allocating capital, and relates to a policy issue of whether stock markets should be encouraged in developing countries. This article examines the impact of both domestic and foreign economic factors on real stock market returns in three southern African stock markets – South Africa, Zimbabwe and Botswana, from 1985-95 – using cointegration and error correction techniques. It finds that, while in all cases stock markets are influenced by domestic economic growth, there are no common patterns beyond this. The influence of other domestic and economic variables depends on the size, openness and market-orientation of the individual economies, as well as the size and liquidity of the various stock exchanges. Where foreign economic variables are important, they appear to be those related to trade, rather than international capital flows, indicating that there is little integrat...

Keith Jefferis

Papers

African stock markets: multiple variance ratio tests of random walks

The changing efficiency of african stock markets

The impact of economic fundamentals on stock markets in southern Africa

The Botswana share market and its role in financial and economic development

The Impact of HIV/AIDS on Poverty and Inequality in Botswana