Showing papers in "The Journal of African Development in 2015"

Export Diversification And Economic Growth In Sub-Saharan Africa

Abstract: Most countries in Sub-Saharan Africa (SSA) have been associated with low and volatile growth performance over the years. Export diversification has been identified in the literature as growth-inducing. This study provides evidence on the relationship between export diversification and economic growth using panel data of forty-two (42) SSA countries. Employing the system Generalised Method of Moments (GMM) estimation technique and three different measures of diversification, we find that export diversification has a positive and significant effect on economic growth in SSA. Our results are robust to the measures of export diversification. The results do not however support a hump-shaped (non-linear) relationship between export diversification and economic growth in SSA. The findings have relevant implications for policy.

Do African Countries Get Health from Health Aid

Abstract: This paper uses panel data from African countries and a dynamic panel data (DPD) estimator to investigate the effects of health aid on health outcomes as well as the effects of health aid on health expenditures from domestic resources. I find that health aid has a statistically significant positive impact on health outcomes in African countries. Health aid is found to be more effective in improving health outcomes in countries that increase health spending from domestic resources above the sample mean and those with better governance. I also find that health aid marginally increases health expenditure from domestic sources in African countries, all things equal, suggesting that the effect of health aid on health outcomes may be larger than the direct effect. The results are robust to several specifications and estimation methods.

Do Firms Learn by Exporting or Learn to Export : Evidence from Senegalese Manufacturers’ Plants

Abstract: This paper examines the causal relationship between exporting and productivity in the manufacturing firms in Senegal using a unique firm-level panel data for the period 1998-2011. We control for endogeneity and sample selection by jointly estimating the productivity and the export-participation equations. Our results indicate strong evidence of both self-selection of the most efficient firms enter into the export market and effect of Learning in the export market. Findings show that firms with better financial health are likely to exports. Furthermore, the ownership of intangible assets like brevet and the quality of labour positively affect the probability to export of the manufacturing firms. We investigate the sectoral heterogeneity of the Learning-by exporting effect (LBE) and find evidence of a weak heterogeneity of the learning-by-exporting effect between the sectors. From a policy relevance, the evidence of learning-by-exporting suggests Senegal has much to gain from encouraging exports by helping domestic firms to overcome the barriers to enter into foreign markets by promoting access to intangible assets like brevet Particularly, export promotion policies could be helpful, reducing the level of financial constraints faced by firms, and indirectly enhancing their investment spending and productivity. As a driver of manufacturing exports, labour quality must be carefully considered in the perspectives of industrial development. Considerable efforts are required in the Senegalese educational system in order to match the training to the requirements of the labour market.

Deindustrialization in Africa

Abstract: Economic growth in Sub-Saharan Africa has been characterized by deindustrialization. Conventional economists argue that this is due to a bad environment for business decision making. This paper provides a classical explanation for deindustrialization, the failure to solve the food problem. That is, food staple prices have risen rapidly resulting in labor becoming costly, although physically abundant. This has prevented the evolution of a comparative advantage in labor intensive manufacturing. Structural change is an important element of the process of economic development, especially in the early stages. Productivity grows by shifting labor out of agriculture where productivity is low, and into industry or manufacturing where labor productivity is high. However, there is not just a comparative static productivity gain from structural change. It also seems that there is a dynamic gain as well. Unconditional convergence in labor productivity does tend to occur in manufacturing. That is, once a manufacturing sector is established in a less developed region, labor productivity in that sector tends to converge to that found in that same sector in developed countries. Thus, aggregate (economy wide) convergence generally fails to occur in many low income countries because manufacturing remains much too small a share in the overall economy. There is a dynamic gain in labor productivity that results from successful structural change. Indeed the process described above seems to be a very good description of the development process in East and Southeast Asia. These countries managed to shift labor into labor intensive manufacturing and industry, a large part of which was produced for export. This led to dramatic increases in the rate of growth of per capita income as well as a dramatic reduction in overall levels of poverty.

Financing Domestic Investment in African Countries: Does the Source of Financing Matter?

Abstract: This paper aims to investigate the effects of various sources of financing on domestic investment in African countries. Domestic savings and credit to the private sector prove to be the most robust sources of financing for domestic investment. While foreign direct investment also has a positive effect on domestic investment, the magnitude is relatively smaller. Official development aid, public external debt and migrant remittances have no significant effect on domestic investment. The evidence in the study has a powerful policy implication: in their efforts to boost domestic investment, African countries are should primarily look inward. Improving the environment for financial intermediation and domestic savings mobilization appears to be a more promising route to finding a key to stimulating domestic investment than relying on imported investment capital.

Challenges Facing Female Leaders of Color in U.S. Higher Education

Abstract: Despite a myriad of challenges including the slow pace of rising to the top and the low compositional diversity in most university leadership, women of color are becoming increasingly visible in higher education leadership. This paper investigates the phenomena of the growing numbers of women of color in top positions, with the aim of debunking the myth of the invisibility of black women in leadership positions in higher education. The findings indicate that although women in the U.S. earn the majority of postsecondary degrees and 26.4% of college presidents are women, with 4.5% of them being women of color, women still have a long way to go before they have equal status with men in university leadership positions. Theories and practices of leadership now focus on competencies that have typically and traditionally been associated with women, and not valued as workplace leadership competencies. An advantageous increase in female academicians means these women bring a different level of knowing, pose different questions, and share different experiences than their male counterparts. Unfortunately, female academicians’ experiences do not yet factor into public policies and decisionmaking.

Ownership of the place of residence in Ghana: A Gender Analysis

Abstract: Using data from a survey that collected individual-level asset ownership data in 2010 logistic regressions are employed to identify the correlates of home ownership and whether these are the same for women and men. In Ghana, women who reported as owners of an asset do not always have the rights associated with being an owner, e.g. the right to sell, bequeath or use the asset as collateral. The second part of this paper investigates the correlates of the right to sell and the right to use the place of residence as collateral among owners of the place of residence. The dependent variable in most previous studies on the determinants of home ownership is the household. The novelty of this study is that the focus is on individuals and the likelihood that an individual is a homeowner.

An Empirical Analysis of Integration and Intra-Regional Trade in ECOWAS

Abstract: This research examines integration and intra-regional trade in ECOWAS. It focuses on the benefit of common policies within ECOWAS and the impact it has on intraregional trade among member countries. The study utilizes a gravity model that is modified to reflect economic features of ECOWAS. Finds of the research show that economic size and common language are the major drivers of intra-regional trade in ECOWAS. Specifically, it indicates that real GDP, population size, openness and language positively influence intra-regional trade while distance was found to be negatively related to intra-ECOWAS trade. Deepening economic and cultural integration is recommended to maximise the enormous gains accruable from increased intra-regional trade.

Examining the Outcomes of the Balanced Scorecard (BSC) as an Integral Tool of Public Sector: Reform in Selected Sectors of the Oromia Regional Government

Abstract: Over the last two decades Ethiopia has been actively engaged in reforming its public sector in an attempt to make it more responsive, transparent, flexible, and compatible with the demand of its public and its constituencies to ensure good governance. Nevertheless, despite repeated comprehensive reform programs applied and acclaimed success stories by public authorities, the public outcry for responsive public service remains an outstanding challenge. Accordingly, this study aimed to examine the application of the Balanced Score Card (BSC) using a blend of survey and case study methods in 12 organizations selected from three major sectors in four major cities. The study intends to draw lessons for policy implications and consultants who aspire to support the public sector reform efforts in least developed countries. The preliminary output that applied descriptive and inferential statistics and qualitative analysis obtained from focus group discussions suggest that there is a strong desire from the public authorities to align public sector service delivery outcomes with strategic goals and public interest so as to make each job holder accountable for the intended result(s). Nevertheless, there were limitations in maintaining the momentum of the reform: both political and management support were erratic. Although the reform has resulted in a positive mental revolution with re spect to the use of BSC among the constituencies involved in the process, the realization of their intentions has remained more form than substance. Interestingly, the study has generated multiple cases that can provoke thinking and empirical lessons for policy makers, consultants and others.

Managing Africa's Natural Resources: Capacities for Development

Abstract: This book offers a rich set of insights into natural resource management and governance in Africa. One of the real strengths of the book is the diversity of voices and perspectives that it brings. The passion for the continent’s development is evident in all of the contributions and it is an important step forward in getting us to think about resources as a potential source of broad-based and shared development, rather than as necessarily a problem; or in more extreme formulations a “curse”. In this short review I can’t do justice to the depth, variety and richness of the book, so I will focus on some areas that stood out for me that might be worthy of, or provoke future debate. The chapters display a nuanced understanding of political economy, and many are prescriptive about institutions and policies. The book is sensitive to emerging new initiatives and models from the BRICS (Brazil, Russia, India, China, South Africa) countries for example. However, as chapter five shows, the long-term trend for commodity prices is still downward; the recent global commodity super-cycle not withstanding. Is the commodity super-cycle now coming to an end or will commodity prices increase again, over the medium term, as scarcity reasserts itself? What will and should be the implications of the end of the super-cycle for policy makers in Africa? Useful analytical frameworks are developed in the book to advance its agenda—the “capacity-leadership-governance” trichotomy as an axis of transformation. Capacity is interestingly defined in chapter ten as the ability to deliver on, or achieve stated goals. Other interesting concepts are also developed: such as the idea of dams as strategic stores of water in the context of climate change. The book is also packed with interesting statistics such as that $1 trillion worth of minerals and oil are extracted from the continent each year. However, the scale of misappropriation of resource rents in some countries is also shocking with less than half of total oil revenue accruing in Cameroon being transferred to the budget, for example. Three timber companies, by themselves, control 20% of Liberia’s land area. The challenge of effective natural resource management is significant in the context of such massive and entrenched power differentials and positions. Nonetheless the book also provides evidence of African states taking very proactive roles in combatting misuse of resource rents, with Nigeria indicting former US Vice-President Dick

Examining Human Capital Capacity’s Influence on Human Development and Poverty Reduction in Sub-Saharan Africa

Abstract: The aim of this paper is to examine and expand our focus on human capital capacity building as a foundation for poverty reduction in Sub-Saharan Africa. The data showed significant differences in the human capital capacity building characteristics as measured by demographic, education and gender equality characteristics. In analyzing select human capital capacity building markers, the findings suggest that the educational indicators were among the strongest in explaining the variation in human development in Sub-Saharan Africa. The findings showed that gender inequality was a serious inhibitor of human development in Sub-Saharan Africa. Overall, the Sub-Saharan nations with the lowest level of poverty had some combination of a population with higher median years of school completed, a higher literacy rate, a lower population growth rate, a larger percent of the population that lived in an urban area, and it had a higher rate of students progressing to secondary education. The findings of this paper lends support to the belief that poverty reduction cannot be confined to enhancing and understanding capacity building as an institutional level activity or only as an economic phenomenon. Finally, the findings lend support to the adoption of an integrated policy approach that takes into consideration social development as well as economic development as a means of poverty reduction in SubSaharan Africa. The social component of the strategy would emphasize the collective human capital development of the population, while the economic component would employ an inclusive growth strategy.

Ethnographic Study to Understand the Culture of Technology Manufacturing in Ghana

Abstract: Sub-Saharan African countries are characterized by low or absent technological growth. Scholars and the international community have endeavored to solve the long-standing problem, but none of these have produced the expected growth. While the rest of the world is advancing rapidly, Africa is noticeably lagging, even in comparison to other developing regions. It is apparent that previous international strategies cannot solve Africa’s technological underdevelopment This study argues that a solution to the problem depends on Africans, who must choose to want a solution and work towards it. An ethnographic study was therefore conducted to investigate the attitudes and worldview of the Ghanaian society towards technology underdevelopment. The study covers both the rural, traditional and urban, modern Ghana. The study, among other things, revealed that the traditional sector is rich in inherited indigenous technology manufacturing, but the methods of production, and therefore, the technologies themselves, have been left undeveloped. The urban/rural divide inhibits positive cultural exchanges and knowledge sharing, thus, limiting the proliferation of indigenous technologies across the different cultures. Urban Ghana, where national policies are drawn, provides no framework for dialogue and participation for indigenous technology development.

Partners Diversification and Exposure of African Countries to International Crises: the Case of Kenya

Abstract: The objective of this paper is to characterize the exposure of Kenyan's income to international income, monetary and price shocks. The results suggest that the partners’ diversification permits them to resist to international shocks. In fact, Chinese conjuncture tends to be less exposed to OECD countries' income and inflation shocks. Also, income in this country more depends on domestic investment and household consumption, in comparison to the exposure to OECD country shocks. In this context, we observe that the exposure of Kenyan income to OECD shocks regresses when the dependence to Chinese conjuncture progresses.

The Relevance of Global Reform of Bank Regulation: A Perspective from Africa

Abstract: The global financial crisis exposed fundamental weaknesses in the financial regulation, prompting ongoing efforts to strengthen the regulatory framework. The key features of the global reforms are: higher mandatory minimum capital adequacy ratios, together with improvements in the quality of capital; introduction of minimum liquidity requirements; introduction of macro-prudential tools; proposals for the resolution of globally systemically important banks. The international character of banking provides a clear rationale for global minimum regulatory standards, especially to avoid regulatory arbitrage, whereby banks locate in the jurisdictions with the least onerous regulations, spurring a race to the regulatory bottom. Hence key regulatory innovations have been drawn up at the global level and most governments around the world, including those in Africa, have incorporated them into their own national banking regulations. The aim of this paper is to assess the implications of the global regulatory reforms for bank regulation in Africa and, in particular, whether the specific reforms are likely to be helpful or counterproductive for banking system stability in Africa. The paper aims to help fill a gap in the literature on the latest global reforms to bank regulation; relatively little of which has assessed these issues from the standpoint of developing countries.

Convalescent Serum Therapy as Rapid Advance Treatment for Ebola in West Africa

Abstract: The 2014 public health crisis in Guinea, Liberia, and Sierra Leone has brought Ebola Viral Disease (EVD) to everyone’s attention. Discovered in 1976, this deadly disease infrequently struck in remote areas of Africa. This article will critically review the literature and describe the pathobiology, transmission, signs and symptoms, diagnosis, treatment, and prevention of EVDwhich, was predicted by the Centers for Disease Control to potentially infect 1.4 million persons in Liberia and Sierra Leone by January 2015 (“Questions and Answers”, 2014). Thankfully this worst case scenario did not occur and we may be experiencing natural burn out of the outbreak along with the results of aggressive education and supportive treatment as in Sierra Leone. There is no established treatment for EVD despite successes in non-human models. The WHO endorsed Convalescent Blood Products (“Potential for use of...,” 2014) after it showed promise in Democratic Republic of Congo. In 2014, American Ebola patients recovered after receiving Convalescent Serum Therapy (CST) with experimental therapies like Zmapp, TKM-Ebola, and Brincidofovir. We may have missed the window of opportunity to establish the efficacy of these potential therapies, which may have unprecedented implications for health status, healthcare infrastructure development in the future, and the economic viability of the sub-region for decades to come. Additionally, an endemic area will pose a threat to the rest of the world as a potential incubator/exporter of this dangerous viral illness.

Education, internal remittances and safety nets in Africa: Some evidence

Abstract: This paper uses LSS data from Cote d'Ivoire and Ghana to investigate the effects of education on social safety nets proxied by internal migrant remittances in Africa. We find that education has positive and statistically significant effect on the probability of sending as well as of the amount of remittance. The estimates are robust to model specification, data organization, and estimation method. The results suggest that one mechanism through which education provides a social safety net in Africa is the migration and remittances channel. Our results suggest that investment in education may not only accelerate economic growth in Africa, it may also provide a social safety net for the population.

ICTs and Regional Economic Integration: An Anticipatory Scenario for the Horn of Africa

Abstract: Development experts are telling increasingly fascinating stories about how human development indices (HDI) among the poor in Africa, Asia, and Latin America have been buoyed by the diffusion of ICTs (Information and Communication Technologies) over the last two decades. According to data compiled by the World Economic Forum, ICTs have facilitated faster and more reliable communication with regard to almost all important spheres of life including healthcare, education, agriculture, commerce, e-banking, the environment, etc. Perhaps the greatest impact of ICTs has been in their democratizing effect and their role in promoting gender equity, especially with regard to access to information that affects basic facets of life which has been beyond reach before either because of geographic distance or because of a lack of facilities such as libraries and clinics. This paper employs the anticipatory scenario-building approach in offering an analysis of potential development implications of ICTs for the Horn of Africa region.

The Distribution of Firm Size in Africa's Manufacturing Sector and Its Implication for Industrial Policy

Abstract: This paper analyzes the distribution of Kenyan firms into four size categories: micro, small, medium and large size. Four questions are investigated. First, do small firms grow faster than large ones or is firm growth independent of size as stipulated by Gibrat’s “Law of Proportionate Effect” Second, what is the steady state size of firms? Third, how long does it take to reach the steady state size? Fourth, does the use of bank credit affect a firm’s growth and the process of firm size convergence? On the basis of ergodic probability distributions, we derive information on firms’ steady state growth and convergence. Using data on Kenya’s manufacturing sector, empirical results suggest that firm growth is associated with overall economic performance. Before the early 1990s, firms had a high growth potential. In equilibrium, 70 percent of surviving firms converged to large size. In contrast, growth and convergence in the 1990s reflected the economic crisis that hit the Kenyan economy: the steady state distribution of firm size was concentrated in the first two quartiles, with suggestive evidence that smaller firms recorded the highest rates of failure. Also, the use of credit increased the growth of surviving firms but appears to have contributed to precipitating firm failure. These results suggest that support policies such as special credit schemes are not a panacea for a firm’s survival and growth.

Inflation, External market Performance and Government Policy: An Empirical Investigation Using VAR-VECM Approach in the Context of Ethiopia

Abstract: This study aims at determining the effectiveness of demand management policies in stabilizing the macroeconomic environment of Ethiopian economy. Inflation and Balance of Payments are used as the two indicators of stability. The researcher made use of Cointegrated VAR approach and estimates inflation and balance of payments equations. All together the researcher used data for the period 1976-2011. The findings of the study imply the existence of two-way relationship between inflation and balance of payments. Excess balance of payment surplus leads to inflationary pressures in the economy while inflation booming deteriorates the country’s external balance. Ethiopia is pursuing a public sector led development strategy that focuses on promoting growth through high public investment facilitated partly by low nominal interest rates. The strategy calls for government directed economic policy, with a dominant role for public enterprises in infrastructure development. Within this development strategy, the authorities adopted both medium and long-term visions. Its medium term vision is to achieve the Millennium Development Goals (MDGs). This should be achieved at the end of the implementation of the five-year plan, named as the Growth and Transformation Plan (GTP) (IMF, 2012). The planning period for the GTP spans the period 2010/11-2014/15. Its long-term vision, on the other hand, is to build on the achievements of the GTP and become a middle-income country in the coming ten years. Among its strategic pillars is an emphasis on agriculture, promotion of industrialization, and investment in infrastructure (MOFED, 2010/11). The strategy has contributed to lifting economic growth; In 2010/11 real GDP growth was 11.4 percent moderately higher than the 10 percent growth a year earlier. The overall economic performance, measured by growth in real GDP, between 2003/042010/11, registered an average annual growth rate of 11.4% (NBE, 2010/11). This robust and broad based economic growth places Ethiopia among the top performing African and other developing Asian countries. In the fiscal year 2010/11, agriculture grew by 9.0 percent due to improved productivity, good weather conditions, and conducive policy environment. The industry sector has also expanded by 15.0 percent, owing to investment in electricity & water as well as construction sector. Service sector growth, however, slightly declined to 12.5 percent from 13.0 percent a year ago (NBE, 2010/11). The main development objective of Ethiopia is to eradicate poverty in a relatively short period of time. This would be achieved by implementing broad based development policies that would not only enhance economic growth but would also adhere to the principles of an equitable distribution of the benefits from such growth. Robust growth in the recent past and pro-poor focus of the government budget has resulted in significant poverty reduction: estimates indicate that the

Determinants of Farm and Non-Farm Family-Controlled Child Labor

Abstract: Ninety five percent of the child labor in Africa takes place in private households where children are controlled by their relatives. While this is a major problem, the literature provides little discussion on the determinants of this form of child labor. To fill this gap, I examine the determinants of farm and non-farm family-controlled child labor using data from the 2009 Ghana Time Use Survey. The findings indicate that school networks, the education level of the head of household, and religion play important roles in determining children’s activities in both farm and non-farm work.