Journal of African Economies - Advance Access

Migration, Self-selection and Returns to Education in the WAEMU

De Vreyer, P., Gubert, F., Roubaud, F. — 2009-06-23

Using data from labour force surveys conducted simultaneously in the capital cities of seven West African Economic and Monetary Union countries, we estimate a model of residential location choice in which expected earnings play a role. The model is first estimated in a reduced form. Estimates are then used to correct for the endogeneity of locational choice in the earnings equations estimated for each country. We find that migration behaviour has a significant effect in shaping earnings differentials between education levels and between the seven capital cities. Corrected predicted earnings in each country are then used as an independent variable in a structural multinomial logit of residential choice. Results show that individuals tend to reside in countries in which their expected earnings are higher than elsewhere.

Financing Post-Conflict Recovery in Africa: The Role of International Development Assistance

Mlambo, M. K., Kamara, A. B., Nyende, M. — 2009-05-22

This paper attempts to identify the key challenges of financing countries in post-conflict transition. Such countries constitute a critical development challenge given their enormous socio-economic needs and the difficulties associated with providing effective development assistance. Conflict destroys a country's economic, governance and administrative institutions; weakens public financial management systems and increases transaction costs, which makes it difficult for principals to monitor their agents. Rebuilding social and economic infrastructure is as crucial as the rehabilitation and reconstruction of the destroyed physical infrastructure—roads, bridges, restoration of water supply and sanitation and energy and power. A framework is elaborated here for assessing (i) Post-conflict situations in African countries; (ii) possible mechanism of financing post-conflict reconstruction and development in Africa; and, (iii) lessons from the past challenges of financing countries in post-conflict transition in Africa. The paper concludes that post-conflict financing in Africa needs to be done in the appropriate context and framework to enhance impact and effectiveness. They should be accompanied by the appropriate policy framework and guidance, and should be conceived within the context of the country's long-term development objectives.

Root Causes of African Underdevelopment

Bhattacharyya, S. — 2009-04-22

What are the root causes of Africa's current state of under-development? Is it the long history of slave trade, the legacy of extractive colonial institutions, or the fallout of malaria? We investigate the relative contributions of these factors using Atlantic distance, Indian Ocean distance, Saharan distance, Red Sea distance, log settler mortality and malaria ecology as instruments. The results show that malaria matters the most and all other factors are statistically insignificant. Malaria also negatively affects savings. The results are robust even when the malaria ecology instrument is replaced by frost, humidity and rainfall and when the latter are used as additional control variables. We find that frost alone is enough to knock off the effects of slave trade and institutions on long-term development in Africa.

Poverty Reduction Strategies During Post-conflict Recovery in Africa

Obwona, M., Guloba, M. — 2009-04-16

The period 1990–2000 saw 19 major armed conflicts in Africa. Peace has been elusive, and the term ‘post-conflict’ often a sad misnomer. War is expensive and hence has powerful economic consequences. Civil war, which is now, by far, the most common form of conflict in Africa, is particularly damaging, reduces incomes, increases capital flight and diverts activity into subsistence livelihood. Post-conflict situations are characterised by unusually wide range of outcomes. While on average economies rebound from war, in some the economies decline and in others they revert to conflict after some time (Collier et al., 2003). Policy choices concerning the economic recovery of these hopeful but fragile situations have received far less attention than issues of humanitarian needs. The current efforts of many African countries coming out of conflicts to develop Poverty Reduction Strategy Papers (PRSPs) reflect increased emphasis on mainstreaming poverty reduction through better inter-agency and inter-sectoral co-ordination, and through participatory consultation, consensus building and planning. In addition, it has been widely agreed upon that HIV/AIDS should be prominent in the Poverty Reduction Strategies of poor African countries in light of the challenges that the pandemic poses to poverty reduction efforts. PRSP has become the primary tool in nearly all African countries for articulation of the strategies for growth and poverty reduction. The paper provides the main challenges that the PRSP formulation faces in a post-conflict environment. The key questions discussed in the paper include: Can PRSP work in a post-conflict situation? Are PRSP really relevant at all in such countries? Does a PRSP formulated in a conflict-free country guarantee poverty reduction and overall welfare of the society? Since PRSPs in Africa came at a time when the continent had no choice, are they really home grown as often alleged? How have international donors engaged in the process and what is the way forward? The paper also reviews the historical perspective of conflicts in Africa and points out experiences in some of the conflict-affected African countries as they develop and implement their PRSPs. It concludes that not all African countries in post-conflict recovery have successfully developed their PRSPs. Some are still in the process of doing so and others who have endeavoured to draft one, have not correctly spelled out the donor-specific key objectives of the government's commitment to poverty reduction. Finally, PRSPs often emphasise consumption-related expenditures in mainly social sectors like education and health while ignoring the sectors where the poor are dominant (for example, agriculture). Quite often, the emphasis on such sectors do not lead to significant poverty reduction whether in a post-conflict or conflict-free country.

A Policy Framework for Transiting from Post-conflict Recovery to Sustainable Development in Sub-Saharan Africa

Ali, A. A. G. — 2009-04-16

This paper argues that the search for a policy framework for transiting from post-conflict recovery to sustainable development in Sub-Saharan Africa could be anchored in the broad concept of development as a process of expanding the freedoms that people enjoy. Under such concept the overarching objective of development in developing countries is the reduction of poverty over a reasonable time horizon. Though highly restrictive, the standard money metric approach to the measurement of poverty could provide the required policy framework. Growth enhancing policies (that increase per capita consumption expenditure), as well as inequality reducing policies (that enhance the opportunities for individuals to participate in the development process) recommend themselves as the relevant policies in post-conflict situations. Given recent experience with economic policy reforms post-conflict countries desiring to transit to sustainable development need to define what constitutes "good policy" bench marks in their respective circumstances rather than adopting cross-country based benchmarks.

Post-conflict Recovery: How Should Strategies Be Distinctive?

Collier, P. — 2009-04-16

This paper considers why economic policies may need to be distinctive if a country is post-conflict relative to others which are equally poor but peaceful. Objectives should probably be distinctive because the risk of conflict is typically much higher. I argue that appropriate responses are job creation for young men, and deep cuts in military spending. Political opportunities are likely to be distinctive because reform may be easier than at other times. Economic opportunities are likely to be distinctive because conflict distorts the structure of the economy. Standard approaches to economic development are therefore often inapplicable, yet the capacity of government to devise tailored solutions is very limited.

Economic Impact of Climate Change on Crop Production in Ethiopia: Evidence from Cross-section Measures

Deressa, T. T., Hassan, R. M. — 2009-04-16

This study used the Ricardian approach that captures farmer adaptations to varying environmental factors to analyze the impact of climate change on crop farming in Ethiopia. By collecting data from farm households in different agro-ecological zones of the county, net crop revenue per hectare was regressed on climate, household and soil variables. The results show that these variables have a significant impact on the net crop revenue per hectare of farmers under Ethiopian conditions. The seasonal marginal impact analysis indicates that marginally increasing temperature during summer and winter would significantly reduce crop net revenue per hectare whereas marginally increasing precipitation during spring would significantly increase net crop revenue per hectare. Moreover, the net crop revenue impact of predicted climate scenarios from three models (CGM2, HaDCM3 and PCM) for the years 2050 and 2100 indicated that there would be a reduction in crop net revenue per hectare by the years 2050 and 2100. Moreover, the reduction in net revenue per hectare by the year 2100 would be more than the reduction by the year 2050 indicating the damage that climate change would pose increases with time unless this negative impact is abated through adaptation. Additionally, results indicate that the net revenue impact of climate change is not uniformly distributed across the different agro-ecological zones of Ethiopia.

Wage Gaps and Job Sorting in African Manufacturing

Fafchamps, M., Soderbom, M., Benhassine, N. — 2009-04-03

Using matched employer–employee data from eleven African countries, we investigate if there is job sorting in African labour markets. We find that much of the wage gap associated with education is driven by selection across occupations and firms. This is consistent with educated workers being more effective at complex tasks such as labour management. In all countries, the education wage gap widens rapidly at high levels of education. Most of the education wage gap at low levels of education can be explained by selection across occupations. We also find that the education wage gap tends to be higher for women, except in Morocco where many poorly educated women work in the garment sector. A large share of the gender wage gap is explained by selection into low wage occupations and firms.

China and the Manufacturing Terms-of-Trade of African Exporters

Villoria, N. B. — 2009-03-15

China's export expansion is commonly associated with lower global manufacturing prices. For most countries, lower prices heighten global competition but also allow importing a cheaper and wider set of inputs and consumer goods. This paper investigates the balance of these two forces in Kenya, Mauritius and the Southern Africa Customs Union, the largest exporters of manufactured goods in sub-Saharan Africa. The paper uses the economic geography model of Redding and Venables (in Economic geography and international inequality, Journal of International Economics, 62, 53-22, 2004) to decompose the import growth of a large number of countries into supply and demand capacities. This decomposition allows for analysis of the extent to which China's export growth has altered manufacturing import and export prices for the selected countries. The study finds that China has significantly decreased world prices in major markets for manufactures, especially textiles, wearing apparel and footwear, potentially displacing the clothing exports of the selected African countries. As a consequence of China's export growth, these focus countries have also seen substantial reductions in their import prices across all manufacturing sectors. However, an estimation of their terms-of-trade suggests that the reductions in export prices outweigh the decrease in import prices and the countries are deemed to lose from China's manufactures export expansion.

Help or Hindrance? The Impact of Harmonised Standards on African Exports

Czubala, W., Shepherd, B., Wilson, J. S. — 2009-03-15

We test the hypothesis that product standards harmonised to de facto international standards are less trade restrictive than ones that are not. To do this, we construct a new database of European Union (EU) product standards. We identify standards that are aligned with International Organisation for Standardisation (ISO) standards (as a proxy for de facto international norms). We use a sample-selection gravity model to examine the impact of EU standards on African textiles and clothing exports, a sector of particular development interest. We find robust evidence that non-harmonised standards reduce African exports of these products. EU standards which are harmonised to ISO standards are less trade restricting. Our results suggest that efforts to promote African exports of manufactures may need to be complemented by measures to reduce the cost impacts of product standards, including international harmonisation. In addition, efforts to harmonise national standards with international norms, including those through the World Trade Organisation Technical Barriers to Trade Agreement, promise concrete benefits through trade expansion.

Social Aspects of Drug Use in Djibouti: The Case of the Leaf of Allah

Borelli, S. — 2009-02-25

In Djibouti the chewing of qat leaves is a widespread habit of the male population that has a profound socio-cultural importance, credited with fostering amity and building social relationships. This paper uses a sample of Djiboutian male adult household heads to test for the presence of peer effects in qat consumption choices in the context of the African society of Djibouti. We use multiple empirical strategies to assess the importance of peer effects in qat consumption. The results contribute to provide some suggestive evidence about the importance of social determinants in qat use.

Public Governance, Health and Foreign Direct Investment in Sub-Saharan Africa

Azemar, C., Desbordes, R. — 2009-01-16

Using 1985–2004 yearly panel data for 70 developing countries, including 28 from Sub-Saharan Africa (SSA), the paper finds that once market size is accounted for, SSA's foreign direct investment (FDI) deficit with other regions of the world is mainly explained by the insufficient provision of public goods: relatively low human capital accumulation, in terms of education and health in SSA. On the basis of additional cross-sectional data, the paper finds that in the absence of HIV and malaria, net FDI inflows in the median SSA country could have been one-third higher during 2000–2004, with slightly more than one-half of this deficit explained by malaria.

Is There a Glass Ceiling in Morocco? Evidence from Matched Worker-Firm Data

Nordman, C. J., Wolff, F.-C. — 2009-01-15

Several empirical studies have found larger gender pay gaps at the upper tail of the wage distribution in developed countries, the so-called glass ceiling effect. In this paper, we investigate the relevance of the glass ceiling hypothesis in Morocco using a matched worker–firm data set of more than 8,000 employees and 850 employers working in the manufacturing sector. We estimate linear and quantile earnings regressions with controls for unobserved firm heterogeneity and perform a quantile decomposition. We also focus on the within-firm gender earnings gap using information on the firms' characteristics. Our results show that the gender earnings gap is higher at the top of the distribution than at the bottom. Furthermore, the gender gap widens in the upper tail of the earnings distribution when controlling for firm fixed effects.

Determinants of Grade 12 Pass Rates in the Post-Apartheid South African Schooling System

Bhorat, H., Oosthuizen, M. — 2008-12-25

This paper utilises an educational production function approach on post-apartheid data that include both schooling and community-level information, in order to empirically estimate the key determinants of Grade 12 pass rates in 2000. Quantile regression techniques are applied, allowing for more nuanced information. The key results are, firstly, that the pupil–teacher ratio is insignificant in explaining pass rates for schools below the 95th percentile of the school performance distribution. Secondly, the impact of resources on performance is not strong and, where there is a significant effect, it is highly dependent on the resource in question and the metric utilised for the dependent variable. Thirdly, knowledge infrastructure may be important to understand the absolute and relative performance of schools. Fourthly, proxy variables for teacher and parent characteristics are strongly significant, and the former should probably be a priority focus for any policy programme aimed at improving Grade 12 performance levels in South Africa.