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Abstract: This paper studies the role played by the quality of property rights in the linkages of international capital flows into sub‐Saharan African (SSA) economies. Using panel data of 36 SSA countries over the period 1996–2015 and the ARDL procedure with the Pooled Mean Group regression method appropriate for non‐stationary panel data estimation, we account for the joint effects of property rights quality and openness to foreign capital flows on economic growth. We uncover the existence of a property rights quality threshold beyond which property rights either amplifies the spillovers effects or attenuates the negative effect of capital flows on economic growth. For instance, it takes a level of property rights of at least 60 to have a positive long‐term impact of capital flows on economic growth in natural resource‐poor African countries. The quality of property rights matters more to obtain spillover effects of capital flows on growth in natural resource‐poor countries than in their peer natural resource‐rich countries. Finally, with regard to the countries' income levels, capital flows have significant long‐term spillovers effects on economic growth in advanced African economies than in their low‐income peers. [ABSTRACT FROM AUTHOR]

The global financial and economic crisis, which hit Africa with a lag, has caused serious setbacks to the continent's growth momentum and likely jeopardized hard-won development gains of recent years. Even though most African countries are likely to avoid recession, the sharp drop in growth rates can have serious, long-term consequences, especially for poor and vulnerable Africans. Furthermore, the speed of the continent's recovery and longer-term growth rates remain uncertain. What is, however, remarkable is that unlike in previous crises (as the energy crisis in the 1970s), this time round the response of most African governments has been to continue with the prudent macroeconomic policies of the past decade, and it is these policies that are giving these countries the fiscal space with which to cushion the impact of the global crisis and avoid an even deeper recession. The emergency rescue packages that some countries introduced are also carefully designed to maintain reform momentum in the medium term. At the same time, some countries have used the crisis as an opportunity to accelerate reforms, leaving them in a better position to take advantage of a recovery in the global economy. Thus, while the global crisis has wreaked havoc on African economies, the policy response of most governments demonstrates that the overall policy environment in Africa remains sound. This paper provides three hypotheses to explain this policy response, which stands in some contrast with African governments' responses to previous crises. First, the prudent macroeconomic stance taken by these countries is simply a reflection of their access to capital markets and thin domestic financial markets. Second, the experience of the past decade, where prudent macroeconomic policies resulted in countries being better able to respond to the crisis, created an environment where governments were reluctant to deviate too far from their macroeconomic stance, lest they be left vulnerable during the next crisis. And third, that there has been a shift in the public's attitude towards economic reforms, and African policymakers were reflecting this shift in their policy responses to the crisis. The paper concludes that if this third hypothesis is the most likely one, it bodes well for Africa's future, despite the global crisis. For it means that economic reforms in Africa will continue and will unlikely be reversed, even with a sluggish global economy, because the public's mind-set has shifted. [ABSTRACT FROM AUTHOR]

Food security is about ensuring that all people at all times have both physical and economic access to the basic food they need. In a number of African countries chronic malnutrition and transitory food insecurity are pervasive. Like most African countries, Eritrea is also a victim of the problem of food insecurity. Based on this historical and recurrent food insecurity in Eritrea, an attempt is made in this paper to assess the possible causes of food insecurity in the country. Furthermore, the paper captures the available food security policy proposals of Eritrea and eventually draws conclusions and extends possible recommendations and policy remedies suited to the country. [ABSTRACT FROM AUTHOR]

Africa performs poorly in the global economy. The continent lacks investments, jobs, real output, and basic social services. Aggravating the poor performance is poor management. This paper argues that the establishment of the New Partnership for Africa's Development(NEPAD) to grapple with Africa's economic problems makes sense but only if necessary policies are properly implemented. It argues that Africa should pursue interest politics through NEPAD as an economic integration. On the issue of financing the budget, which has in the past been a major constraint to OAU-initiated projects, this paper strongly recommends that it should be made mandatory that all multinational companies operating in all NEPAD member countries pay a certain percentage of their earnings into the NEPAD budget. [ABSTRACT FROM AUTHOR]

This paper is an analytical review of the prospects and challenges of developing securities markets in Ethiopia. With the fall of communism and the emergence of capitalism, many countries around the world are moving toward market-oriented economies and securities markets are springing up on all continents around the globe. Securities markets have come to symbolize to many the essence of capitalistic economic relations. When studying the economies of developing countries, the first thing that becomes apparent is the existence of immense and, to a considerable extent, unemployed human resources as well as an acute shortage of capital. Shortage of capital is a major constraint in the realization of economic development. Recognizing the role that securities markets play in mobilizing capital, more than a dozen African countries have established stock markets. Ethiopia is not one of them. There is little current research which focuses on Africa's securities markets. This study helps to contribute to that effort by focusing on Ethiopia, the second largest country in sub-Saharan Africa plagued with major economic problems. The paper concludes by recommending the establishment of a stock market and providing suggestions on how to do it. [ABSTRACT FROM AUTHOR]

This paper tests the PPP hypothesis for the South African rand/US dollar real exchange rate using a fractional integration framework. The results suggest that the real exchange rate of the South African rand with respect to the US dollar is a highly dependent variable with an order of integration very close to 1. This finding is not affected by the data frequency considered (daily, weekly or monthly). Also, there appears to be a single break in December 2001 (possibly corresponding to a change in the monetary policy framework), with the unit root null being rejected in favour of d > 1 for the periods before the break, but not afterwards. Thus, our results strongly reject the PPP hypothesis for the South African rand/US dollar rate across data frequencies, since shocks are found to affect the exchange rate forever. [ABSTRACT FROM AUTHOR]

This paper surveys frameworks of labour migration in southern Africa and determines South Africa's policy responses to inflows of migrants from seven neighbouring countries. Legislations, policy reports and scientific publications on migration were thoroughly reviewed and interviews and correspondence with key policymakers were conducted. Statistical analyses of data on foreign worker recruitments and permits issued by South Africa's Department of Home Affairs were also performed. The absence of a migration protocol in southern Africa suggests SADC Members have not implemented the African Union's migration policy basic guidelines. Two systems coexist in southern Africa that complicate migration governance: a South Africa-managed bilateral migration policy, and aspirations for a formal SADC-managed migration policy. Bilateral agreements between South Africa and neighbours have established a labour migration system that dims prospects for a regional migration policy. SACU Members could establish a two-tier policy to achieve free movement while maintaining managed migration policy outside SACU. An official multilateral migration governance mechanism would serve SADC better than the current ad-hoc measures. [ABSTRACT FROM AUTHOR]

The post-apartheid South African corporate governance (CG) model is a unique hybridization of the traditional Anglo-American and Continental European-Asian CG models, distinctively requiring firms to explicitly comply with a number of affirmative action and stakeholder CG provisions, such as black economic empowerment, employment equity, environment, HIV/Aids, and health and safety. This paper examines the association between a composite CG index and firm value in this distinct corporate setting within a simultaneous equation framework. Using a sample of post-apartheid South African listed corporations, and controlling for potential interdependencies among block ownership, board size, leverage, institutional ownership, firm value and a broad CG index, we find a significant positive association between a composite CG index and firm value. Further, our two-stage least squares results show that there is also a reverse association between our broad CG index and firm value, emphasizing the need for future research to adequately control for potential interrelationships between possible alternative CG mechanisms and firm value. Distinct from prior studies, we find that compliance with affirmative action CG provisions impacts positively on firm value. Our results are consistent with agency, legitimacy, political cost, and resource dependent theoretical predictions. Our findings are robust across a number of econometric models that adequately control for different types of endogeneity problems, and alternative accounting, and market-based firm valuation proxies. [ABSTRACT FROM AUTHOR]

This paper identifies and decomposes sources that explain household economic well-being in Cameroon. It uses the 2001 and 2007 Cameroon Household Consumption Surveys, synthetic variables constructed by the multiple correspondence analysis and econometric approaches that correct for potential endogeneity and unobserved heterogeneity in a step-wise manner and simultaneously. Sources of well-being that explain poverty are then decomposed into growth and redistribution components. Variables that significantly explain household economic well-being are education, health, household size, fraction of active household members, working in the formal sector and area of residence. Decomposition analysis shows that the growth components largely account for changes in deprivation in terms of each regressed-income source. With the exception of the income source education, redistribution components slowed down progress in alleviating shortfall in other regressed-income sources. These results have implications for public interventions that affect education and health for all, labour market participation and infrastructure development. [ABSTRACT FROM AUTHOR]

This paper investigates the transmission of monetary policy to the real economy after the adoption of bank reforms in emerging market economies (EMEs). The Egyptian case is empirically studied to test the efficacy of the banking sector as a transmission agent subsequent to the banking reforms that extended from 1991 to 2009. The structural vector autoregressive methodology is employed to investigate the impact of the interest rate and foreign exchange rate channels on output and inflation. The results of the study reveal several interactions among the two types of channels. Second, interest rate intervention proves to have substantial effects on output, but less on inflation. Third, exchange rate intervention has some effects on inflation, but less on output. Thus, both transmission channels have showed superior effectiveness after the banking reform. This indicates that the Central Bank of Egypt should not continue to depend on the interest rate channel alone, but has to additionally utilize the exchange rate channel in order to successfully achieve inflation targeting that has been its prime goal since 2003 and even more after the global food crisis of 2007/8. This ruling could prove functional when conducting monetary policy in EMEs of similar circumstances to Egypt. [ABSTRACT FROM AUTHOR]

The question of the optimal spread between bank lending rates and rates that banks pay on deposits, which is fair to bankers, depositors and borrowers, has dogged economies for some time. In Ghana, there is widespread perception that the spread is too wide. Bankers, on the other hand justify the spread on the basis of economic variables that affect them. This paper contributes to the literature by identifying, in the case of Ghana, the short-run response of the net interest margin of banks to changes in bank-specific, industry-specific and macroeconomic variables within the broad framework of Ho and Saunders (1981) . We find that increases in the following factors significantly increase net interest margin — bank market power (or concentration), bank size, staff costs, administrative costs, extent of bank risk aversion and the rate of inflation. On the other hand, increases in the following variables decrease net interest margin significantly — bank excess cash reserves, the central bank lending rate, management efficiency and the passage of time. To help reduce interest rate margins, we recommend that banks should not get too big, the central bank should consider lowering the capital adequacy ratio and banks should be required to pass on to borrowers the full extent of reductions or increases in the central bank lending rate. Continued efforts at keeping inflation at bay will also help. [ABSTRACT FROM AUTHOR]

The aim of this paper is to estimate the productivity change of Nigerian insurance companies and to rank the companies analysed in the sample according to their productivity score. This benchmark exercise provides the companies analysed with a view of how their relative productivity can be upgraded. For this purpose, the non-parametric Luenberger productivity model is used. For comparative purposes, the non-parametric Luenberger–Hicks–Moorsteen productivity indicator is also used. The companies are ranked according to their total productivity for the period 1994–2005, using both models, which produce variations in the respective results. Economic implications arising from the study are derived. [ABSTRACT FROM AUTHOR]

For small open economies, an understanding of movements in the exchange rate is imperative in analyzing trade and capital flows. In addition, reliable forecasting of exchange rate volatility is important in risk-taking assessment and investment decision-making, both of which are critical to long-term growth. Using an asymmetric GARCH-type approach, this paper examines the implications of economic liberalization on the stochastic behavior of the exchange rate series in a sample of sub-Sahara African (SSA) countries over the 1970–2004 period. The results indicate that exchange rate volatility is variable, and is less volatile under fixed exchange rate regime (pre-economic liberalization) and higher under flexible regime (post-economic liberalization), that is, it is asymmetric. For most of the countries, the EGARCH and TGARCH models are robust to parameter stability and gives better forecasting performance compared to the standard GARCH model. [ABSTRACT FROM AUTHOR]

The paper conducts an empirical investigation into the effects of financial liberalization policies on the growth of 19 countries in sub-Saharan Africa (SSA). Two indexes are constructed which measure the gradual progression and institutional changes involved in financial liberalization. Because these indexes track specific financial liberalization policies, they provide better measures of financial liberalization than the indicators of financial development often used in the literature. Panel data estimates show a significant positive relationship between economic growth and financial liberalization policies. Our results are robust to alternative specifications of the model, and also across slow- and fast-growing countries. [ABSTRACT FROM AUTHOR]

This paper investigates the factors that influence market participation in rural economies. This is based on the premise that participation in the market is an important channel through which the global economy impacts on the rural areas and can have a positive impact on poverty reduction through increased incomes. A case study approach is adopted using four rural communities in three ecological zones of Ghana. [ABSTRACT FROM AUTHOR]

Unemployment is more prevalent in urban than rural Ghana, while underemployment is pervasive in rural Ghana. The paper analyses trends in these two forms of human resource underutilization and examines their major determinants. It is found that a positive association exists between the underemployment rate and the incidence of poverty in specific industries. The data supports the importance of demographics, education and firm sizes as major determinants of unemployment. Furthermore, these factors together with type of employment are the factors influencing underemployment. To reduce the level of unemployment and underemployment, the government should provide support for: (1) growth of private sector firms and informal sector activities; and (2) rural alternatives to agricultural activities. These implications are also relevant to other African countries trying to combat the twin problems of unemployment and underemployment. [ABSTRACT FROM AUTHOR]

South Africa, in an attempt to reduce unemployment and alleviate poverty, has implemented a number of public sector conservation projects: the largest one being the Working for Water Programme(WfWP). Sound economic decision-making regarding the economic feasibility of these public sector conservation projects require that they be subjected to economic assessment in the form of cost-benefit analysis. One aspect of cost-benefit analysis, which is often neglected, is the choice of the social discount rate. This paper addresses the issue of what the social discount rate for public sector conservation projects should be and provides an example of how to derive a social discount rate for a public sector conservation project, namely the WfWP. [ABSTRACT FROM AUTHOR]

This paper seeks to empirically explore the causal link between the level of financial development and economic growth in 13 sub-Saharan African countries. The empirical investigation is carried out in a vector autoregression(VAR) framework based on the theory of cointegration and error-correction representation of cointegrated variables. The results of the cointegration analysis provide evidence of the existence of a long-run relationship between financial development and economic growth in almost all(12 out of 13) of the countries. With respect to the direction of long-term causality, the results show that financial development plays a causal role on economic growth, again in eight of the countries. At the same time, evidence of bidirectional causal relationships is found in six countries. The findings imply that African countries can accelerate their economic growth by improving their financial systems. [ABSTRACT FROM AUTHOR]

This paper analyzes capacity building in Africa based on the experiences of the African Capacity Building Foundation (ACBF). The ACBF was set up through a collaborative effort of African Governments, the World Bank, the United Nations Development Program (UNDP) and the African Development Bank (ADB). The study develops a conceptual framework of capacity building followed by a review of the major perspectives explaining capacity deficiency in Africa. The empirical analyses show that there is a relationship between capacity building and institutional factors such as non-receptivity of policymakers toward policy analysis, politicization of policymaking and lack of capacity prevailing in Africa. The correlation analyses reveal a statistically significant relationship between capacity building and the availability of human and material resources in the region. However, the weak relationship between capacity building and some of the resource variables such as donor funding and expatriate staff as well as the insignificant number of studies seem to suggest that the relationships should be further explored with a large data set. The study also indicates that gestation period, integration of program elements and institutional setting must be carefully considered in designing capacity building projects in Africa. [ABSTRACT FROM AUTHOR]

This paper examines the various theories and paradigms relating to trade and output in monetary unions. Both descriptive and empirical evidence have been used to analyse the case of African regional economic groupings, especially that of the West African Economic and Monetary Union (WAEMU) and other countries in the Economic Community of West African States (ECOWAS). While the descriptive statistics point to greater room for improvement, especially in the areas of price stability, fiscal discipline and greater intra-trade, the empirical evidence shows that monetary union is beneficial to bilateral trade and especially economic growth. The results support the hypothesis that important beneficial effects of monetary union also come through central bank credibility. [ABSTRACT FROM AUTHOR]

One of the strong factors reflecting Africa's economic backwardness is the low level of industrial development. Not only does the industrialization process appear to have bypassed the continent, there is evidence of de-industrialization in the case of several countries. This paper seeks to address a set of interrelated questions: To what extent is the growth performance of African economies related to these structural characteristics? More precisely, is there any discernible evidence that GDP growth and overall labour productivity growth of African countries is positively related to how fast their industrial sector is growing? We test out Kaldor's three growth laws: first, that the growth of GDP is positively related to the growth of manufacturing output not simply in a definitional sense (because manufacturing output is a part of GDP) but in a fundamental causal sense related to the production characteristics of manufacturing activity; secondly, that the growth of labour productivity in manufacturing is positively related to manufacturing output growth because of static and dynamic increasing returns to scale (Verdoorn's Law); and thirdly, that there will be a negative relation between labour productivity growth in the economy as a whole and the rate of growth of employment in the non-manufacturing sector because most activity outside the manufacturing sector is subject to diminishing returns, particularly in land-based activities such as agriculture and many service activities. The authors' conclusions are that there is some empirical support for Kaldor's growth laws in respect of the countries of Africa. The growth of GDP seems much more closely associated with the growth of the manufacturing/industrial sector than the agricultural or service sectors. Structural change in favour of industrial activities would almost certainly help to accelerate the growth of GDP and living standards in Africa. [ABSTRACT FROM AUTHOR]

This paper utilizes cointegration and the vector error-correction model (VECM) to explore the causal relationship between economic growth and growth rate of domestic savings for Congo, Côte d’Ivoire, Ghana, Kenya, South Africa, and Zambia. Specifically, three analyses were undertaken. First, the time series properties of economic growth and domestic savings were ascertained with the help of the augmented Dickey–Fuller unit root procedure. Second, the long-run relationship between economic growth and growth rate of domestic savings was examined in the context of the Johansen and Juselius (1990) framework. Finally, a Granger-causality test was undertaken to determine the direction of causality between economic growth and growth rate of domestic savings. The results indicate one order of integration [I(1)] for each of the series. The results of the cointegration tests suggest that there is a long-run relationship between economic growth and growth rate of savings. The results from the Granger-causality tests indicate that contrary to the conventional wisdom, economic growth prima facie causes growth rate of domestic savings for most of the countries under consideration. Le présent document utilise la co-intégration et le modèle à vecteur de correction des erreurs (VECM) pour étudier les relations de cause à effet entre la croissance économique et les taux de croissance de l’épargne intérieure au Congo, en Côte d’Ivoire, au Ghana, au Kenya, en Afrique du Sud et en Zambie. Plus précisément, trois analyses ont été effectuées. La première a vérifié les propriétés des séries chronologiques de la croissance économique et de l’épargne intérieure à l’aide de la méthode Dickey–Fuller de racine unitaire augmentée. La deuxième a examiné les relations à long terme entre ... [ABSTRACT FROM AUTHOR]

Against the backdrop of a persistent food insecurity problem in Sudan which has prevailed since the mid 1970s, this paper makes use of the ordinary least squares (OLS) method of analysis to assess the performance of the national development strategies encapsulated in various medium-term plans and programs between 1970/71 and 1992/93 with respect to achieving their objective of national self sufficiency in food production through both vertical and horizontal expansion in food production. An exponential function is used to estimate the trends in area, production, and productivity for three major staple crops, namely sorghum, wheat, and millet using annual time series data covering the period 1970-95. The results provide clear evidence that vertical expansion alone does not pay off in terms of output. Instead, policies should focus more on improving agricultural productivity via the introduction of new varieties and the application of technological packages. These policies must then be reinforced by efforts to improve infrastructure, including health and education, to pave the way for a positive supply response at lower costs. Experience has shown that food security, as a prelude to industrial growth is not likely to be achieved if agricultural productivity is not increased. Face à l'insécurité alimentaire persistante qui a prévalu au Soudan depuis le milieu des années 70, cette étude utilise la méthode des moindres carrés ordinaires pour évaluer la performance des stratégies nationales de développment. Celles-ci sont consacrées par les différents plans et programmes à moyen terme appliqués entre 1970/71 et 1992/93 en vue de réaliser l'objectif d'autosuffisance alimentaire par l'expansion verticale et horizontale de la production alimentaire. Une fonction est utilisée pour estimer, par le biais de séries chronologiques annuelles couvr... [ABSTRACT FROM AUTHOR]