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This paper investigates the possible crowding‐in or crowding‐out effect of public investment on private investment in sub‐Saharan Africa. While this relationship has been theoretically and empirically studied in the literature, most studies used traditional panel fixed effects or Generalized Method of Moments estimators which can potentially lead to biased and inconsistent estimates. We employ heterogeneous parameter models, including the Mean Group, the Common Correlated Effects Mean Group Model, and the Augmented Mean Group estimators, to incorporate the possibility of slope heterogeneity and the presence of cross‐sectional dependence. Using a large sample of 44 sub‐Saharan African countries over the period 1960–2015, we find that on average public investment crowds in private investment in sub‐Saharan Africa. We also find that the impact differs between countries and is higher in countries with a strong private sector. [ABSTRACT FROM AUTHOR]

This paper contributes to the understanding of the other neglected effects of foreign direct investment (FDI) by analysing how FDI affects financial development in the short run and long run for a panel of 49 African countries over the period 1990–2016. The empirical evidence is based on a pooled mean group approach. With three panels differentiated by income level, the following findings are established: first, while there is a positive and significant long‐run relationship between FDI and financial development in Africa, in the short run the effect of FDI on financial development is negative. Second, the effect of FDI is positive and significant in the long run in the three sub‐samples. However, in the short run, the effect of FDI is negative and significant in lower‐income countries and non‐significant in lower‐middle‐income and upper‐middle‐income countries. Overall we find strong evidence supporting the view that FDI promotes financial development in African countries in the long run. [ABSTRACT FROM AUTHOR]

This study aims to examine and analyze the impact of financial development and foreign bank penetration on African economies. An empirical study for the period 1995–2015 is conducted using the system GMM estimator. Our empirical results indicate that foreign bank entry has a positive and significant impact on economic growth in the countries of North and Southern Africa, while in the other two regions considered in this study (West and Central Africa, East Africa) the impact is negative and rarely significant. In addition, our results show that the development of financial markets has a positive and significant effect on economic growth only in the Southern African region. The paper concludes that policymakers should focus on long‐term policies to strengthen the financial sector to truly meet the needs of African people. [ABSTRACT FROM AUTHOR]

As the hunting, butchering, processing, and consumption of bushmeat is a potential source of human Ebola virus (EV) infections, the extent to which bushmeat is a substitute for food produced and sold in the formal sector suggests that the relative price of food could matter for the incidence of human EV infections. This paper considers if productivity in the food sector is a driver of human EV infections in sub‐Saharan Africa. We estimate count data specifications of country level human EV infections as a function of food sector productivity in sub‐Saharan Africa over the 1976–2013 time period. Our parameter estimates suggest that if productivity in the food sector was on average 1 per cent higher over the 1976–2013 time period, the incidence of human EV infection would have been 42.5 per cent lower. This is consistent with bushmeat being a substitute for food produced in the formal sector, as food productivity increases lower the price of formal food relative to bushmeat. Our findings suggest that as productivity in the formal food sector is a driver of human EV infections in sub‐Saharan Africa, policy interventions that increase food productivity would enable Millennium Development Goal outcomes related to hunger, disease mitigation, and sustainability of wildlife. [ABSTRACT FROM AUTHOR]

Macroeconomic models currently used by policymakers generally assume that the functioning of financial markets can be fully summarized by financial prices, because the Modigliani and Miller (1958) theorem holds. However, the assumption that this theorem holds is questionable. This paper argues that there are frictions in the market which traditional models based on the Modigliani and Miller theorem fail to take into account in explaining how monetary policy and other shocks are transmitted to the economy and points to new directions. A comprehensive macroeconomic model should incorporate financial market interactions to enhance the understanding of the transmission mechanisms of monetary policy and other shocks. If market dynamics are not taken into account, macroeconomic models used by policymakers may point to wrong policy choices. Motivated by the lack of assessment of the recently launched financial reforms, deregulation, consolidations, financial innovations and joint payment systems, the paper assesses the process of monetary transmission mechanism by investigating evidence of a bank lending channel in SADC during the period 1990–2006 using data from the banking sector. Data from a panel of banks is used to identify shifts in the loan supply curve in response to changes in monetary policy using a vector autoregression (VAR) model. Although the results are mixed the paper generally reports the existence of a bank-lending channel in all SADC countries in the sample. The take-off point for monetary policy effects differs from one country to another. [ABSTRACT FROM AUTHOR]

The purpose of the paper is to empirically investigate the link between debt relief and credit to the private sector in African countries using a panel method over the period 1988–2004. The motivation for investigating the relationship between debt relief and credit to the private sector follows Christensen's (2004) hypothesis that domestic debt has a negative impact on the credit to private sector; therefore debt relief is expected to alleviate domestic debt and thereby create space for domestic credit, which if it is mostly constituted of public sector credit, crowds out credit to the private sector. The main results of the paper are as follows: (1) debt relief has a significant and positive effect on credit to the private sector in the short term; (2) in the long term, debt relief has positive effects on domestic credit to the private sector only when associated with good initial institutional quality. [ABSTRACT FROM AUTHOR]

Technological progress in Ethiopian agriculture is the slowest by any standard, with rather very poor capacity to address the nation's problems of low agricultural productivity, poverty, and resource degradation. This paper argues and attributes the low level of technology adoption and impact to the discrepancy between the farmers' needs and the attributes of technologies generated. The empirical evidences have been generated based on the analyses of coffee farmers' variety attribute preferences, taking coffee seedlings as production technologies. Attribute preferences of smallholder farmers are governed by their contextual household characteristics, institutional, and socioeconomic factors. According to the results, risk vulnerable farmers prefer seeds adaptable to their local conditions and varieties with stable yield attribute. On the contrary, farmers in more accessible areas and/or those who are less concerned in securing subsistence income levels opt for income maximizing attributes, namely, yield and marketability. The study results have also shown the mechanisms of how farmers' attribute preferences change with development-oriented interventions. The paper demonstrates why and how policy-makers should formulate context specific technology development and agricultural extension strategies. [ABSTRACT FROM AUTHOR]

Studies of child labor in developing countries have largely relied on data collected through national household surveys. But government-sponsored household surveys are arguably prone to both sample selection bias and reporting bias. In this paper, we compare the demographic and labor market characteristics of working street children obtained from the 2000 Tanzanian Integrated Labor Force Survey, a government-sponsored household survey, with the results obtained in a 2004 survey of working street children in the city of Mwanza in northern Tanzania. Our comparisons help illumine the potential biases introduced when child labor studies rely on household samples; specifically, we show that children in the non-household based survey work longer hours, have lower educational attainment and suffer worse health outcomes than their counterparts in the government-sponsored household survey. This suggests that studies based on national household surveys may significantly underestimate both the extent and the consequences of child labor. [ABSTRACT FROM AUTHOR]

This paper examines the role of several export development strategies in relaxing export supply capacity constraints and promoting export expansion and diversification in Africa. It starts with a review of the analysis and recommendations in Can Africa Claim the 21st Century? ( World Bank, 2000 ) and an identification of subsisting supply obstacles. This forms the background against which the paper discusses changes in the growth, structure and destination of African exports during 2000–2005; explores the use of export development strategies (such as supply chain management, networks and clusters, as well as branding); and discusses the enhancement of market access of African exports regionally and globally. The paper concludes with an analysis of the prospects for relaxing Africa's export supply response capacity constraints and the feasibility/viability of the suggested strategies for expanding and diversifying the region's exports. [ABSTRACT FROM AUTHOR]

Copyright of African Development Review / Revue Africaine de Développement is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper reviews theoretical frameworks for sectoral decomposition and assesses the within- and between-sector contributions to changes in aggregate poverty in Cameroon informed by the Shapley Value decomposition rule. Between 1984 and 1996 poverty remained a rural phenomenon in Cameroon. It became more widespread, deeper and severer in both rural and urban areas, but more so in urban than rural areas. While the within-sector effects disproportionately accounted for the increase in poverty in the period 1984–96, the between-sector contributions in both rural and semi-urban areas played a mitigating role on the worse effects of the increase in poverty. These findings infer the potential positive feedback effects of migration such as remittances, and/or increases in rural consumption expenditure in the face of rural underemployment, as effective strategies used by migrants to lift their families and villages out of the worse effects of poverty. The implication of this interpretation is that decision-makers need to better understand the factors that push or pull potential migrants. Rural–urban mobility could, therefore, be viewed as a strategy used by households to moderate the worse effects of poverty and a vector of shared growth. The implications for public policy, in terms of open unemployment and associated social and insecurity problems at the receiving end, point to the wisdom of addressing the push-factors via targeting more in favour of rural areas. [ABSTRACT FROM AUTHOR]

The literature on capital flight and remittances is copious, as a plethora of studies in recent years have focused greater attention on the determinants and impact of capital flight and remittances in the development process. These issues are particularly pertinent to Africa in view of its relatively high incidence of capital flight in the presence of foreign exchange constraints, limited foreign capital inflows, external indebtedness and high dependence on overseas development assistance. The principal aim of this paper is to estimate the extent and magnitude of capital flights from Africa and remittance inflows to Africa, and to assess their role in current account sustainability. The paper employs standard methodological approaches to estimating capital flight and remittances for selected African countries and analyses their relationships with current account balance and key economic indicators. The findings from the statistical exercises in the paper yielded a number of important results: • The magnitude of capital flight from Africa has increased considerably in recent years, with widespread fluctuations and volatility. • The volume of remittances into Africa has increased dramatically but steadily. • There is a negative association between balances on current account and capital flight, implying that capital flights tend to worsen current account difficulties. • There is a positive relationship between remittances and current account, suggesting that remittances could play an important role in mitigating current account problems. • The link between remittances and economic growth is positive, albeit insignificantly in the statistical sense, suggesting some evidence of the crucial role of remittances in the economic growth and development process. • External debt and capital flight are positively intertwined, providing support to the so-called ‘round-tripping’ or ‘back-to-back’ hypothesis The policy implications of these findings are that in spite of the good progress made by many African countries towards economic and political reforms, more innovative policy thinking and reform deepening must be initiated to create a conducive environment for private sector participation in general and foreign capital (including capital flight reversal) in particular. Similarly, there is a need for incentivising and mainstreaming remittances into national development strategies with the view to promoting the growth-enhancing effects of remittances. A wide range of policy options and forward thinking analyses were advanced in the paper. [ABSTRACT FROM AUTHOR]

Copyright of African Development Review / Revue Africaine de Développement is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Presents information on the research contributions of Mohammed Nureldin Hussain. Discussion on the broad achievement of the Research Division of the African Development Bank; Information on the African development policy issues prepared by the Research Division; Importance of privatization to the private sector development.

The paper uses a simple macroeconomic model to estimate the impact of debt relief and terms of trade shocks on growth and poverty in African countries. For the 18 heavily indebted poor countries (HIPCs) that reached the enhanced HIPC decision point by end-December 2000, the basic quantitative findings are that HIPC debt relief has boosted economic growth in these countries by an average of 2.9 percent per annum and that the computed result of this increase in growth is a reduction in poverty by an average of 2.2 percent per annum. However, the paper shows that recent deteriorations in the terms of trade have counter-balanced these positive effects by lowering growth by an average of 2.0 percent per annum and by increasing poverty by an average of 1.3 percent per annum. Clearly, much of the positive impact emanating from the HIPC Initiative has been eroded due to recent deteriorations in the terms of trade. The paper also estimates the net effect on growth and poverty of the recently agreed 100 percent multilateral debt relief. This is predicted to boost economic growth by an average of 5 percent per annum and reduce poverty by about 5.3 percent per annum for the group of all African HIPCs. The paper concludes that 100 percent debt relief is crucial for Africa, but that more aid and policies need to be focused on a long-term development strategy that fosters the necessary structural transformation. [ABSTRACT FROM AUTHOR]

In this paper we use a computable general equilibrium model to study the impact of a trade shock and a tariff reform on household poverty for an archetype developing country. Unlike other studies, we present the income distribution of each household group as a Beta statistical distribution. In contrast to other studies, this paper presents the poverty lines as being endogenous. With this specification, the poverty line will change following a variation in relative prices. With the new distributions and poverty line, the poverty levels of the base year are compared with the ex-post values. Foster, Greer and Thorbecke's (1984) poverty measures are used. We work with the Cameroon household survey data of 1995–96. We consider two scenarios. The first is a 30 percent fall in the world price of the country's export crop and the second is a reduction of 50 percent in the country's import tariffs. For the first simulation, results indicate a drop in all household incomes and a decrease in the poverty line. Unilateral trade liberalization also has negative consequences on all household incomes. As in the first simulation, the poverty line decreases with a unilateral trade liberalization. In the trade liberalization simulation, the poverty line effect counters the income effect in most cases analyzed. In the other simulation, the poverty line effect attenuates the decrease in the poverty measures. [ABSTRACT FROM AUTHOR]

This paper extends the existing literature on poverty in developing economies by examining the effects of human capital, financial capital and physical assets on the incidence of poverty in both urban and rural Ghana. The following is found: low stocks of assets appear to be a more prevalent problem associated with poverty; the returns to human capital are positive and rise with higher educational attainment, irrespective of gender; the correlation between income distribution and incidence of poverty is positive; and ownership of human, physical and financial assets reduces the probability of being poor. Against the backdrop of growth-oriented policies, the paper calls for investments in schooling, provision of institutional credit and an enabling environment for labour market activities as strategies for the reduction of poverty. [ABSTRACT FROM AUTHOR]

In the last two decades, primary and secondary school enrollment rates have declined in Nigeria while enrollment rates in post-secondary school have increased. This paper estimates from the General Household Survey for Nigeria the private returns to schooling associated with levels of educational attainment for wage and self-employed workers. The estimates for both men and women are small at primary and secondary levels, 2–4 percent, but are substantial at post-secondary education level, 10–15 percent. These schooling return estimates may account for the recent trends in enrollments. Thus, increasing public investment to encourage increased attendance in basic education is not justifiable on grounds of private efficiency, unless investments to increase school quality have higher private returns. With high private returns to post-secondary schooling, students at this level should pay tuition, to recoup more of the public costs of schooling, which may be redistributed to poor families through scholarships. [ABSTRACT FROM AUTHOR]

Copyright of African Development Review / Revue Africaine de Développement is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of African Development Review / Revue Africaine de Développement is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Although southern African economies appear to have escaped the initial phase of the East Asian economic crisis relatively unscathed, the second stage of the contagion was somewhat less benevolent in its influence on southern African economies. This paper seeks to investigate the impact of the Asian contagion on southern African economies within a general equilibrium framework. We use the GTAP (Global Trade Analysis Project) model to examine the implications of the Asian crisis for southern African economies. Bien que les économies des pays du sud de l’Afrique semblent avoir échappées à la première phase de la crise économique de L’Asie de l’est, l’effet de la deuxième phase a été plus néfaste envers les économies des pays sud africains. Cet article cherche à enquÁter sur l’impact qu’a eu la contagion asiatique sur les économies des pays sud africains dans un cadre d’équilibre général. Nous utilisons le modèle du GTAP (Global Trade Analysis Project) afin d’interpréter les implications de la crise asiatique sur l’économie des pays sud africains. [ABSTRACT FROM AUTHOR]

Copyright of African Development Review / Revue Africaine de Développement is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The object of this paper is to examine the fiscal consequences of exchange rate adjustment in the context of selected African economies. The paper identifies the salient channels through which the exchange rate is expected to influence fiscal variables, describes the behaviour of these indicators in the sample countries, and formulates and estimates an empirical model that links the real exchange rate with real fiscal revenue and expenditure. It finds that currency devaluation - where launched - has, on balance, resulted in real depreciation and that the latter has increased real fiscal revenue, with imperceptible effect on real expenditures. The fiscal deficit is found to exert no statistically significant influence on the behaviour of the real exchange rate. Ce document examine les conséquences budgétaires de l'ajustement du taux de change dans un certain nombre de pays africains. Il détermine les principales voies par lesquelles le taux de change est censé influer sur les variables budgétaires, décrit le comportement de ces indicateurs dans les pays concernés, élabore et évalue un modèle empirique établissant un lien entre le taux de change réel et les recettes et dépenses budgétaires réelles. Il constate que la dévaluation, l&agrave: où elle est intervenue, s'est en définitive traduite par une véritable dépréciation, qui a entraâné un accroissement des recettes budgétaires réelles et exercé un effet imperceptible sur les dépenses réelles. En outre, sur le plan statistique, le déficit budgétaire n'exerce pas d'effet significatif sur le comportement. [ABSTRACT FROM AUTHOR]

Information on the topic "Rethinking African Economic Policy in Light of the Global Economic and financial Crisis" discussed at a meeting held December 6-8, 2009 in Nairobi, Kenya. As stated, the objective of the meeting was to respond to the threats of the financial crises on Africa's growth and development. Information of several sets of papers discusses at the meeting is also discussed.

Cet article analyse les effets de l'exploitation des ressources naturelles sur les recettes fiscales non liées aux ressources naturelles dans les pays de l'Union Economique et Monétaire Ouest Africaine (UEMOA) de 1996 à 2015 en utilisant les Effets Fixes Dynamiques (Dynamic Fixed Effects, DFE). Les résultats montrent que l'exploitation des ressources naturelles dissuade la mobilisation des recettes fiscales non liées aux ressources naturelles. La mauvaise qualité des institutions amplifie l'effet corrosif. Les résultats restent stables suivant les différents indicateurs de la qualité institutionnelle et les types de ressources naturelles. Ces résultats impliquent que les pays de l'UEMOA doivent améliorer la qualité des institutions de sorte à accroître leur capacité à gérer d'importants revenus provenant des ressources naturelles. [ABSTRACT FROM AUTHOR]

This introduction distills the key findings and messages from the papers published in this issue, which consist of eight case studies on the causes and effects of capital flight from Africa. The case studies contribute to the literature by providing evidence that enables us to assess the validity and generalizability of the findings from cross-sectional and panel data studies. The evidence from the case studies confirms important empirical regularities on the causes of capital flight. In particular, the results confirm that external borrowing fuels capital flight, and that trade misinvoicing is an important channel of capital flight, especially in the case of natural resource-rich countries. The studies also underscore the important role of good institutions in alleviating the risks of capital flight, while political instability is found to be a driver of capital flight. The evidence from case studies provides valuable insights for the design of strategies aimed at curbing and preventing capital flight from Africa. [ABSTRACT FROM AUTHOR]

This paper explores the 'financial revolving door' hypothesis in Cameroon over the 1970-2010 period by extending the analysis to other types of capital flows such as Official Development Assistance (ODA) and Foreign Direct Investment (FDI). The paper shows that a one-dollar increase in external debt leads to an increase in capital flight of 47-62 cents. This increase in capital flight mainly stems from changes in the private component of external debt. Capital flight is twice more sensitive to an increase in oil revenues than external debt. The paper further underscores the importance of the political and institutional environment. Even though corruption exacerbates the relationship, political and institutional stability helps to mitigate illicit capital outflows arising from an increase in external debt. With regard to the effect on ODA and FDI, the paper found it to be of little significance. [ABSTRACT FROM AUTHOR]

This paper analyses the amount of capital flight associated with the natural resources sector (oil and timber) in Cameroon. The paper adjusted the methodology proposed by Boyce and Ndikumana () to take into account the practice of misinvoicing in the oil and timber industries using data from World Integrated Trade Solution (WITS) and COMTRADE. The results confirm that the natural resources sector, and in particular the oil and timber industry, is an important conduit of capital flight through trade misinvoicing. This finding underscores the need to improve governance in the extractive industries, as well as the quality of institutions, especially those that are in charge of trade transactions. [ABSTRACT FROM AUTHOR]

The conventional wisdom is that growth is a precondition for poverty reduction. Paying particular attention to the level of growth, poverty and institutions in sub-Saharan Africa (SSA), this paper investigates the effect of GDP per capita growth and sectoral growth on poverty and explores whether the growth-poverty link can be strengthened by institutions. Using the panel dataset of 41 SSA countries over the period 1981-2010 and dynamic two-step system generalized method of moment (GMM) estimator; it is found that GDP per capita growth is an important instrument for poverty reduction. Also, the growth of agriculture and the service sectors have direct poverty-reducing effects. The paper further reveals that good and accountable government, bureaucratic quality and sound policies and regulations are important ingredients in sustaining the growth-poverty link in SSA. [ABSTRACT FROM AUTHOR]

The main objective of this paper is to investigate CEMAC's demand for international reserves, with an emphasis on the role of the monetary disequilibrium. Prior to this task, we assess CEMAC's position in terms of reserve adequacy. Using some relevant measures of reserve adequacy, we find that CEMAC countries have sufficient international reserves to meet the minimum adequacy requirements. To better analyze CEMAC's international reserves demand, we extend the usual buffer stock model to account for overall economic growth and imports. Moreover, an importance is given to the devaluation of the CFA franc, the peg of this currency to the euro, and the effect of the recent Global Financial Crisis. Using quarterly data from 1985:1 to 2009:4, we show that the long-run reserve demand in the CEMAC area can be described as a function of uncertainty and economic growth. It also appears that a disequilibrium in the money market significantly affects reserve demand in the CEMAC area. Moreover, both the devaluation of the CFA franc and the peg of this currency to the euro positively affect the demand for international reserves in the short run. Finally, there is evidence of an inertia in the reserve management of the central bank. [ABSTRACT FROM AUTHOR]

This paper analyzed drivers of foreign direct investments (FDI) to West Africa using a panel dataset from 1970 to 2010. OLS and GMM techniques are used for the estimations. The main results indicate that there is a U-shaped relationship between economic development and FDI inflows to West Africa. In summary: (i) The quadratic element of real per capita GDP, domestic investment, trade openness, first year lag of FDI, natural resources (oil and metals) endowment and exports, and monetary integration have positive and significant effect on FDI inflows to West Africa; and (ii) there is a negative relationship between FDI inflows to the sub-region and loan component of ODA, economic growth, level of economic development (real GDP per capita), life expectancy, and domestic credit to the private sector. [ABSTRACT FROM AUTHOR]

This paper looks at the implications of monetary policy uncertainty in the WAEMU area over the period 1975Q1-2010Q2. Under uncertainty on the transmission mechanisms, the monetary policy must be cautious according to the Brainard conservatism principle. Using the linear quadratic stochastic control approach by introduction the variance covariance matrix of the estimated parameters in the optimal control theory the results through the optimal monetary policy rule yield that the policy-makers are always very cautious when they have an inflation and output gap stabilization objective. However, when they are concerned to smooth interest rate, their behavior becomes distinctly more aggressive. [ABSTRACT FROM AUTHOR]

This paper aims at assessing the relationship between infrastructure development and competitiveness in North Africa. Based on the World Bank data, we analyze the infrastructure indicators of four North African countries over the period 1996-2012 and estimate the elasticity of competitiveness with respect to infrastructure development. We first argue that competitiveness could be improved by investing more on infrastructure. Although comparison with sub-Saharan Africa reveals that important progress has been made in North Africa in terms of quantity, countries need to improve the infrastructure quality by investing in green energy, in maintenance, in public private partnerships and in regional infrastructure. Econometric analysis confirms that a 1 percent increase in infrastructure quality raises competitiveness by 0.64 percent. Country specific elasticity is respectively 0.22 in Algeria, 1.42 in Egypt, 0.36 in Tunisia and 0.56 in Morocco. Based on these results, appropriate policy recommendations are discussed. [ABSTRACT FROM AUTHOR]

Currency crises, generally defined as rapid depreciations of a local currency or loss of foreign exchange reserves, are common incidents in modern monetary systems. Due to their repeated occurrence and severity, they have earned wide coverage by both theoretical and empirical literature. However, unlike advanced and emerging economies, currency crises in low-income countries have not received due attention. This paper uses the signals approach developed by Kaminsky et al. () and assesses currency crisis in Ethiopia over the time frame January 1970 to December 2008. Using the Exchange Market Pressure Index (EMPI), we identify three currency crisis episodes that coincide with the liberalization following the fall of Ethiopian socialism, the Ethio-Eritrean border conflict, and the zenith of the global financial crisis. The timing shows the importance of both local and international dynamics. More macroeconomic indicators picked up the first crisis in a 24-month signalling window, compared to the latter two. Three categories of indicators were used: current account, capital account and domestic financial sector. None of the capital account indicators were significant based on the noise-to-signal ratio rule. One possible explanation for this might be the weak integration of the Ethiopian economy with global capital markets. [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]

Empirical studies on international trade highlight the role of innovation on international exchange but do not capture the effect of technological innovation when unobservable common factors (UCFs) are considered. This paper examines the long‐run relationship between technological innovation and international exchange using panel data for eight African countries over the period 1981–2013. The non‐stationarity and cointegration between technological innovation, international exchange, public investment, real gross domestic income and foreign direct investment were examined, controlling for cross‐sectional dependence and heterogeneity between countries. The results suggest that technological innovation in Africa remains low after controlling for UCFs, while public investment, real gross domestic product and foreign direct investment have significant impact on international exchange. Moreover, the results from the homogeneous and heterogeneous estimates, with and without UCFs, show that ignoring UCFs is likely to bias the coefficients. These findings reveal that African countries should invest more in public infrastructures and research and development to upgrade their capability To play an active role in the international market. [ABSTRACT FROM AUTHOR]

Since the seminal paper by Rajan and Zingales in 2003, a plethora of studies have been motivated to establish whether the simultaneous opening of trade and capital borders leads to financial sector development. We test whether the simultaneous openness hypothesis is valid for Nigeria, with a focus on the banking sector and stock market. Using annual data from 1990 to 2015 and an instrumental variable regression estimation technique, we show that the simultaneous increase of trade and financial openness limits banking sector and stock market development. Thus, there is no empirical evidence to validate the simultaneous openness hypothesis in Nigeria. It also shows that trade openness is more beneficial for banking sector and stock market development in Nigeria than financial openness. [ABSTRACT FROM AUTHOR]

Financial deepening is universally considered to be one of the vital means to trigger inclusive growth, in economies the world over, Tanzania being no exception. However, the lack of traditional collateral among the poor has made it virtually impossible for them to have access to financial services particularly in the formal financial institutions. It is in this context that the informal financial groups (IFGs) are so crucial in filling the financial inclusiveness gap among the poor in Tanzania. It is thus crucial that the efficacy of IFGs in improving the well‐being of the poor is assessed. It is in this context that the present study employs a quasi‐experiment mixed methodology to answer research questions. Findings have categorically shown that membership to IFGs has a positive and significant impact on various socio‐economic variables. Efforts to intensify education and training activities in IFGs, and their access to loans are some of the key recommendations that this paper suggests. It is hoped that the newly promulgated 2017 National Microfinance Policy shall be implemented to that effect. [ABSTRACT FROM AUTHOR]

Financial development is influenced by the dynamics of multiple factors which have remained insufficiently explored up to date. In view of this, an attempt is made in this paper to investigate the impact of internet adoption on financial development in sub‐Saharan Africa, using Nigeria and Kenya as case studies. The dynamic ordinary least squares and vector error correction mechanism methods were employed in the study which revealed that the internet, complemented by financial openness, exerted a significant positive impact on financial development in the period 2000–16. The null hypothesis which states that the internet does not encourage financial development is therefore rejected. It follows that the level of financial development in both countries, and indeed most countries in sub‐Saharan Africa, could be enhanced by adopting appropriate policies that encourage more inclusive use of the internet. The policy recommendations of this study therefore include (i) relaxing the stringent requirements for licensing internet operators in order to make more services available for financial transactions, (ii) integrating internet technology into the national infrastructure framework in order to sustain its application, (iii) fostering local skills and expertise that will be maintaining internet infrastructure and (iv) providing a legal framework that protects personal information and ensures responsible usage of internet. [ABSTRACT FROM AUTHOR]

The main objective of this paper is to estimate the agricultural sector production efficiency using data envelopment analysis based on a cross‐section of 49 African countries over the 1995–2012 period in order to analyze the determinants of annual efficiency scores to assess the impact of agricultural efficiency on food security. We find that agriculture aid, agricultural sector infrastructure, sanitation, and good governance serve the main drivers of agriculture efficiency and its growth. Our findings also suggest that a large portion of Africa's agricultural sector growth can be attributed to technical progress as opposed to efficiency changes. [ABSTRACT FROM AUTHOR]

This paper conducts an empirical investigation of the relationship between trade liberalization and intra-ECOWAS in selected economies. Using system and difference generalized method of moments, findings showed that trade liberalization has contributed to intra-regional trade in West Africa. Our results also show that better institutional quality and infrastructure are associated with higher intra-ECOWAS trade. Furthermore, using fixed and random effect estimators our findings were validated, thus reinforcing support to the hypothesis that removal of trade restrictions particularly in the manufacturing and primary sectors, good governance and infrastructural developments enhance trade amongst ECOWAS countries. [ABSTRACT FROM AUTHOR]

Commodity price fluctuations pose significant challenges for macroeconomic stability in many African economies. This is so because of the heavy dependence on primary commodities for revenue and economic activity. But not all countries are affected alike. The nature of the impacts is likely to be different, depending on the structural characteristics of the economy and the policy responses. In this paper we seek to better understand the macroeconomic impacts of commodity price fluctuations on economic performance in Africa using both descriptive analysis and carefully identified structural vector autoregressions. Overall, the results show that there is heterogeneity in both the direction and magnitude of macroeconomic responses to commodity price shocks in different economies. Specifically, the policy responses to commodity price shocks in Africa have been mostly procyclical, whereas the primary aim of fiscal and monetary policy should be to follow a countercyclical stance from a Keynesian perspective. As a result of these procyclical impacts, especially for fiscal variables, we recommend the use of structurally cyclical budget rules for fiscal policy, and product price targeting rules for monetary policy in Africa's commodity republics. [ABSTRACT FROM AUTHOR]

Recently the Central African Republic (CAR) has been experiencing huge economic insecurity which mostly derives from the political governance crisis that the country has been continuously undergoing since its independence in 1960. This paper examines the relationship between the political governance crisis and economic security in the country, covering the period 1996–2015, using two‐stage instrumental analysis and second order asymptotic tests. The results show that political stability and absence of violence/terrorism, voice and accountability, proxies of political governance crisis played a different role on national income per capita, agricultural raw materials exports, agriculture value added, external balance on goods and services, food exports, food imports, foreign direct investment, GDP growth, GDP per capita growth, wage and salaried workers, industry value added, total natural resources rent and trade, as proxies of economic security. The importance of sustainable political governance stability and the implementation of appropriate reforms at institutional level are preconditions to economic security. [ABSTRACT FROM AUTHOR]

In response to changing prices, incomes and demographics, household use of various fuels such as electricity, gas, kerosene and fuel wood have changed over the years. In this paper we estimate income and price elasticities of household demand for various types of energy in urban southwest Nigeria. Household micro‐data was collected via the administration of a questionnaire. Empirical analysis showed that all energy goods are inelastic for own price elasticities and cross price elasticities. Most of the cross price effects are negative values indicating complementarity between energy goods. This suggests that substitution possibilities between energy goods are quite limited. However, kerosene is shown to be the main fuel used for cooking by about 90 per cent of households; the use of LPG and electricity is minimal. The income group analysis further shows that kerosene is preferred across all income groups. Budget share allocations reveal that households allocate a greater share of their income (40 per cent) to kerosene consumption while LPG gets the lowest share allocation of (3 per cent). [ABSTRACT FROM AUTHOR]

Using an improved food poverty line, this paper provides the first dynamic food poverty analysis for Nigeria, accounting for urban‐rural income and price differentials. Estimates from the General Household Survey (GHS) longitudinal data reveal that about half of the population was food‐poor in 2013. The proportion of the population that slipped into food poverty within the periods under study (2010–13) far outweighs those that moved out of food poverty. After controlling for households' socio‐economic and demographic characteristics in a multivariate analysis, large initial household size, unemployment, and low levels of initial education are identified as key factors that keep households in food poverty over time. This, however, varies across rural and urban households. [ABSTRACT FROM AUTHOR]

By investigating factors influencing interest margins adjustment, this paper aims to provide some answers on how to improve the efficiency of the Tunisian banking system. Focusing on different theoretical views on the determinants of banks intermediation margins using a quite representative sample observed between 1999 and 2014, we estimate an augmented model using the system GMM estimator assuming the existence of adjustment costs. Estimations results and robustness checks show that reducing intermediation margins of Tunisian banks is fundamentally a matter of improving cost efficiency, scale economies and competitiveness. Considering the highly distressed economic and financial context in which Tunisian banks operate since 2011, we think that improving bank efficiency and credit access in Tunisia is closely related to the capacity of the government and the regulatory authority to enforce urgent strategic reforms in order to consolidate the banking system and to improve its competitiveness. [ABSTRACT FROM AUTHOR]

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Abstract: Despite technological progress and society's changing lifestyles, preferences and attitudes towards public healthcare, little is known about the impact of these non‐economic factors (NEFs) on public health expenditure because existing studies have focused mainly on macroeconomic factors. This paper employs a structural time series model (STSM) to re‐examine and quantify the contributions of the key underlying drivers of public health expenditure while accounting for technological progress and other NEFs that have hitherto been ignored. The STSM captures the impact of NEFs via a stochastic trend component. The results of our application for Nigeria using data (1971–2013) sourced from the World Bank and Central Bank of Nigeria are robust to a battery of unit‐root and cointegration tests. We found that the key macroeconomic factors — economic output, current account and fiscal balance, official development assistance, oil revenue as well as urbanization and crude birth rate — are important drivers of public health expenditure. Technological progress and other NEFs have a non‐linear significant impact that varies with time and remains the largest contributor to annual change in public health expenditure. Policy implications from our findings are noted. Specifically, understanding and stabilizing both the macroeconomic and non‐economic factors are crucial to improve public health expenditure. [ABSTRACT FROM AUTHOR]