Working Paper Series

24-Jul-2019

Working Paper 317 - Women Self-Selection out of the Credit Market in Africa

Women are disproportionately disadvantaged in access to finance in Africa. While supply-side detriments, such as high interest rates and collateral requirements, are well documented in the literature, little is understood about how demand-side factors contribute to the observed gender gap in access to finance. This paper provides the first empirical evidence on how women managers’ perception about their creditworthiness contributes to the large gender gap in Africa, particularly in the Northern region. One of the innovations of the paper is introducing a theoretical model using the credit...
22-May-2019

Working Paper 45 - Commercial Infrastructure in Africa: Potentials and Challenges

For most developed and developing countries, the 1980s and early 1990s were characterized by economic reforms that focused on the reduction in the role of government in the economy. For the United States (US) this process mainly entailed the deregulation and re-regulation of large infrastructure enterprises. In the UK and other Organization for Economic Cooperation and Development (OECD), the process required the privatization of state-owned enterprises and regulation. As applied to developing countries, economic reform meant significant reduction in the ownership of enterprises that were...
21-May-2019

Working Paper 116 - Unlocking Productive Entrepreneurship in Ethiopia: Which Incentives Matter

Policymakers in Sub-Saharan Africa (SSA) are well aware of the positive role that productive entrepreneurship and small and medium-sized enterprises (SMEs) can play in development of their economies. Productive SMEs can create jobs, broaden the tax base, diversify risks, innovate and adopt new technology. The role of SMEs as engines of growth was shown by the postwar recovery in Austria and Germany and by the diverging paths of the Central European and Baltic countries from those of the CIS countries, among others. In transition economies, the productivity gains, employment, and the...
17-May-2019

Working Paper 268 - Measuring Resilience to Climate Change in Ethiopia

Resilience comprises anticipative, mitigative, adaptive, reactive, and transformative capacities. This paper pioneer an approach of measuring resilience using the Resilient Capacity Index (RCI) by considering all the dimensions. Principal Component Analysis (PCA) was used to give relevant weights to the different indicators. OLS and censored regression analysis were used to identify determinants of resilience. The findings indicated that HHs living in the same geographic locations have different levels of resilience. The average RCI for highland, midland and lowland were 0.14, 0.116 and 0.037...
22-Feb-2019

Working Paper 308 - The Diaspora and Economic Development in Africa

International migration has increased significantly since the early 1990s and is now an integral part of globalization. One of the main characteristics of this migration is the size of the youth involved. Indeed, the examination of the architecture of international migration clearly shows a strong dominance of the mobility of the active population (see Figure 1). Africa, which is largely involved in this phenomenon, is characterized by high emigration to developed OECD3 countries. Moreover, the highly skilled emigration rate from Africa — especially West and East Africa — is among the highest...
27-Jun-2018

Working Paper 300 - Village Communities and Global Development

Theories of economic development should be based on a general understanding of how communities have been organized in traditional societies. For such a foundation, we consider some insightful observations about traditional autonomous villages and feudal manors by Henry Sumner Maine, a 19thcentury jurist who studied the history of Western law and the problems of India under British rule. Feudalism is the simplest way to integrate villagecommunities into a larger state system, but much of global poverty may be a legacy of feudal statebuilding. Economic development depends on political...
27-Jun-2018

Working Paper 301 - Structural Transformation, Deep Downturns, and Government Policy

Most recessions are a result of some shock to the economic system, typically amplified by financial accelerators, and leading to large balance sheet effects of households and firms, which result in the effects persisting. But, over time, the balance sheets get restored. Even banks recover. But episodically, the “shock” is deeper. It is structural. Among advanced countries, the movement from agricultural to manufacturing in the last century, and the more recent movement from manufacturing to the service sector reflect such a large economic transformation. The associated downturns are longer...
04-Oct-2017

Working Paper 283 - Mineral Resource Accounting Measures in Africa

Prior to the end of the prolonged commodity boom that led up to the 2008 recession, much was made of the rapid growth in GDP demonstrated by many African countries. The continent’s rising GDPs were held to be heralding a new dawn: a turn in the evolutionary economic downward cycles that had typified many of its economies since the end of the colonial era. The rapid fall in commodity prices as the global recession took hold showed the limitations of these high hopes, and the weak foundations on which some of them had been based. In this paper, we will begin by checking the veracity of this...
04-Oct-2017

Working Paper 284 - Growth and Fiscal Consequences of Terrorism in Nigeria

In spite of government counter-terrorism expenditure and efforts, the incidence of terrorism in Nigeria appears to be rising. This paper examines the growth and fiscal consequences of terrorism in Nigeria by estimating the terrorism--macroeconomy relation using different measures of terror incidence. The results show that terrorism has an economically and statistically significant negative impact on growth; although this impact is considerably small and short-lived, manifesting only after a lag of about three years. Specifically, the cost of terrorism to Nigeria, in terms of lost GDP per...
04-Oct-2017

Working Paper 285 - Capital Inflows and Economic Growth in Sub-Saharan Africa

This study analyzes the effect of capital flows on economic growth in sub-Saharan Africa, using a system of generalized methods of moment (GMM) model. It tests the extent to which the level and volatility of capital inflows, both disaggregated and total, affect economic growth. The study finds that portfolio equity has a positive effect on economic growth while private equity and debt are inversely related to growth. However, volatility of portfolio equity and private equity has no impact on economic growth, pointing to low levels of financial integration in these countries. Total capital...
04-Oct-2017

Working Paper 286 - Climatic Shocks and Food Security The Role of Foreign Aid

Little is known about the role that foreign aid can play in dampening the effects of climate change. This paper investigates the role of aid in mitigating the adverse effects of climatic shocks on food security in developing countries. Because foreign aid is an important source of revenue for developing countries, it can enable them to face climatic shocks by mobilizing or stabilizing resources for the financing of agriculture production or food imports. Our results show that foreign aid dampens the effect of climatic shocks on food security. Moreover, the dampening effect is higher for...
04-Oct-2017

Working Paper 287 - Current Account Adjustments and Integration in West Africa

In this paper, we seek to understand three main issues: first, what are the long- and short-run determinants of current account balances in West Africa; second, is there a sustainable path for the current account position that is consistent with regional integration; and if yes, what has been the process of adjustment towards such a path. We address these questions by first identifying the longterm determinants of the current account, and then using the results to calculate the equilibrium sustainable targets for the current account in the region. After accounting for short-run disequilibrium...
04-Oct-2017

Working Paper 288 - Return to Investment in Agricultural Cooperatives in Ethiopia

In an effort to increase smallholder participation in commodity markets, the World Food Program (WFP) recently implemented five-year Purchase for Progress (P4P) pilot projects in 20 countries. The projects involved investing in physical and human capacities of Farmer Organizations (FOs) to aggregate commodities and add value as well as locally purchasing food aid from the same, the combination of which provided smallholders with value-added forward markets for their staple crop. In this study, using the Ethiopian survey data, we estimated a causal income and distributive effects of the...
04-Oct-2017

Working Paper 289 - Croissance inclusive la performance du Djibouti

Malgré la forte croissance économique observée à Djibouti au cours des dix dernières années, la pauvreté n’a pas reculé dans ce pays. Cet article vise à établir un profil dynamique de la pauvreté à Djibouti, et analyser les liens entre pauvreté, croissance et redistribution dans ce pays, afin d’expliquer les raisons de l’échec observé dans les stratégies de réduction de la pauvreté. Sur la base des données collectées auprès de 6 200 ménages, l’étude utilise la méthode de décomposition de Datt et Ravallion (1992) pour décomposer les variations observées de la pauvreté en effet croissance, et...
04-Oct-2017

Working Paper 290 - Building Fiscal Capacity The role of ICT

Limited fiscal capacity poses a significant challenge in developing countries. To mitigate this challenge, the adoption of electronic tax systems has been at the forefront of tax reforms by many developing countries; however, there is little systematic empirical evidence on the impact of such reforms. We attempt to narrow this gap by documenting evidence from Ethiopia where there has been a recent surge in the use of electronic sales registry machines (ESRMs). Using administrative data covering all business taxpayers, we find that ESRM use resulted in significant increases in reported sales...
04-Oct-2017

Working Paper 291 - Regional Financial Integration and Economic Activity in Africa

Unlike in Asia and Europe, it is not clear what the pattern and impact of financial integration have been in Africa. This paper addresses three main issues: the progress and experience towards financial integration in Africa, the degree and timing of the integration process in selected African stock markets, and the effect of financial integration on economic activity. First, using time-varying parameters from a state-space model, we assess the degree and timing of financial integration in Africa and find results that indicate contemporary patterns toward increasing financial globalisation...
04-Oct-2017

Working Paper 292 - Chaines de valeur et Transformation structurelle soutenable

Depuis une quinzaine d’années, la diversification et la sophistication des exportations se sont imposées comme les deux indicateurs permettant de mesurer et de qualifier le processus de transformation structurelle. Ainsi, alors que les pionniers de l’économie du développement s’attachaient à décrire les transformations de la structure productive, les travaux contemporains se concentrent sur les modifications du panier d’exportation. Une telle approche, dans le contexte actuel de fragmentation mondiale des productions, est problématique. Avec l’amplification de cette fragmentation, il y a eu...
23-Sep-2017

Working Paper 182 - Rising Food Prices and Household Welfare in Ethiopia: Evidence from Micro Data

The Ethiopian economy has witnessed a double-digit rate of inflation since 2003, culminating at 53% in June 2008. Particularly the significant rise in the relative prices of grain and other foodstuff such as sugar, edible oil and other necessities in recent period are very worrisome. Evidently such large changes in both absolute and relative prices in a space of few years can undermine the rebound in per capita incomes in the last decade and the poverty reduction effort of the government. The gravity of the problem has been well understood by policy makers, and efforts are underway to...
01-Aug-2017

Working Paper 273 - Stock (Mis)pricing and investment dynamics in Africa

The study ascertains the extent of mispricing in equity portfolios and mispricing–investment relation using the post financial crisis stock information. A risk-augmented capital asset pricing model (CAPM) is specified to estimate the mispricing in equity portfolios while the mispricing– investment relationship model follows Mohammed (2006). For all the estimations, the regressions are run on daily data from 5 January 2010 to 30 December 2015. First, the results show the presence of transient mispricing in the portfolios’ returns of African equities regardless of the firms’ liquidity and...
01-Aug-2017

Working Paper 274 - Conflict and Fragile States in Africa

This paper considers the determinants of conflict in Africa. It revisits the greed– grievance debate to consider the specific regional context and changing nature of conflict in sub-Saharan Africa. This is a literature that has grown rapidly in economics and political science, but some recent developments in modeling and conceptualization are providing important new contributions. It proposes and uses modeling techniques that deal with the problem of excess zeros, revisits the definition of conflict, and improves upon some proxy measures. Understanding the nature of conflict in Africa is...