Working Paper Series

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, croissanceet 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 6200 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...
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...
01-Aug-2017

Working Paper 275 - Illicit Financial Flows and Political Institutions in Kenya

The conventional Neoclassical literature views illicit financial flows (capital flight) to be a result of portfolio choice decisions by utility optimizing agents. These flows are seen as a response to changes in an individual’s portfolio bundle arising from the standard risk diversification motive by economic agents due to relative risk incentives and return differentials. This paper explores a political economy perspective as an alternative explanation to the illicit financial outflows for one African country, Kenya. We ask two specific questions: Why has Kenya continued to be characterized...
01-Aug-2017

Working Paper 276 - A Tax on Children? Food Price Inflation and Health

Using a high-frequency local market price data from Ethiopia, we estimate the effects of exposure to food price inflation during “early life”—inception to the first 24 months after birth—on children’s health. Our analysis focuses on three major staple cereals. The results show that exposure to food price inflation while in utero and during infancy has detrimental and long-term impacts on children’s heights and weights. For instance, exposure to 10 percent inflation in teff prices in the 5–6 th month of infancy, during which transition to complementary feeding starts, results in a loss of up...
01-Aug-2017

Working Paper 277 - Deterrence and Legitimacy in Anti-Corruption Policymaking

In our framed laboratory experiment, two Public Officials, A and B, make consecutive decisions regarding embezzlement from separate funds. Official B observes Official A’s decisions before making his/her own. We find a contagion effect in embezzlement in that facing a corrupt Official A increases the likelihood and extent of embezzlement by Official B. Likewise, deterrence matters in that higher detection probabilities significantly decrease the likelihood and extent of embezzlement. Crucially, when the same deterrence policy applies to both officials, detection is more effective in curbing...
01-Aug-2017

Working Paper 278 - Education resources and the quality of local governance in Africa

We investigate the extent to which the quality of educational resources responds to the quality of governance in local government offices in Africa. We distinguish between learning resources that are more related to school enrolment and to drop-out rates, such as school fees and facilities, and those that are more related to quality of learning outcomes, such as textbook availability, teacher absenteeism or quality of teaching. Our subjective indicators of local governance are measured at the regional/provincial level, which is the smallest geographical location in our pooled Afrobarometer...
01-Aug-2017

Working Paper 279 - Teen Fertility and Labor Market Segmentation in Madagascar

Women represent the majority of informal sector workers in developing countries, especially in subSaharan Africa where adolescent pregnancy rates are high. Little empirical evidence exists concerning the relationship between teen fertility and the likelihood that a woman will be employed in the informal sector. Using a panel survey in Madagascar designed to capture the transition from adolescence to adulthood, we estimate a multinomial logit model to capture the effect of the timing of first birth on female selection into four categories: nonparticipation, informal, formal, and student. To...
01-Aug-2017

Working Paper 280 - Labor Market Outcomes during Life Transition

There is growing evidence that noncognitive skills affect economic, behavioral, and demographic outcomes in the developed world. However, little such evidence exists from developing countries. This paper estimates the joint effect of five specific personality traits and cognition on a sequence of labor market outcomes for a sample of Malagasy individuals as they transition from adolescence to young adulthood. Specifically we model these individuals’ age of entry into the labor market, labor market sectoral selection, and within-sector earnings. The personality traits we examine are the Big...
01-Aug-2017

Working Paper 281 - Early Childbearing, School Attainment and Cognitive Skills

Female secondary school attendance has recently increased in sub-Saharan Africa, and so has the risk of becoming pregnant while attending school. Using panel data that capture the transition from adolescence to adulthood in Madagascar, we analyze the impact of teenage pregnancy on young women’s human capital. Early childbearing increases the likelihood of dropping out of school by 42 percent and decreases the chances of completing secondary school by 44 percent. This pregnancyrelated school dropout is associated with a reduction of 1.1 standard deviations in math and French test scores....
19-Jun-2017

Working Paper 267 - Does Access to Basic Services Matter for Child Health? Evidence From Togo

This paper aims to analyze the effect of access to basic services on child health in Togo. We use the structural equation model (SEM) to take account of the possible interdependencies between child health and basic service capabilities, and settle endogeneity issues. The results indicate that access to basic services improves children’s health by reducing the probability of occurrence of illness (malaria and diarrhoea). These results suggest that government should improve access to basic services to help reduce child morbidity and mortality related to diarrhoea and malaria. This could be done...
19-Jun-2017

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...
19-Jun-2017

Working Paper 269 - Climate Change and Renewable Energy Generation in Africa

This paper contributes to the economics literature on renewable energy generation by investigating climate-change impacts on renewable energy generation in Africa (with special focus on hydropower generation as it is the main renewable source of power in the continent). The analysis includes 51 African countries over the period 1996- 2012. The econometric approach consists of estimating a model of the determinants of hydroelectricity generation, using dynamic panel framework (system General Method of Moments). The findings suggest that lagged hydroelectricity generation and crude oil price...
19-Jun-2017

Working Paper 270 - The Economy of Tastes, Feelings, and Opinions

Interpersonal comparisons of well-being have preoccupied economists, social scientists, and philosophers for centuries. They are also central to theoretical debates about how to improve the lives of the people in Africa. Various problems must be addressed to elaborate intellectual and policy frameworks for making socially acceptable decisions. One must obviously start with valid methods for defining, understanding, capturing, and measuring the notion of individual well-being. The methods used for individual assessments should also be extended to social groups in ways that make them meaningful...
19-Jun-2017

Working Paper 271 - Facteurs déterminants des IDE en Afrique

Utilisant un panel de 52 pays africains et trois spécifications du modèle de gravité (le modèle standard ; le modèle augmenté de l’indicateur de gouvernance et du développement des infrastructures ; et le modèle augmenté de l’effet de proximité culturelle et du désenclavement du pays hôte), l’étude a mis en évidence plusieurs faits stylisés sur l’IDE. Premièrement, l’amélioration de la gouvernance et la qualité des infrastructures boostent de façon significative les flux d’IDE en direction de l’Afrique. Deuxièmement, l’effet de la qualité de la gouvernance semble être dominant, en particulier...
19-Jun-2017

Working Paper 272 - Price effects of borders between Lesotho and South Africa

Despite efforts to increase integration within Africa, product markets remain segmented between countries. This paper examines the magnitude of price gaps, known as the border-effect, between Lesotho and South Africa using retail price data for 49 products in 35 cities over the period 2006–2009. Using a production–consumption pair approach, we estimate that crossing the border between South Africa and Lesotho is associated with an absolute product price gap that widened from 18 percent in 2006 to 29 percent in 2009. The structure of relative prices also differs markedly, revealing a lack of...