Working Paper Series

17-May-2017

Working Paper 255 - Competition and industrial policies relating to food production in southern Africa

Shaping markets and competition The nature of competitive rivalry and the identity of market participants are central to the quality of growth. The rivalry may be understood in dynamic terms including whether it relates to improving capabilities and allows opportunities for new local participants, or whether incumbents are able to evolve strategies to entrench their historical positions. A key challenge in economic development is to generate competition and competitors.
17-May-2017

Working Paper 256 - Sub-Saharan Africa’s Manufacturing Sector: Building Complexity

Prior to 2000, there was widespread pessimism regarding Africa’s economic growth prospects. An over-reliance on mineral exports, civil war and chronic corruption had ruined many of Africa’s economies, culminating in The Economist labelling it the ‘hopeless continent’ (The Economist, 2000). Since the turn of the millennium, however, the narrative has changed. Pessimism has changed to optimism, buoyed by the growth of an African middle class (Shimeles & Ncube, 2015) and increasing foreign direct investment, which reached $60 billion in 2013—five times its 2000 level (Diop et al. 2015).
17-May-2017

Working Paper 257 - The Inclusive and Sustainable Transformation Index

A century or two from now, when future historians analyze and chronicle the story of economic development and try to identify its defining and foundational moments (the conceptual points in time when the world decided to establish some baselines of commonality), it is very likely that they will pick 2015, the year of the adoption of the Sustainable Development Goals (SDGs) and of the Paris Agreement on climate change, as a major inflexion point. These global treaties were milestones in the long struggle for building global consensus on international priorities, including specific objectives...
17-May-2017

Working Paper 258 - Structural Transformation: A competitiveness-based view

The research on competitiveness aims to enhance our understanding of the drivers of prosperity differences across locations, focusing especially on aspects that can inform policy to support higher levels of prosperity (Porter, 1990; Porter, 2000; Delgado et al., 2013). This chapter outlines key elements of the competitiveness framework, and discusses how it relates to the idea of structural transformation.
17-May-2017

Working Paper 259 - Structural Transformation and Food Security: Their Mutual Interdependence

A sustainable structural transformation depends, causally, on a society’s widespread confidence in its food security. However, sustaining this confidence in food security at a societal level requires, causally, a successful structural transformation. This mutual dependence of structural transformation and food security has bedeviled the development profession for decades. The profession has often ignored the critical role of agricultural development and food price stability as the underlying foundations to both structural transformation and food security. Without a clear understanding of how...
17-May-2017

Working Paper 260 - Transforming Traditional Agriculture Redux

Over the past 50 years, while the world’s population has more than doubled, the quantity and real value of agricultural output has more than trebled, even though land in agriculture increased by only about one-tenth (Alston and Pardey 2014). This remarkable accomplishment belied predictions in the early 1960s of trouble in the world food equation and hopeless hunger for generations to come in much of the world. These dark Malthusian prophecies reflected a perspective based on traditional agriculture and conventional inputs; the pundits did not anticipate the imminent transformation of...
17-May-2017

Working Paper 261 - Post-Macroeconomics: Some Theoretical and Analytical Issues

In his 1974 Nobel Prize lecture titled “The Pretence of Knowledge,” Friedrich von Hayek chastised his fellow economists about their love affair with analytical approaches that mimicked physics or biology, especially after their discipline had “been conceded some of the dignity and prestige of the physical sciences.” He argued forcefully and convincingly that some of the gravest errors of economic policy are a direct consequence of this scientistic error.” (von Hayek, 1974) Decades later, his criticism of economic methodology, in general, is still valid and has been endorsed by a wide range of...
17-May-2017

Working Paper 262 - Dysfonctionnements de l’offre de transport en Afrique: cas de Yaoundé

L’accélération du phénomène d’urbanisation observé ces dernières années dans les grandes agglomérations en Afrique n’est pas sans conséquence sur les comportements de mobilité. Selon le rapport du département des affaires économiques et sociales des Nations unies, plus de la moitié de la population mondiale vivait en ville en 2015 (UN, 2015). Les projections démographiques prévoient pour 2030 une population mondiale de 8,2 milliards d’habitants, dont 6,9 milliards vivront dans les pays en développement et 3,9 milliards dans les zones urbaines. En Afrique, 1,3 milliards d’individus habiteront...
17-May-2017

Working Paper 263 - Factor Productivity and Potential Output Growth in South Africa

Factors of production—labour, capital and technology—feature prominently in endogenous and exogenous growth theories. The efficiency and intensity of their use, and their productivity levels, have varied widely before and during South Africa’s period of democracy. In the four decades before the democratic transition in 1994, South Africa’s economy was characterized by a rapidly increasing average capital intensity and a rising average capital output ratio, alongside weak and often declining total factor productivity (TFP), and thus weak and declining economic growth.
17-May-2017

Working Paper 264 - Institutional Reforms and Economic Outcomes in Africa

In the past few years, there has been significant emphasis on institutional reforms. Reforms have even become major criteria for financial and other forms of assistance from international organisations like the World Bank, the International Monetary Fund (IMF), and other donor agencies. The agitation for institutional reform is premised on close correlation observed between income differences across countries and indicators of institutional quality in recent growth literature (see for example, North, 1990, 1991; North and Weingast 1989; Mauro 1995; Knack and Keefer 1995; Hall and Jones 1999;...
17-May-2017

Working Paper 265 - Monnaie unique et intégration: CEEAC et CEDEAO

La question de l’intégration économique en général et de l’intégration monétaire en particulier n’est pas nouvelle. Elle remonte aux arrangements monétaires en Europe à la fin de la seconde guerre mondiale et au débat sur la politique de change au Canada (Friedman, 1953 ; Meade, 1957 ; Scitovsky, 1958). Mais c’est à Mundell (1961) que revient la paternité du débat sur les unions monétaires, à la suite d’une étude pionnière menée dans un contexte de fragilité du système monétaire international, qui posait la question du choix d’un régime de change optimal.
17-May-2017

Working Paper 266 - Structural Transformation and Income Distribution: Kuznets and Beyond

This paper explores the question of structural transformation and income distribution through the eyes of Simon Kuznets, the pioneer in such analysis. It argues that Kuznets’ 1955 paper stands the test of time in that it provides illuminating insights into current phenomena like the evolution of Chinese inequality. The paper shows how the Kuznetsian framework can be used in predicting the differential relationship between urbanization and inequality in India versus China, in assessing the detail of the contribution of sectoral mean and inequality evolution to overall inequality change, and in...
09-Mar-2017

Working Paper 250- Quality of Corporate Governance on Dividend Payouts: The Case of Nigeria

In advanced economies, only firms who have relatively grown in size and need more capital for operations approach capital markets for finance, implying that their ownership would be diffused and enlarged. To attract more investors, corporate governance standards that could protect the interests of shareholders need to be enforced (Kowalewski, Stetsyuk and Talavera, 2007). This phenomenon is relatively new in Nigeria, since firms, formerly owned by colonial allies and administrators were transferred to some Nigerians as a result of the indigenisation policy of 1970s. Another major economic...
09-Mar-2017

Working Paper 251 - Foreign trade and international financial flows: Implications for economic stability in ECOWAS countries

Economic stability of any country goes beyond exposure to endogenous factors but a host of exogenous factors it receives from other countries through foreign trade and international financial flows. Hence, exposure to exogenous factors poses both opportunities for growth and challenges of economic instability across countries. In other words, foreign trade and international financial flows are potential candidates for business cycles2 transmission.
09-Mar-2017

Working Paper 252 - Capital flow surges and economic growth in sub-Saharan Africa: Any role for capital controls?

International capital flows not only offer a great deal of benefits to financially integrated countries, they also pose numerous macroeconomic challenges (Reinhart and Reinhart, 2008; Furceri, Guichard and Rusticelli, 2011). While countries with some degrees of financial openness are able to share income risks with rest of the world, smooth their consumption path and bridge saving-investment and foreign exchange gaps (Prasad et al., 2003; Chenery and Strout, 1966; Taylor, 1991; Akinboade, Siebrits and Roussot, 2006), they also face the risks of having their economies exposed to exogenous...
09-Mar-2017

Working Paper 253 - Climate Change Challenges, Smallholder Commercialization and Progress out Poverty in Ethiopia

Given the livelihood options outside smallholder farming for the largest set of the population in developing countries and in recognition of the potential for market to unlock economic growth and development gave rise to market led rural development paradigm during the 1980s (Timmer, 1997). For this purpose policies were once again trending in favor to support smallholder farmers and their livelihood development as a key driver of poverty reduction. For several decades, attention was given to the improvement of production and productivity so as to pave the ways for smallholder...
09-Mar-2017

Working Paper 254 - Exchange Rate Policies and FDI Flow in WAMZ

Foreign Direct Investment (FDI) is a main source of much desired capital flow as it is capable of facilitating technological spillovers, job creation and improves managerial skills and productivity in recipient countries (Blomstrom and Kokko, 1997; Jensen, 2003). Experts argue that FDI has the ability to argument the two gaps as identified in the literature vis-à-vis: the savings gap and the foreign exchange gap. More importantly, the desired savings to meet up with the desired investment is a mirage to most sub-Saharan African countries and this calls attention for external capital inflow to...
16-Feb-2017

Working Paper 248 - Farmers’ Vulnerability to Climate Shocks: Insights from the Niger Basin of Benin

Climate change and variability constitutes a serious global environmental issue (Hare et al., 2011; Vincent and Cull, 2014). Thus, the occurrence of climate shocks and extreme climatic events such as floods, droughts, strong winds, heat waves, earthquakes, hurricanes is widespread.2 The Fifth Assessment Report (AR5) of the Intergovernmental Panel on Climate Change (IPCC, 2014) stated that climate shocks will likely have an overall negative effect on agricultural production in many African countries and regions, and this could lead to food insecurity and malnutrition exacerbation.
16-Feb-2017

Working Paper 249 - Threshold Effects of Inflation on Economic Growth in Africa: Evidence from a Dynamic Panel Threshold Regression

Examining the relationship between inflation and economic growth has been the subject of considerable theoretical and empirical research since understanding the inflation-growth nexus is very important for monetary policy (Seleteng et al., 2013). Traditionally, the relationship between inflation and economic growth is linear; the impact of inflation can be neutral, positive or negative depending on whether money is super-neutral (Sidrauski, 1967), substitute for capital (Mundell, 1965; Tobin, 1965) or complementary to capital (Stockman, 1981; Fischer, 1983).
06-Feb-2017

Working Paper 246 - Why is inequality high in Africa?

Available evidence suggests that Africa is the second most unequal continent in the world next to Latin America (e.g. Ravallion and Chen, 2012). High inequality also seems to have persisted overtime with no visible sign of declining (Bigsten, 2014; Milanovic, 2003). Paucity of data at the household level in repeated waves for many countries prevented any systematic analysis on the underlying determinants of inequality in Africa. Previous attempts based on cross-country panel data indicate ethnic fractionalization as a robust determinant of income inequality in Africa (Milanovic, 2003). While...