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AfDB Projects changing Lives in Egypt
18/01/2018 16:36
AfDB Projects changing Lives in Egypt
Working Paper 229 - Structural change, economic growth and poverty reduction – Micro-evidence from Uganda
29/01/2016 14:15
Working Paper 229 - Structural change, economic growth and poverty reduction – Micro-evidence from Uganda
Working Paper 223 - Eliminating Extreme Poverty in Africa: Trends, Policies and the Role of International Organizations
08/05/2015 15:18
Working Paper 223 - Eliminating Extreme Poverty in Africa: Trends, Policies and the Role of International Organizations
Working Paper 222 - Economies of Scale in Gold Mining
28/04/2015 09:19
Working Paper 222 - Economies of Scale in Gold Mining
Working Paper - 209 - What is driving the African Growth Miracle
04/12/2014 16:57
Working Paper - 209 - What is driving the African Growth Miracle
Millennium Development Goals (MDGs) Report 2014
01/11/2014 15:31
Millennium Development Goals (MDGs) Report 2014
AfDB Partner of Choice for East Africa - EARC Report 2014
08/10/2014 12:27
AfDB Partner of Choice for East Africa - EARC Report 2014
Gender, Poverty and Environmental Indicators on African Countries 2014
06/05/2014 11:03
Gender, Poverty and Environmental Indicators on African Countries 2014
Comparing the Real Size of Africa Economies – Highlights of the Main Findings of the 2011 Round of the International Comparison Program in Africa
05/05/2014 10:27
Comparing the Real Size of Africa Economies – Highlights of the Main Findings of the 2011 Round of the International Comparison Program in Africa
The new report Comparing the Real Size of African Economies: Highlights of the Main Findings of the 2011 Round of the International Comparison Program in Africa is based on the price survey data and national accounts collected from 50 of the African Development Bank’s regional member countries (RMCs). The International Comparison Program (ICP) is a global statistical initiative established in 1970 to produce internationally comparable price and expenditure data as well as purchasing power parity (PPP) estimates to facilitate cross-country comparisons of price levels, Gross Domestic Product (GDP) and related economic aggregates in real terms and free of price and exchange rate distortions. The genesis of the ICP was an early recognition that measures of economic aggregates based on exchange rates do not reflect real differences in price levels between countries, and are thus patently unsuitable for policy decisions which in principle relate to volumes free of price distortions. By establishing purchasing power equivalence, where one unit of currency purchases the same quantity of goods and services in all countries, PPP data allow cross-country comparisons of economic aggregates and structures on the basis of volumes, free of price and exchange rate distortions. The program is globally managed by the World Bank and implemented by regions, namely, Africa, Asia and Pacific Islands, South America, the Community of Independent States (CIS) and Russia, Western Asia and Europe. The regional programs are managed by various institutions and lead countries. The European Economic Union Statistics Office (Eurostat) and the Organisation for Economic Co-operation and Development (OECD) manage the comparison for their member countries. In South America, the work is managed by the United Nations Economic Commission for Latin America and the Caribbean (UN-ECLAC); in Asia, by the Asian Development Bank; in Western Asia, by the United Nations Economic and Social Commission for Western Asia (UN-ESCWA) and in the CIS countries by Russia. AfDB has been managing the Africa program since 2002, the first time an African institution assumed such responsibility since the inception of ICP. The previous ICP rounds for Africa were managed by Eurostat.&nbsp; The ICP 2011 results answer a number of key questions relating to the Africa region: Which are the largest and smallest economies? Which are the poorer and richer ones compared to the regional average? How do price levels vary across the region? And which countries appear to enjoy the highest welfare levels, etc.<br /><br />Read more
Working Paper 195 - Inequality, Economic Growth, and Poverty in the Middle East and North Africa (MENA)
03/01/2014 10:47
Working Paper 195 - Inequality, Economic Growth, and Poverty in the Middle East and North Africa (MENA)
The wave of protests and unrests that swept across the Middle East and North Africa (MENA) region since 2011 has continued in different forms. In addition to demands for more economic and political inclusion, the protests had been largely sparked by a refusal to tolerate any longer the gross socio-economic inequality perpetuated by long-entrenched “elites” in power. In many countries today, the issue of inequality has come to the front burner of international and national discourse with a view to finding solutions. Thus, the key objectives of this study are to; (a) analyze the patterns of inequality, growth and poverty in the MENA region; and (b) investigate the effect of income inequality on key societal development, namely economic growth and poverty, in the region. Previous empirical results show that inequality plays a significant role in affecting poverty, indicating that the elasticity of inequality should always be positive since a decrease in inequality should decrease poverty. The results of empirical studies on the effect of income inequality on economic growth have yielded remarkable disparities, resulting in three main positions. Among the first group of studies, it is believed that inequality plays a central role in determining the rate and pattern of growth. The second group finds a positive effect but proposes a sign changing non-linear relationship. The third group, however, finds no correla-tion at all or finds inconclusive evidence of any correlation between inequality and economic growth. Based on the literature, we use cross-country data for the period 1985-2009 to analyze the effect of income inequality on economic growth and poverty in the MENA region. Our estimations are done with pooled OLS while the data sets are drawn from the World Bank’s WDI Online database. Our empirical results show that income inequality reduces economic growth and increases poverty in the region. Other factors having significant negative effect on economic growth in the MENA region include previous growth rate, exchange rate, government consumption expenditure or government burden, initial per capita GDP, inflation, and primary education. On the other hand, variables positively and significantly associated with MENA’s economic growth are domestic investment rate, urbanization, infrastructure development, and mineral rent as a percentage of GDP. Apart from income inequality, other factors increasing poverty in the region are foreign direct investment, population growth, inflation rate, and the attainment of only primary education. Poverty-reducing variables in the region include domestic investment, trade openness, exchange rate, income per capita, and oil rents as a percentage of GDP. Key policy implications include: (a) the use of targeted community-based conditional cash transfers and expenditures as effective safety nets and levers of poverty reduction and redistribution; (b) promotion of domestic investment through the deepening of reforms, the mobilization of higher domestic savings through tax reforms, cost sharing in the provision of public goods and services and enhancing public expenditure productivity; (c) increasing per capita income through increased competitiveness, the creation of more quality jobs and increased participation in economic activity, dismantling of existing structural bottlenecks to private and public investment, scaling-up investments in hard and soft infrastructure, and increasing productivity, especially in agriculture; (d) promoting government expenditure effectiveness; (e)&nbsp; greater prudence in monetary and fiscal management; (f) adoption of the value-chain approach to add value to products, and scaling-up investment of physical, human, social and institutional capital, and innovation and technological progress; (g) intensification of family planning services efforts and activities; (h) regulation of the inflow of foreign capital to ensure labor-intensive industries are not displaced by globalization; (i) intensification of productive infrastructure development; and (j) addressing skills mismatch and the promotion of the up-skilling, better training and education for the low-skilled workforce.Read more
Working Paper 194 - The Impact of Community Development Works Programs (CWP) on Households’ Wellbeing in Albania
03/01/2014 10:29
Working Paper 194 - The Impact of Community Development Works Programs (CWP) on Households’ Wellbeing in Albania
This paper attempts to evaluate the impact of the Albanian Development Fund’s (ADF’s) CWP programs on access to infrastructures, welfare and social capital. We use the standard of Heckman and Vytlacil (2001) marginal treatment effects (MTE) approach as recently formalized by Björklund and Moffitt (2007) to account for both heterogeneity and selection bias. Results show that the beneficial impact of ADF projects and programs is straightforward as the treated communities and households enjoy better infrastructures, higher standards of living as well as a better social cohesion in the community. The approach used here could be adapted to evaluate the impact of projects and programs of governments and institutions such as the African Development Bank in Africa. Indeed, the methodology (that is, in the absence of a baseline survey for projects and programs, coupling information on beneficiaries and general survey data in order to construct a valid control group), could be useful in assessing the impact of projects and programs on the continent where institutions such as ours implement many development projects without thinking to evaluate its impact, and thus without necessarily putting in place a baseline. Our method could help address such issues. We also present a method for addressing selection bias in participation. In absence of randomized control trials or other like methods, the MTE approach is proven to be robust enough to account for that. To evaluate the impact of CWP, we use a combination of data on benefiting communities provided by the Albanian Development Fund and the LSMS surveys in order to gather information about the baseline and construct control groups. To account for selection bias and non-random distribution of intervention, we implement a tow components (parametric and non-parametric) marginal treatment effect (MTE) estimation following Heckman and Vytlacil, 2001. Our results show that, on average, CWP I and CWP II appear to have had an impact on the targeted communities, but the magnitude is higher in 2005 than in 2002. For example, in 2002, access to electricity in dwellings was lower in beneficiary communities as compared to the control group, while it was higher in 2005 (-15% versus 25% on average). As for the rest of indicators of access to infrastructures, it is clear from our calculus that treated communities were better off. As a result, CWPs have increased per capita expenditure in treated communities. In 2002, benefiting households had on average 1694 leks (s.e. of 2177.5) more than the untreated households in the control group. In 2005, they were 6862 leks (s.e. 4842) better off than their untreated counterparts.Read more
Economic Brief - Drivers and Dynamics of Fragility in Africa
18/12/2013 15:12
Economic Brief - Drivers and Dynamics of Fragility in Africa
Economic Brief - The Search for Inclusive Growth in North Africa- A Comparative Approach
11/12/2013 16:59
Economic Brief - The Search for Inclusive Growth in North Africa- A Comparative Approach
Economic Brief - Fragile States Taking Part in Africa’s Inclusive Growth Take-Off
23/09/2013 10:18
Economic Brief - Fragile States Taking Part in Africa’s Inclusive Growth Take-Off
Working Paper 182 - Rising Food Prices and Household Welfare in Ethiopia: Evidence from Micro Data
23/09/2013 09:56
Working Paper 182 - Rising Food Prices and Household Welfare in Ethiopia: Evidence from Micro Data
The Ethiopian economy has witnessed double-digit rate of inflation since 2003, surging to a peak of 53% in June 2008. The significant rise in the relative prices of grain and other foodstuff such as sugar, edible oil and other necessities were particularly worrisome. Large changes in both absolute and relative prices in such a short period of time can undermine the rebound in per capita incomes in the last decade and the poverty reduction effort of the government. Cognizant of the gravity of problem, policymakers have mounted efforts to cushion vulnerable households from experiencing the full brunt of price surges. The scope for such interventions will be once the welfare effects of rising prices are understood. Moreover, better measures of key parameters driving the demand for grain and other goods supplements an analysis into the causes of relative price changes in Ethiopia. &nbsp; This paper seeks to bridge the knowledge gap surrounding the link between welfare and rising prices. First, the study examines the distributional consequence of the rise in absolute price over the recent periods in rural as well as urban areas. It provides quantitative estimates of the change in the measure of income inequality due to price changes. Such findings will indicate whether or not the poor have been affected disproportionately more than others during inflationary periods. Second, it provides evidence on the welfare implications of changes in relative prices of key consumption goods by constructing concentration curves using non-parametric methods. The pair-wise comparison of concentration curves is used to analyze whether subsidies on wheat or other grain products could raise welfare, particularly, if it is financed through surtax imposed on other commodities, or income. Third, it estimates the effect of changes in the relative prices of agricultural goods on consumption growth for rural as well as urban households to capture welfare effects of the price shocks. Finally, a range of income and cross-price elasticity of demand values are reported to understand better the role of demand shifts in driving relative price changes. The results show that the recent dramatic rise in the general price level may be responsible for a 2% annual rise in the average GINI coefficient in urban areas. Therefore, between 2000 and 2006, the GINI coefficient rose by about 6 percentage points due to inflation alone suggesting the anti-poor bias of the inflationary process in urban areas. Secondly, consumption pattern for cereals and other food items suggest that subsidies targeted at maize in rural areas, and teff in urban areas financed say through a proportional income tax (surtax) could be welfare enhancing, particularly for the poor population. The study shows that, while real consumption growth deteriorated significantly following the rise in the real price of food (cereals) in urban areas, its effect on rural households depended on the potential to be a net-seller or a net-buyer. As a result, land rich households tended to benefit significantly from real and nominal price movements of cereals while land poor households lose enormously. Thus, policy reforms designed to raise agricultural terms of trade in favour of the rural sector need to address the potential for general price hikes to aggravate poverty by impoverishing the land-poor and consequently raising income inequality as well as pushing the average farm household into poverty. The study estimates that the overall effect of the recent hike in relative prices has increased the true cost of living by 12% in urban areas, suggesting the severity of the welfare loss associated with inflation. In addition, if unchecked, inflation in urban Ethiopia could worsen income inequality significantly. It is estimated that between 2000 and 2006, the Gini coefficient might have increased by 6.1% due to changes in relative prices that were adverse to the urban poor. This result coupled with the recent trend of rising inequality in urban areas suggests that gains in average per-capita growth can be eroded easily leading to growing impoverishment of households in urban areas. The impact of a rise in the real prices of cereals on the welfare of rural households is more complex. To partially address this issue, the study specified a dynamic model of consumption growth, which is a function of changes in household endowments and price shocks. The model was estimated for three distinct groups which potentially could address the net-purchasing position of a household. These groups are: land-rich, land-poor and a typical farm household. The result show that real growth in consumption is positive for land-rich households, negative for a typical farm household, and deteriorates significantly for land-poor households. These outcomes imply negative consequence for the pace of poverty reduction in rural areas.Read more
Working Paper 181 - Determining the Correlates of Poverty for Inclusive Growth in Africa
23/09/2013 09:56
Working Paper 181 - Determining the Correlates of Poverty for Inclusive Growth in Africa
From 2000 to 2012, Africa’s economy has grown rapidly and remarkably, averaging over 5 percent. In 2012 GDP growth in Africa was 6.6 percent, even at a time developed nations are experiencing growth contraction. In spite of the high growth that Africa has experienced in recent years, poverty, inequality and unemployment remain high, indicating lack of inclusion in the development process and its outcomes. But poverty, for example, can be reduced at a faster rate when inclusive growth strategies are applied and when special income distribution policies are undertaken. The study is therefore an attempt to contribute to the design of inclusive growth policies. It examines the correlates of poverty - headcount index of international poverty line at US$1.25 per day - using data on 43 African countries for the period, 1980 to 2011. This study is useful, first, to verify the relative role of the various factors in determining poverty status, and second, to recommend policy changes to reduce poverty incidence in Africa and promote inclusive growth. Using the basic growth–poverty model, the paper examines the correlates of poverty, using data on Africa for the period, 1980 to 2011. The unbalanced cross-section time series data covers 43 countries and comprises a sample size of 147 data points. For robustness and to account for endogeneity issues, our estimations are done with OLS, FGLS, IV-2SLS and IV-GMM. The log transformation of all the variables allows us to interpret the coefficients as elasticities. Our empirical estimates suggest that higher levels of income inequality, primary education alone, mineral rents, inflation, and higher level of population tend to increase poverty in Africa and therefore bad for poverty reduction and inclusive growth in the continent. On the other hand, higher real per capita GDP, net ODA, and secondary education have significant negative effect on poverty in Africa and thus good for poverty reduction and inclusive growth in the continent. Trade openness has positive but insignificant effect on poverty in Africa in spite of the huge liberalization efforts of African countries. First, given the finding that inequality fuels poverty in African countries, we recommend in particular, conditional cash transfers based on community approaches and targeted. Second, the significant positive effect of net ODA on poverty in Africa demonstrates a positive “infrastructure effect” by which foreign aid improves the recipient country’s economic and social infrastructure and hence raises the marginal product of capital in the country. Thus, in spite of the debt crisis in the Euro Area, allowance should still be made for aid as an important vehicle for poverty reduction in Africa. Third, African countries must increase their national incomes by deepening macroeconomic and structural reforms to increase their competitiveness, dismantle existing structural bottlenecks to private and public investment, scale-up investments in hard and soft infrastructure, and increase productivity, especially in agriculture, etc. Fourth, effective inclusive growth policies that invest in human capital of the citizens and workforce are needed, including up-skilling, emphasis on technical and vocational education and training (TVET), and educational reforms that conform to industry needs. Fifth, following our finding that mineral rents exacerbate poverty in Africa, international financial institutions like the African Development Bank have a critical role to play in helping these countries acquire the much-needed capacity not only to negotiate beneficial contracts and earn higher rents but also for effective management of mineral rents and other related revenues, using a new natural resources management framework. Sixth, central banks should continue with tight monetary policies, supported by prudent fiscal management and tackling binding structural constraints. Seventh, trade openness has insignificant effect in reducing poverty in Africa. This calls for improved competitiveness, value-addition, diversification, and increased intra-regional trade. Lastly, given that poverty increases with the number of household members (or family size), there is urgent need to intensify family planning services efforts and activities in African countries so as to improve knowledge, acceptance and practice (KAP) of family planning.Read more
Working Paper 180 - Marital Status, Household Size and Poverty in Nigeria: Evidence from the 2009-2010 Survey Data
23/09/2013 09:56
Working Paper 180 - Marital Status, Household Size and Poverty in Nigeria: Evidence from the 2009-2010 Survey Data
Recent studies on a sample of sub-Saharan Africa have shown that only half of widows or their children received property after the death of their husbands. The rates were high in Rwanda66% in Rwanda (60 percent), Namibia (57 percent), and Tanzania (53 percent). Indeed, only women in polygamous marriages were less likely to report inheriting property. These studies support the view that property inheritance by widows is significantly and robustly associated with higher welfare outcomes (per capita consumption and value of household stocks) in most regions. This paper examines the effect of marital status and household size, among other correlates, on poverty in Nigeria a view to addressing the related question of whether and how poverty can be sustainably reduced, using the Harmonized Nigeria Living Standard Survey (HNLSS) data of 2009/2010. The study applies multivariate analysis, using a logistic regression in accordance with the basic principles of discrete choice models on the 2009/2010 data. In order to explore the correlates of poverty with the variables thought to be important in explaining poverty a logistic regression relating poverty status (the dichotomous variable) to marital status; demographic characteristic (household size), personal characteristic (age and its square); gender; educational attainment; occupation/employment; and geographical residence. Our results show that monogamous marriage, divorce/separation and widowhood are negatively and significantly correlated with the probability of being poor. However, monogamous marriage has the largest probability of reducing poverty in Nigeria. We also find that household size matters in determining poverty in the country: a one-person household negatively and significantly reduces poverty while addition of members to the household, progressively increases the probability of being poor. In addition, our results show that there is a significant concave (inverted-U shaped) relationship between age and poverty. Other variables found to significantly reduce the probability of being poor include: being a male, completion of post-secondary education, being in paid household employment, and residence in the North Central and South East geopolitical zones. Variables that increase the probability of being poor in Nigeria include rural residence, possessing no education, being a self-employed farmer, and residence in the North West geopolitical zone of the country. Based on the results, we recommend a number of policy interventions necessary to reduce poverty in Nigeria. The study provides a set of policy interventions necessary to reduce poverty in Nigeria. First, while government cannot legislate marriage structure given the heterogenous nature of the country and the need to promote freedom of choice, public and private sector policies can be used to increase the number and proportion of high quality monogamous marriage rates among Nigerians. &nbsp; Second, given that property inheritance helps widows and divorced women to reduce poverty, the government, at the national level, should embark on policy reforms to guarantee women’s rights to equal inheritance under the law, and to increase women’s legal literacy so that they are able to claim what is rightfully theirs. Such policies should also support women’s ownership claims to property in the event of divorce. Third, given that poverty increases with the number of household members (or family size), there is urgent need to intensify family planning services efforts and activities in Nigeria so as to improve knowledge, acceptance and practice (KAP) of family planning. This will involve not only increased financial outlay but also research on fertility determinants as well as decentralized planning, delivery and supervision of family planning services. Fourth, there is a need to focus on gender-based poverty interventions, especially among female-headed households in Nigeria. Improving access to education, for example, can reduce gendered disadvantages both by increasing individual productivity and by facilitating the movement of poor people from low-paying jobs in agriculture to higher-paying jobs in industry and services. Making agriculture attractive with modern inputs and easy access to credit, which will help to increase productivity in the sector, will also be helpful.Read more
Working Paper 179 - Heterogeneity of the Effects of Aid on Economic Growth in Sub-Saharan: Comparative Evidence from Stable and Post-Conflict Countries
22/09/2013 23:00
Working Paper 179 - Heterogeneity of the Effects of Aid on Economic Growth in Sub-Saharan: Comparative Evidence from Stable and Post-Conflict Countries
L’Afrique subsaharienne est la première région du monde bénéficiaire de l’afflux de l’aide extérieure. La communauté internationale a consacré plus de 568 milliards de dollars américains d’aide étrangère au développement de l’Afrique subsaharienne (ASS) depuis 1960, soit environ 15% du PNB du continent, c'est-à-dire en proportion, quatre fois plus que le plan Marshall qui a permis le redécollage des économies européennes après la deuxième guerre mondiale(Commission Economique pour l’Afrique, 2010). Cependant,&nbsp; la croissance en Afrique Subsaharienne n’a pas suivi la tendance de l’afflux de l’Aide Publique au Développement (APD). Elle est restée faible malgré un regain de l’activité économique au début des années 2000 (soit&nbsp; en moyenne 2,37%). Ainsi, l’objectif de cette étude est de mettre en évidence les effets de l’APD sur la croissance et de déterminer les canaux de transmission en Afrique subsaharienne.&nbsp; Par ailleurs l’étude fait une différence entre les pays stables et les pays en situation de post conflit. L’analyse effectuée sur un échantillon de 34 pays d’Afrique sub-saharienne sur la période 1990-2010 donne lieu à trois résultats majeurs. (1) l’aide a un effet positif sur la croissance uniquement lorsque l’estimation est contrôlée du niveau de la gouvernance. (2) La dynamique comparative quant à elle montre que la gouvernance et l’éducation sont les principaux canaux de transmission de l’aide à la croissance en environnement stable. En revanche, en environnement de post conflit, l’aide affecte la croissance via l’investissement en capital public (infrastructure).&nbsp; (3), l’approche de décomposition d’Oaxaca-Blinder montre que l’écart en termes de montants d’aide reçus n’explique pas les différences de croissance observées entre pays stables et pays en situation de post conflit. Sur la base de ces résultats, une recommandation de politique économique pourrait être d’orienter l’aide allouée respectivement au financement de l’éducation et à l’amélioration de la gouvernance dans les pays stables. Dans les pays en situation de post conflit, il faudrait par contre insister sur le financement des infrastructures.Read more
Millennium Development Goals (MDGs) Report 2013 - Full Report
25/06/2013 10:28
Millennium Development Goals (MDGs) Report 2013 - Full Report
Gender Poverty and Environmental Indicators on African Countries 2013
02/05/2013 09:45
Gender Poverty and Environmental Indicators on African Countries 2013
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