2014

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Working Paper - 215 - A Regional Budget Development Allocation Formula for Tunisia
30/12/2014 09:42
Working Paper - 215 - A Regional Budget Development Allocation Formula for Tunisia
Working Paper - 214 - From Productivity to Exporting or Vice Versa Evidence from Tunisian Manufacturing Sector
30/12/2014 09:42
Working Paper - 214 - From Productivity to Exporting or Vice Versa Evidence from Tunisian Manufacturing Sector

Categories: Tunisia

Working Paper - 213 - Disentangling the Pattern of Geographic Concentration in Tunisian Manufacturing Industries
30/12/2014 09:42
Working Paper - 213 - Disentangling the Pattern of Geographic Concentration in Tunisian Manufacturing Industries

Categories: Tunisia

Working Paper - 212 - Diversification and Sophistication of Livestock Products: the Case of African Countries
30/12/2014 09:42
Working Paper - 212 - Diversification and Sophistication of Livestock Products: the Case of African Countries
Working Paper - 211 - Bank Lending Channel of Monetary Policy Transmission in Zambia: Evidence from Bank-Level Data
30/12/2014 09:42
Working Paper - 211 - Bank Lending Channel of Monetary Policy Transmission in Zambia: Evidence from Bank-Level Data

Categories: Zambia

Working Paper - 210 - The Real Exchange Rate and Growth in Zimbabwe Does the Currency Regime Matter
04/12/2014 16:57
Working Paper - 210 - The Real Exchange Rate and Growth in Zimbabwe Does the Currency Regime Matter
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
Working Paper - 208 - The Main Obstacles to Firms Growth in Senegal Implications for the Long-Run
10/09/2014 23:38
Working Paper - 208 - The Main Obstacles to Firms Growth in Senegal Implications for the Long-Run
Working Paper 206 - Growth and Distributional Impact of Agriculture, Textiles and Mining Sectors in Lesotho
22/08/2014 15:00
Working Paper 206 - Growth and Distributional Impact of Agriculture, Textiles and Mining Sectors in Lesotho
Working Paper 205 - Volatility and Co-movement in Commodity Prices- New Evidence
06/08/2014 12:38
Working Paper 205 - Volatility and Co-movement in Commodity Prices- New Evidence
Working Paper 204 - Skills and Youth Entrepreneurship in Africa: Analysis with Evidence from Swaziland
06/08/2014 12:38
Working Paper 204 - Skills and Youth Entrepreneurship in Africa: Analysis with Evidence from Swaziland
Working Paper 203 - Immigrants, Skills and Wages in the Gambian Labor Market
25/06/2014 10:14
Working Paper 203 - Immigrants, Skills and Wages in the Gambian Labor Market
Working Paper 202 - Segmentation and efficiency of the interbank market and their implication for the conduct of monetary policy
29/04/2014 14:33
Working Paper 202 - Segmentation and efficiency of the interbank market and their implication for the conduct of monetary policy
Working Paper 201 - Does Intra-African Trade Reduce Youth Unemployment in Africa ?
29/04/2014 14:33
Working Paper 201 - Does Intra-African Trade Reduce Youth Unemployment in Africa ?
African countries have taken several measures to promote regional integration, a major part of which is intra-regional trade. Intra-African trade is one of the important activities to achieve regional integration and accelerate sustainable and inclusive development in Africa. This explains several measures taken at both sub-regional and continental levels to promote intra-African trade. Such intra-African trade has enormous potential to create employment (especially for the burgeoning youth population of the continent), catalyze investment and foster economic growth on the continent. Unemployment among young people aged between 15 and 24 is one of the greatest development challenges facing countries globally, including those in Africa. However, very few studies have been undertaken in the particular context of African countries and to the best of our knowledge there are no studies exploring the intra-African trade-youth unemployment nexus in Africa. Thus, the key objectives of this study are: (1) To analyze the scale, trends, and composition of intra-African trade and youth (overall, female and male) unemployment; (2) To quantitatively investigate the relationship between intra-African trade, and youth (overall, female and male) unemployment; and (3) To summarize the key findings and discuss their policy implications for intra-African trade policy and diversification, regional integration, and youth employment. African countries have not made significant progress in boosting intra-African trade. In 2012, the average intra-African trade was just 12% compared with 67% for APEC, 61% for the EU, 41% for NAFTA, 25% for ASEAN, and 17% for MERCUSOR. Over the period from 1995 to 2012, the average intra-African trade was only 12% for Africa against 70% for APEC, 64% for the EU, 44% for NAFTA, 24% for ASEAN, and 18% for MERCUSOR. However, in value terms, Africa has made tremendous progress in intra-African trade, increasing from US$27.9 billion in 1995 to US$148.9 billion in 2012, representing an increase of more than fivefold. On the other hand, in 2011, about 74.8 million young globally were unemployed (an increase of more than 4 million since the start of the global financial and economic crisis in 2007), with almost 20% of them in Africa. Also, in 2011, youth unemployment in Sub-Saharan Africa (SSA) was slightly higher than the global average at 12.8% but with North Africa averaging 27.1%, the highest amongst the regions of the world. This gives an average of about 20% youth unemployment in Africa in 2011. In addition, young people in Africa are about three times more likely as adults to be unemployed. Youth unemployment is also predominantly an issue for women in Africa, especially in North Africa. While the unemployment rate for young women in North Africa was 34.3% in 2010 (compared to the global average of 13.1%), the rate for young men stood at 18.5% (compared to the global average of 12.6%), all two are the highest for any region. The evidential reports on the unemployment-reducing effect of trade integration, while few, are however, mixed. This study empirically estimates the effect of Africa’s intra-regional trade on the burgeoning youth unemployment on the continent. We investigate both the aggregate and gender-specific impacts. For robustness, our estimations are done with pooled OLS with country fixed effects and IV-2SLS with country fixed effects. The empirical estimates, using available cross-sectional time series data over the period, 1980 and 2010, suggest that higher levels of intra-African trade reduce both the aggregate, female and male youth unemployment in Africa. In addition, our results show that domestic investment rate, institutionalized democracy, secondary education, inflation, economic growth, and higher urbanization tend to reduce youth unemployment, both on the aggregate and gender-differentiated and therefore good for youth unemployment reduction in the continent. On the other hand, higher real per capita GDP and to a lesser extent credit to the private sector have significant positive effect on youth unemployment in Africa. Government consumption expenditure and foreign direct investment have an insignificant effect on both the aggregate level and the gendered level of youth unemployment in Africa. Efforts to expand intra-African trade for unemployment reduction should include eliminating tariffs and non-tariff barriers, enhancing mutually advantageous commercial relations through trade liberalization schemes, and adopting comprehensive and harmonized regional trade policies. In addition, a need exists to intensify cooperation in regional infrastructure development projects. not only to increase access to and reduce the cost of provision of these facilities but also to help lower transactions costs, boost trade, and increase the continent’s attraction to investors. There is a need to promote and deliberately support the development of the domestic capital markets through a sub-regional approach and put in place supportive infrastructure for the markets. African governments should adopt a sub-regional approach to the support and development of capital markets, to strengthen their catalytic role in mobilizing savings for increased domestic investment. Also, strengthening of regional integration groups will be useful in reducing the incidence of domestic policy reversals and improving the credibility of economic policies in Africa. Indeed, the full implementation of the plan and declarations to boost intra-African trade made during the January 2012 African Union Summit of Heads of State and Government will be very critical. A key challenge for African countries is to mobilize increased resources for high domestic investment, and high and sustainable economic growth. African countries need to increase efforts for the mobilization of higher domestic savings, including through the implementation of tax reforms, simplifying and improving tax administration, cost sharing in the provision of public goods and services and enhancing public expenditure productivity. Effective policies that invest in human capital of the citizens and workforce are needed. Skill acquisition through technical and vocational education and training (TVET) should be prioritized. The promotion of diversification away from natural resources dependence and investing in new and more sophisticated production and exports are imperative. Investments in education, social services and infrastructure as gender-equity policies will promote gender-equitable employment.Read more
Working Paper 200 - Analysis of Household Expenditures and the Impact of Remittances using a Latent Class Model: the Case of Burkina Faso
29/04/2014 14:33
Working Paper 200 - Analysis of Household Expenditures and the Impact of Remittances using a Latent Class Model: the Case of Burkina Faso

Categories: Burkina Faso

Working Paper 197 - Estimating the Economic Cost of Fragility in Africa
05/03/2014 09:59
Working Paper 197 - Estimating the Economic Cost of Fragility in Africa
Working Paper 199 - Microcredit for the Development of the Bottom of the Pyramid Segment: Impact of Access to Financial Services on Microcredit Clients, Institutions and Urban Sustainability
05/03/2014 09:41
Working Paper 199 - Microcredit for the Development of the Bottom of the Pyramid Segment: Impact of Access to Financial Services on Microcredit Clients, Institutions and Urban Sustainability
Today, although mainstream debates on sustainability especially in urban areas are full of literature on the importance of creating sustainable cities through the involvement of different stakeholders in urban development, there is little practical orientation in the academic literature for the growing gap between the rich and poor. In addition, the current literature is enormously concerned with resource use and environmental pressures and very little is mentioned on the nexus between urban sustainability and the empowerment of the urban poor. This research attempts to remove the myths and to open debates on the segment of urban population often referred to as “the bottom of the pyramid (BOP)” regarding how they are faring in the unfolding urban phenomenon. This is done through an analysis of the microfinance innovation following an evaluation of the impacts of access to microfinance and the implications to urban sustainability. The purpose of this research is to demonstrate the role played by microfinance in urban BOP development through, 1) identifying gaps and complementing the weak existing urbanization and microfinance literature, 2) analyzing and evaluating the impacts of access of microfinance, and 3) measuring the implications of access to microfinance on urban sustainability. The research methodology uses both quantitative and qualitative methods. It employs empirical and iterative approaches based on sustainability measurements and microfinance indicators. For analysis, a new set of data derived from questionnaires successfully administered to 1006 respondents in two villages in the Kibera slum in Nairobi is used. The sample population is grouped into participants (treatment group) and non-participants (control group) who were followed for 18 months to track the impact of participation in microfinance. To measure the impacts of microfinance services on urban BOP development, this research uses non-randomized controlled trials - a combination of double difference and propensity score matching approaches. The results are used to gauge the impacts of access to microfinance and financial training services to households, businesses, microcredit institutions and to analyze subsequent impacts on urban sustainability in Kenya. The findings indicate a significant increase in per capita income of the urban slum population studied. In addition, the results show significant improvement in business skills. For microfinance institutional development, the results indicate a no impact on loan repayment and client retention rate. However, there is little or no evidence on the spillover effects of access to microfinance services on the equally important urban dwellers’ concerns such as water and sanitation, solid waste management and access to alternative energy. The main conclusion reached is that microfinance has an instrumental role to play in promoting sustainable urban development as it supports social welfare improvement and increases the livelihood of participants, business development and urban sustainability to a certain extent, thereby empowering the urban poor in contributing to poverty alleviation. The message to be derived is that there is a need to make the urban BOP segment take a more active role in development through collaboration with the government and other stakeholders. This research delivers implications for business and policy pertaining to sustainable urban development with a focus on stakeholders’ participation to improve lives in slums. The future of slum upgrading and eventual urban sustainability will depend on political willingness to ensure that the poor are empowered so as to actively participate in the process of development. For implications for business, the urban BOP segment provides business opportunities to both individuals and institutions. Microfinance businesses should be supported and operated formally to support national development through the payment of taxes. This is because current microfinance businesses within the urban BOP settings are operated informally. Also, business investment in slums should not only focus on micro-small businesses but also small and medium-sized enterprises to support industrialization. As for the implications for policy, the development of the urban BOP segment should be hinged on slum upgrading as opposed to resettlement and eviction. As a tool for urban poverty alleviation, easy access to microfinance should be promoted in order to support BOP entrepreneurship. Moreover, stakeholder participation in urban development should be promoted to improve service delivery in slums. As for policy implications, therefore, this research proposes that top-down approaches to urban development should be complemented by bottom-up approaches that involve all stakeholders in slum development to ensure that the poor are empowered to actively participate in the process of development.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)  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
Working Paper 193 - Large Scale Agribusiness Investments and Implications in Africa- Development Finance Institutions' Perspectives
03/01/2014 10:26
Working Paper 193 - Large Scale Agribusiness Investments and Implications in Africa- Development Finance Institutions' Perspectives
Agriculture is the dominant source of livelihood in Africa, especially in low-income rural areas.  About 70% of the population is directly employed in the sector, and it accounts for approximately 30% of the region’s GDP.  Therefore growth in agricultural productivity is likely to have a direct impact on economic growth with strong effects on poverty.  Furthermore, agricultural productivity growth resulting from increased investments (both public and private), when coupled with input and output market development, can set the stage for the same structural transformation of agrarian economies that has immensely benefitted other developing regions, most recently Southeast Asia. The paper’s focus is agribusiness and encompasses the whole spectrum of the agriculture value chain. This includes mainly, inputs (seeds, fertilizer, pesticides, herbicides and animal feed), primary production (crop and livestock husbandry), processing (milling, storage, packaging and handling), marketing and distribution.  We define an agribusiness as any operation along this value chain that is conducted on a commercial basis. It must be acknowledged that agribusiness is necessarily a subset of agriculture since other aspects of the latter, such as extension services and land registration, are usually public in nature. The total size of agriculture, including agribusiness, in sub-Saharan Africa was approximately USD 313 billion in 2010, and is expected to reach USD 1 trillion in 2030. The paper analyses the additionality that DFIs bring to the agribusiness sector. By additionality, we mean the specific features that DFIs bring to private sector projects that commercial banks are unable or unwilling to bring. Such “additional” aspects of DFIs’ support are important not only to ensure that highly developmental projects are fully funded, but also, to enhance the development outcomes of supported projects through the introduction of well-rounded design and improved operation. One of the salient aspects of the growth of the agribusiness sector in recent years has been the attendant increase in demand for land in Africa. Investment trends in the agribusiness sector have affected both the scale and complexion of the demand for land in Africa in recent years. In West and Central Africa, approximately 7.8 million hectares (2% of total agricultural land in 2009) were awarded to foreign investors between 2006 and 2010.  East Africa, in particular Ethiopia and Sudan, has similar quantities of land allocated to investors. This scale of demand for land in Africa is unprecedented. Africa’s share of global arable land is only 16%. However, only about 20% of its arable land is under cultivation at a given point in time. On the other hand, future expansion outside of Africa is limited. Consequently, the African region will continue to attract investments in the agribusiness sector. While this demand represents an opportunity, it often comes with risks such as land tenure insecurity, land market distortions, increased vulnerability to food price shocks, loss of biodiversity and environmental degradation. This means that the potential benefits expected from foreign direct investments in the sector are not always guaranteed.  Using the Principles of Responsible Agricultural Investments that have been agreed by several international organization, this paper identifies the following areas where DFIs can bring additionality in the projects they finance: (i) proper land valuation; (ii) ensuring food security; (iii) improving land tenure security (especially for smallholders); (iv) generating local linkages (e.g. out-grower schemes) and (v) ensuring environmental and social safeguards. Bringing such additionalities ensures that private sector projects financed by DFIs are better aligned with their poverty reduction mandates. Beyond land governance aspects, DFIs bring other forms of additionality, including direct (providing equity and debt financing) and indirect resource mobilization (reducing political and commercial risk), as well as political risk mitigation. This paper’s main contribution to the debate on large agribusiness projects and land concessions in Africa is the fact that it draws from the actual experiences of the African Development Bank in the field to demonstrate how DFIs can maximize development outcomes of projects without compromising commercial viability.  As a result, its recommendations are grounded in actual experiences so that these private investments can be leveraged in to the continent’s benefit.Read more
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