FINANCIAL SAFETY NETS

We study the optimal design of financial safety nets under limited private credit, asking whether and when it is optimal to restrict ex ante the set of investors that can receive public liquidity support. When the government lacks commitment, we show that the optimally designed safety net covers only a subset of investors. Compared to an economy where all investors are protected, this results in more liquid portfolios, better social insurance, and higher welfare. Our results can rationalize the prevalence of limited safety nets as well as the coexistence of traditional and shadow banks.     

The impact of agricultural research on productivity and poverty in sub-Saharan Africa

While it is widely recognized that agricultural research is a key driver of broad-based technological change in agriculture that benefits the poor in many different ways, little is known about its aggregate impacts on productivity growth and poverty reduction in sub-Saharan Africa (SSA). Using a polynomial distributed lag structure for agricultural research within a simultaneous system of equations framework, this paper first demonstrates that agricultural research contributes significantly to productivity growth in SSA. Productivity growth is again shown to raise per capita incomes, with income increases finally having significant poverty-reducing effects. With an aggregate rate of return of 55%, the payoffs to agricultural research are also impressive. Agricultural research currently reduces the number of poor by 2.3 million or 0.8% annually. While the actual impacts are not large enough to more than offset the poverty-increasing effects of population growth and environmental degradation, the potential impacts of agricultural research are far greater. Apart from low research investments, SSA faces several constraints outside the research system that hinder realization of potential research benefits. The results show that doubling research investments in SSA would reduce poverty by 9% annually. However, this would not be realized without more efficient extension, credit, and input supply systems.     

Value Creation in Brand Alliances: A Dynamic Conceptualization

The objective of this article is to conceptualize the value creation process in brand alliances using a dynamic approach, based upon the literature on strategic alliances and inter organizational relationships, to explain the importance of organizational components in brand alliances. The research question is to identify the key components which allow the creation and sustaining of value: context, actors, objectives, behaviors, resources, and governance mechanisms, internal and external conditions affecting the value creation process. Then the framework is applied in case studies of brand alliances in the food market. We show that the impact of these components depends on the nature of the organizations involved, on market conditions and on the manner resources and governance mechanisms are combined together.     

A paradigm shift in African agricultural research for development: the role of innovation platforms

To demonstrate the development impact of their outputs, agricultural research and development (R&D) organizations used to focus on the efficiency and effectiveness of technologies. In recent years, innovation systems thinking has started to address institutional and organizational barriers to technological change in African agriculture. The main approach used has been the multi-stakeholder innovation platform (IP). This paper analyses the requirements for improving the competence and skills of IPs actors in agricultural value chains, food systems, and natural resource management. As case studies, it uses IPs in the maize and cassava value chains that were initiated in the dissemination of new agricultural technologies in Africa (DONATA), in both West and Central Africa, and made reference to the rice IPs facilitated by AfricaRice. Yields and incomes in maize and cassava IPs significantly increased and inter-actor relationships and behavioural change among the diverse social and economic operators were enhanced. This achievement built on three capacity development interventions: (i) learning workshops that sensitized and informed technocrats and policy-makers and nurtured their involvement and ownership, (ii) competence and skill training of IP facilitators and practitioners, and (iii) coaching and mentoring of these facilitators and practitioners. To better facilitate IPs, facilitators and practitioners need to learn to observe, recreate, test, and perfect the IP process and value chain approach. Practicable tools that can be visualized and put into practice by the IP actors are essential. The DONATA on which the paper is based has been invaluable in terms of experiential learning.     

Will cotton make a comeback in Mali?

With the decline of cotton especially in the marginal cotton areas, farmers have been using more of the cotton‐financed inputs on the cereals. The cotton para‐statal company (CMDT) has made a virtue out of this recommending diversification for these regions. Following the world price spike in 2010, the Malian government responded with a substantial price increase for cotton in 2011 of 38% to rejuvenate the Malian sector. This article looks at the impact of this price policy in the cotton economy and the potential of new cereal technology and marketing strategy to raise incomes and facilitate the diversification. Given the importance of the marketing decision of selling later after the recovery of cereal prices from the harvest collapse, a discrete stochastic programming model was developed for three‐stage decision making. Then, the recent changes in the cotton economy and government fertilizer subsidies were analyzed along with the introduction of the new technology marketing of sorghum. Cotton and maize continue to dominate the economy but the combined sorghum technology marketing increases farmers’ incomes by 16% to 21% and eases the return to normal cotton prices, after the 2011 price spike, as well as the removal of the fertilizer subsidies.     

The estimated ex ante economic impact of Bt cowpea in Niger,Benin and Northern Nigeria

Genetically modified (GM) crops could increase economic growth and enhance living standards in Africa, but political issues have slowed the use of biotechnology. This is the first study that assesses the potential impact of GM crops in Africa while considering the preferences of producers and consumers towards GMOs as well as the income and price risks they face. The study uses a choice experiment to estimate the ex ante economic impact of a novel technology, Bacillus thuringiensis (Bt) cowpea, on producers and consumers in Benin, Niger and northern Nigeria. The experiment involves the simulation of a market transaction similar to those in open air markets in West Africa. During the market simulation, respondents are informed about the advantages and disadvantages, including health risks, of Bt cowpea. The results from the study suggest that cowpea growers and consumers in Benin and northern Nigeria prefer Bt to conventional cowpea for health safety reasons. The results estimate that social welfare in Benin, Niger and northern Nigeria would increase by at least US$11.82 per capita annually with Bt cowpea, if seed sectors are operating smoothly. With inefficiencies in seed sectors and the potential for cowpea acreage increase, the estimated social welfare increase in the region would be about US$1.26 per capita annually.     

The impact of market regulations on intra-European real exchange rates

We study the contribution of market regulations to the dynamics of the real exchange rate within the European Union. Based on a model proposed by De Gregorio et al. (Rev Int Econ 2(3):284–305, 1994a), we show that both product market regulations in nontradable sectors and employment protection tend to raise the real exchange rate. We then carry out an econometric estimation for European countries for 1985–2006 to quantify the contributions of the pure Balassa–Samuelson effect and those of market regulations on real exchange-rate variations. Based on this evidence and on a counter-factual experiment, we conclude that the relative evolutions of product market regulations and employment protection across countries play a very significant role for real exchange-rate variations within the European Union and especially within the euro area, through their impacts on the relative price of nontradable goods.     

Tourism,globalization and economic growth: a panel cointegration analysis for selected West African States

This study examined the tourism-led hypothesis for selected 11 countries of Economic Community of West African States (ECOWAS). Panel cointegration technique was employed to inspect long-run relationship between study variables. Results of fully modified ordinary least squares and dynamic ordinary least squares confirmed the positive effect of physical capital, tourism and economic globalization index on economic growth. Thus, tourism-led growth hypothesis exists in ECOWAS. Conversely, negative impact of foreign direct investment on growth was captured.     

Choice of Mortgage Contracts: Evidence from the Survey of Consumer Finances

This study revisits the empirical question of the determinants of the choice between fixed‐ and adjustable‐rate mortgages using data from the Survey of Consumer Finances that overcome some of the data limitations in previous studies. The results from a logit model of mortgage choice indicate that pricing variables and affordability are important considerations. We also find that factors, such as mobility expectations, income volatility and attitudes toward financial risk largely influence mortgage choice, with more risk‐averse borrowers preferring fixed‐rate mortgages. For households that are less risk averse, the mortgage type choice decision is less sensitive to pricing variables and income volatility, and affordability factors are not significant. These findings provide empirical support that underscores the importance of attitudes toward risks in mortgage choice.     

The Role of Property Rights in the Relationship between Capital Flows and Economic Growth in SSA: Do Natural Resources Endowment and Country Income Level Matter?

This paper studies the role played by the quality of property rights in the linkages of international capital flows into sub‐Saharan African (SSA) economies. Using panel data of 36 SSA countries over the period 1996–2015 and the ARDL procedure with the Pooled Mean Group regression method appropriate for non‐stationary panel data estimation, we account for the joint effects of property rights quality and openness to foreign capital flows on economic growth. We uncover the existence of a property rights quality threshold beyond which property rights either amplifies the spillovers effects or attenuates the negative effect of capital flows on economic growth. For instance, it takes a level of property rights of at least 60 to have a positive long‐term impact of capital flows on economic growth in natural resource‐poor African countries. The quality of property rights matters more to obtain spillover effects of capital flows on growth in natural resource‐poor countries than in their peer natural resource‐rich countries. Finally, with regard to the countries' income levels, capital flows have significant long‐term spillovers effects on economic growth in advanced African economies than in their low‐income peers.