On the Adequacy of Monetary Arrangements in Sub‐Saharan Africa

We examine the economic rationale for monetary union(s) in Sub‐Saharan Africa through the use of cluster analysis on a sample of 17 countries. The variables used stem from the theory of optimum currency areas and from the fear‐of‐floating literature. It is found that the existing CFA franc zone cannot be viewed as an optimum currency area: CEMAC and UEMOA countries do not belong to the same clusters, and a ‘core’ of the UEMOA can be defined on economic grounds. The results support the inclusion of the Gambia, Ghana and Sierra Leone in an extended UEMOA arrangement, or the creation of a separate monetary union with the ‘core’ of the UEMOA and the Gambia, rather than the creation of a monetary union around Nigeria. Finally, the creation of the West African Monetary Zone (WAMZ) around Nigeria is not supported by the data.     

Economic Partnership Agreements Between Sub‐Saharan Africa and the EU: A Development Perspective

This paper draws on Hinkle and Schiff (2003). It analyses the planned Economic Partnership Agreements (EPAs) between the EU and Sub‐Saharan Africa (SSA) from a development perspective. It does not take a position on whether SSA should enter into EPAs with the EU. Rather, it starts from the notion that the process of forming EPAs is unlikely to be reversed and examines the conditions that will maximise SSA's benefits from the EPAs. If this notion is correct, then the analysis presented in the paper applies. On the other hand, Pascal Lamy, the EU Trade Commissioner, made a proposal at the May 2004 G‐90 summit in Dakar that might lead to a change in the EPA process. He proposed that the G‐90, a group consisting of ACP and non‐ACP LDC countries, should not have to make concessions at the WTO Doha Round of multilateral trade negotiations, i.e., he proposed a ‘free round’ for the G‐90. This proposal opens the door to the possibility that the same might apply to the ACP countries in the EU‐ACP negotiations and that the EPA process might be reversed. The paper considers the key issues raised by the planned EPAs, their relationship to the WTO's Doha Round and the EU's Everything‐but‐Arms Initiative, the changes needed to make the EPAs internally consistent, the domestic reforms in SSA that would need to accompany trade liberalisation in both goods and services, and the potential effects of the EPAs on regional integration in SSA. The EPAs will pose a number of policy challenges for SSA countries, including: restructuring of indirect tax systems, reduction of MFN tariffs, liberalisation of service imports on an MFN basis and related regulatory reforms in the services sector, and liberalisation of trade in both goods and services within the regional trading blocs in SSA. The paper also finds that the EPAs provide an opportunity to accelerate regional and global trade integration in SSA. To realise the potential development benefits of the planned EPAs, two steps are essential. First, the EU must, as it has stated, truly treat the EPAs as instruments of development, subordinating its commercial interests in the agreements to the development needs of SSA. Second, the SSA countries need to implement a number of EPA‐related trade policy reforms. However, the latter is far from certain, given the lack of reform momentum in SSA.     

Infrastructure Development and Regulatory Reform in Sub‐Saharan Africa: The Case of Air Transport

This paper analyses the main policy issues raised by regulatory reform in air transport in sub‐Saharan Africa. Its basic premise is that improving ait infrastructure is of paramount importance for the region as it tries to integrate more thoroughly into the world economy. On the basis of the experience of OECD countries with privatisation, liberalisation, and regulatory design, the author analyses progress being made in sub‐Saharan Africa and identifies three important case studies: the restructuring of the regional airline of Francophone Western Africa, the sell‐off of the state‐owned airline of Kenya, and the overall reform process in South Africa, by far the largest market in the sub‐continent. The analysis highlights the importance of regional dynamics in the upgrading of the air transport industry in developing and emerging areas. Sub‐Saharan Africa has made smaller progress in this respect than, for instance, Central America. As the start of the Millennium Round and the first WTO air transport review approach, these issues will gain policy priority for all countries, and may become powerful bargaining tools for non‐OECD countries to press for more open access into OECD markets for the South's traditional exports.     

Achieving the Millennium Development Goals in Sub‐Saharan Africa: A Macroeconomic Monitoring Framework

This paper presents a macroeconomic approach to monitoring progress toward achieving the Millennium Development Goals (MDGs) in Sub‐Saharan Africa. At the heart of our framework is a macro model which captures key linkages between foreign aid, public investment (disaggregated into education, infrastructure and health), the supply side and poverty. The model is then linked through cross‐country regressions to indicators of malnutrition, infant mortality, life expectancy and access to safe water. A composite MDG Indicator is also calculated. The functioning of our framework is illustrated by simulating the impact of an increase in foreign aid to Niger at the MDG horizon of 2015, under alternative assumptions about the degree of efficiency of public investment. Our approach can serve as the building block for Strategy Papers for Human Development (SPAHD), a more encompassing concept than the current ‘Poverty Reduction’ Strategy Papers.     

Rising BRIC and Changes in Sub‐Saharan Africa's Business Cycle Patterns

This paper assesses the extent to which Sub‐Saharan Africa (SSA)'s business cycle is synchronized with that of the rest of the world (RoW). SSA's business cycle has not only moved in the same direction as that of the RoW, but has also gradually drifted away from the G7 in favor of the BRIC. Trade with the BRIC has been the strongest driver of this shift. As fiscal policy stances in SSA and the BRIC are not synchronized, they have not caused output correlation. Also, financial openness, which is at an early stage in SSA, has acted as a neutral force.     

Foreign Direct Investment and Total Factor Productivity Growth: New Macro‐Evidence

Although the role of foreign direct investment (FDI) in facilitating technology transfer is well known in the literature, empirical evidence regarding the effect of FDI on growth is mixed. The contradictory results in the literature may be due to the failure to account for endogeneity and for the abortive capacity of the hosting countries. Using panel data for 49 countries over the period 1974–2008 and the existence of Investment Promotion Agencies in the receiving countries as an instrument, our results show that increased FDI stock leads to higher productivity growth. We also find a significant positive effect on the interaction between FDI stock and distance to the technological frontier, suggesting that the ability of technologically backward countries in absorbing technologies developed at the frontiers increases as more FDI stock is accumulated.     

The Convergence of Labour Productivity in British and German Industries

When a Galtonian cross-section regression model is used to analyse data on the relative labour productivity of 30 British and German manufacturing industries 1960-1989, it is found that there are strong tendencies for labour productivity in the two countries to converge. This is particularly true for 1960-73 and for 1979-89, when there was Galtonian regression towards the (geometric) mean level of relative productivity. There was no tendency for the relative advantage or disadvantage of an industry to persist over time. When an errors-in-variables model is used, it is found that reverse regression and lagged value instrumental variable estimators do not indicate that the OLS estimators in the Galtonian model are usually biased downwards and in fact confirm the direction of the Galtonian regression.     

Exports and Productivity: A Survey of the Evidence from Firm‐level Data

While the role of exports in promoting growth in general, and productivity in particular, has been investigated empirically using aggregate data for countries and industries for a long time, only recently have comprehensive longitudinal data at the firm level been used to look at the extent and causes of productivity differentials between exporters and their counterparts which sell on the domestic market only. This paper surveys the empirical strategies applied, and the results produced, in 54 microeconometric studies with data from 34 countries that were published between 1995 and 2006. Details aside, exporters are found to be more productive than non‐exporters, and the more productive firms self‐select into export markets, while exporting does not necessarily improve productivity.     

How to Balance the Outcomes of the Economic Partnership Agreements for Sub‐Saharan African Economies?

Since 2002, the Sub‐Saharan African countries ( except South Africa which already has a free‐trade agreement with the EU ) have embarked on free‐trade agreement negotiations with the European Union. These arrangements will replace the Cotonou scheme, which requires these countries to eliminate their tariffs on ‘substantially’ all their European imports. Based on a general equilibrium analysis, this study estimates the potential effects of these agreements by considering different levels of reciprocity in the commitments of the Sub‐Saharan African countries. It shows that the ‘standard’ EU proposal, whereby Sub‐Saharan African countries would cut tariffs on 80 per cent of their European imports, would not be enough to balance the outcome of the Economic Partnership Agreements. As a result of the asymmetries between European and African protections and supply‐side capacities, African countries could experience a balance of trade deficit of USD 1.8 billion associated with a 0.1 per cent decrease in GDP. This proposal, which also induces an industrial restructuring to the benefit of the agro‐processing industries, will create a significant fiscal burden. A lesser level of commitment could largely mitigate these unfavourable results; by reciprocating tariff eliminations on only 60 per cent of their European imports, African countries would reduce the trade imbalance and fiscal losses induced by these agreements by 21 and 51 per cent respectively.     

外包与生产率和就业:基于中国的实证

文章使用1997、2002和2007年的42部门投入产出表数据,计算了我国22个工业行业的外包比率,并以面板数据模型检验了外包对工业行业劳动力就业及外包对工业行业产出的影响。检验结果表明,材料品外包、服务外包的发展均有效地提升了我国工业行业生产率水平,但服务外包对工业行业生产率的促进效应要远远大于材料品外包,而外包对工业行业就业影响的分析结果是,服务外包对工业行业就业的影响为正效应并且影响显著,材料品外包对于工业行业就业的效应则效果不明显。     

Outward FDI and Productivity: Micro‐evidence from Slovenia

This paper uses a rich data set of Slovenian manufacturing firms active in the period 1994–2002 that contains information on outward FDI and exports to different markets in order to test three empirical hypotheses that relate the decision for outward FDI to total factor productivity. First, the evidence supports the hypothesis proposed by Helpman, Melitz and Yeaple (2004) that more productive firms are more likely to invest in a foreign affiliate. Second, the hypothesis proposed by Head and Ries (2003 ) that less productive firms may be encouraged to invest in low‐income countries is rejected by the data. However, the main contribution of the paper is to confirm the third hypothesis that required firm's productivity increases with the number of markets that the firm serves, i.e. there is a positive relationship between the number of a firm's foreign affiliates and its total factor productivity.     

相机性政策、公共债务与经济复苏:来自中国的证据

本文利用1992年第一季度到2009年第四季度的数据,用久期模型分析了相机性财政和货币政策对我国经济走出1992-2009年间四次衰退的作用。结果表明,相机性财政政策和货币政策的协调组合对我国经济走出衰退具有比较显著的正向作用,这两类政策的积极实施可以使经济复苏的概率分别提高21%和13%。但是,公共债务水平的上升会削弱相机性政策协调对经济走出衰退的刺激作用,特别是会严重制约积极财政政策的可持续性。     

Foreign Acquisition and Firm Productivity: Evidence from Slovenia

This paper investigates the impact of foreign acquisition on the productivity of Slovenian manufacturing firms subject to takeover in 1997. It finds evidence that foreign investors acquire those enterprises with higher productivity, that are more inclined to export and that operate in more concentrated industries. It then controls for the estimation bias induced by this non‐random selection process by applying the combined propensity score matching and difference‐in‐differences estimation technique. The results of the empirical analysis show no robust statistical evidence of a positive causal effect of foreign acquisition up to two years following takeover. This finding suggests that a transfer of intangible assets from foreign firms to their Slovenian affiliates does not take place over this time period.     

Service Offshoring and Productivity: Evidence from the US

The practice of sourcing service inputs from overseas suppliers has been growing in response to new technologies that have made it possible to trade in some business and computing services that were previously considered non‐tradable. This paper estimates the effects of offshoring on productivity in US manufacturing industries between 1992 and 2000. It finds that service offshoring has a significant positive effect on productivity in the United States, accounting for around 10 per cent of labour productivity growth during this period. Offshoring material inputs also have a positive effect on productivity, but the magnitude is smaller accounting for approximately 5 per cent of productivity growth.     

International Debt Shifting: The Value-Maximizing Mix of Internal and External Debt

Abstract

We study the capital structure of multinationals and expand previous theory by incorporating international debt tax shield effects from both internal and external capital markets. We show that: (i) multinationals’ firm value is maximized if both internal and external debt are used to save tax; (ii) the use of internal and external debt is independent of each other; and (iii) multinationals have a tax advantage over domestic firms, which cannot shift debt across international borders. We test our model using a large panel of German multinationals and find that internal and external debt shifting are of about equal importance.     

Rainfall,financial development,and remittances: Evidence from Sub-Saharan Africa

We use annual variations in rainfall to examine the effects that exogenous, transitory income shocks have on remittances in a panel of 41 Sub-Saharan African countries during the period 1970–2007. Our main finding is that on average rainfall shocks have an insignificant contemporaneous effect on remittances. However, the marginal effect is significantly decreasing in the share of domestic credit to GDP. So much so, that at high levels of credit to GDP rainfall shocks have a significant negative effect on remittances, while at low levels of credit to GDP the effect of rainfall on remittances is significantly positive.     

Financial Crisis and Productivity Evolution: Evidence from Indonesia

We examine how the productivity of different industries changes over the course of a financial crisis by exploiting cross‐firm, within‐industry differences in productivity resulting from the Asian financial crisis of 1997. We show that the crisis coincided with dramatic changes in productivity and that many of these changes were sustained in the long run. In particular, an increasing number of industries experienced decreases in average firm productivity during the crisis and did not recover. Further, we find that changes in industrial productivity in the recovery period are driven not by increases in the productivity of existing firms, but rather by the entry of new firms and changes to the reallocation of market share. Finally, we find that foreign exporters' productivity was the least impacted by the crisis, suggesting that only access to alternate forms of both capital and international markets can help to smooth investment and maintain productivity over a financial crisis.