Trade Intensity and Business Cycle Synchronicity in Africa

Abstract: Business cycle synchronicity, which is the key requirement for sharing a common currency, is not particularly strong within the prospective African monetary unions. However, this parameter is not irrevocably fixed and may be endogeneous vis‐à‐vis the integration process. For example, trade may increase the similarity of economic disturbances. This paper tests such an effect among the 53 African countries from 1965 to 2004. The estimated results suggest that trade intensity increases the synchronization of business cycles in the African context. The magnitude of the ‘endogeneity effect’ is, however, smaller than similar estimates among industrial countries.     

The reception of resistance to development: A perspective

People sometimes react with little enthusiasm to development projects designed for them — or even resist such projects. One of the reasons for this is that development projects and modernization impose Western values and world‐views on other cultures. The search for an authentic identity based on African values is described by prominent modern African writers all over the continent This search includes, to a greater or lesser extent, the rejection of Western values and lifestyles. In this article the views of African writers on the African concept of a cosmic order and the corresponding concept of development is compared with the traditional Western concepts. Theological reflection from a Christian point of view is also included. Various ‘gaps’ that exist are discussed, as well as possibilities for reconciling the opposing values and world‐views.     

Are the communal grazing lands in need of saving?

The condition, productivity and profitability of the communal grasslands in the southern African ‘homelands’ are assessed by review of the published data. There is very little empirical data from the communal grasslands themselves. These data, supported by other circumstantial evidence, do not support the often‐held notion that the communal grasslands are severely degraded and beyond recovery. This is especially so for the moist and mesic areas of southern Africa. Results from the arid areas are variable.     

Development management regions in South Africa: An empirical evaluation

In this study an attempt has been made to evaluate the validity of the boundaries of the officially approved ‘development regions’ of South Africa. A variety of statistical methods were used for the evaluation of the empirical validity of the boundaries of these regions. Firstly, two sets of homogeneous regions based on different sets of parameters were delimited. Secondly, two sets of regions indicating areas of different levels of economic development were determined. With the aid of this information, some changes in the boundaries of the existing regions are suggested. A historical account of attempts at regionalisation in South Africa for development management purposes is also given. A semantic assessment of definitions points to the need for a change in the use of the term ‘development region’ — for this specific purpose — to the term ‘development management region’.     

Stratégies de développement et ouverture sur l'extérieur

Résurné: Cet article examine d'abord la notion de strategie de developpe- ment: il en propose une definition et des criteres de mesure: la strategie de developpement, mode de developpement choisi par le pays, autrement dit ce qui ne resulte pas de I'environnement, est appreciee a travers divers indicateurs, dits de performance, de choix structurels et de choix instrumentaux. Les indi- cateurs sont mesures en purgeant les donnees brutes de I'influence de l'envi- ronnement. Abstract: This paper first considers the concept of development strategy, of which it offers a definition and measurement criteria. Development strategy is defined as the development pattern chosen by the country, that is to say the pattern which does not result from the environmental factors. It can be appreciated by several indicators of ‘performance’, ‘structural choices’ and ‘instrumental choices’, most of them measured by eliminating from gross variables the influence of the environment. This methodology is then applied to the study of the trade strategy. The ‘openness’ of ‘outward orientation’ is here defined and measured by the level of export-GDP ratio which does not result from environment. Environmental variables acting on the export ratio, as estimated by a cross-sectional analysis, are the per capita income level, the country size, and the mineral exports. This ‘revealed’ outward (or inward) orientation is compared between African and non African countries. Finally, the implications of an informal trade for the outward orientation index are discussed in the case of African countries.     

Invisible capital: The contribution of communal rangelands to rural livelihoods in South Africa

Communal rangelands (including their woodland component) contribute significantly to rural livelihoods in that a variety of natural resources are utilised for direct use and for exchange in local and more distant markets. Natural resources are also valued for purposes which are not ‘economic’ (eg for ceremonial and aesthetic reasons) and because of their ecological functions. The fact that many of these uses are not monetised means that their true social and economic value is often underestimated and not taken adequately into account when assessing, for example, the viability of land redistribution projects. The ecological dimension is as crucial as the socio‐economic: how sustainable is this multifold use of communal rangeland resources? More positively, can the productivity of ‘natural capital’ be increased, and how can the benefits of multifold utilisation activities be more widely distributed to help address rural poverty? This article discusses conceptual models drawn from the general literature which may be of relevance; reviews some of the southern African evidence on rural livelihoods and natural resource use; and attempts to draw out the lessons for poverty assessments and land reform policy.     

Women,gender and policy‐making in the South African context

Equality, including gender equality, is a fundamental principle of the South African constitution. This article is intended as a briefing document for researchers and policy‐makers on some of the more qualitative gender considerations involved in policy‐making and analysis. The article is not based on original research or data analysis, but is informed by a range of papers and studies which throw up gender questions about conventional ways of seeing. The article starts by dealing briefly with the distinction between ‘equity’ and ‘efficiency’ arguments for gender equality. After summarising past and current developments in establishing gender machinery within government, it goes on to suggest how traditional economic theory obscures or distorts gender issues. Finally it discusses the use and abuse of concepts commonly encountered in both poverty studies and discussions of gender.     

Whither the study of development in South Africa?

In South Africa we have, since 1990, experienced an upsurge of interest in the study and teaching of development. In this article it is argued that two brands of development research and teaching have emerged in South Africa: one brand has a distinct public administration/management focus, while the other has a more pan-disciplinary, development studies focus. Despite these different focuses, a peculiar convergence has taken place in that the themes of study of the two ‘schools’ often overlap. This convergence demands further exploration of a number of themes, such as the research methodologies appropriate to the South African development context; approaches to administration and management relevant to South African development; balancing the role of state and civil society in South Africa; and clarity on what we mean by the concept ‘empowerment’ in our deliberations on development in South Africa.     

Aiding self‐employed car‐washers in the informal sector in Durban

In the past year, the South African Government has committed itself to ‘developing’ the informal sector as a strategy to ease the unemployment crisis and to aid the underemployed. In this paper, the author examines both the lives of self‐employed car‐washers and car‐washing as an activity within the informal sector. He argues that many ‘marginalised’ people who eke out a subsistence in the lower echelons of the informal sector in South Africa regard themselves as lumpenproletariat (or ‘wage‐labourers‐in‐waiting') and not dynamic entrepreneurs. These people expect the Government to intervene in the process of their transition to proletarianism. Further, activities such as car‐washing offer no prospects for self‐advancement.     

The rise and decline of European parliaments, 1188–17891

This article quantifies the activities of medieval and early modern parliaments. It traces the long‐term evolution of this European institution, and offers a first pass at analysing its impact on long‐term economic development. Starting in Spain in the twelfth century, parliaments gradually spread over the Latin west between 1200 and 1500. In the early modern period, parliaments declined in influence in southern and central Europe and further gained in importance in the Netherlands and Britain, resulting in an institutional ‘Little Divergence’ between 1500 and 1800. We discuss the background of this phenomenon in detail. Moreover, by analysing the effects of parliamentary activity on city growth we find that these differences in institutional development help to explain the economic divergence between north‐western and southern and central Europe.     

The Impact of the Asian Economic Crisis on Southern African Economies

Although southern African economies appear to have escaped the initial phase of the East Asian economic crisis relatively unscathed, the second stage of the contagion was somewhat less benevolent in its influence on southern African economies. This paper seeks to investigate the impact of the Asian contagion on southern African economies within a general equilibrium framework. We use the GTAP (Global Trade Analysis Project) model to examine the implications of the Asian crisis for southern African economies. Bien que les économies des pays du sud de l’Afrique semblent avoir échappées à la première phase de la crise économique de L’Asie de l’est, l’effet de la deuxième phase a été plus néfaste envers les économies des pays sud africains. Cet article cherche à enquÁter sur l’impact qu’a eu la contagion asiatique sur les économies des pays sud africains dans un cadre d’équilibre général. Nous utilisons le modèle du GTAP (Global Trade Analysis Project) afin d’interpréter les implications de la crise asiatique sur l’économie des pays sud africains.     

Pro-poor microcredit in South Africa: cost-efficiency and productivity of South African pro-poor microfinance institutions

This article compares the performance of selected South African microcredit non-governmental organisations (NGOs) that have a poverty-alleviation focus against various benchmarks drawn from the MicroBanking Bulletin. Donors, governments and many analysts regard sustainability as the benchmark of microfinance institutions' (MFIs) performance. However, the most relevant question is whether microcredit NGOs are doing as well as they can in their context. Of particular contextual importance is income inequality in a society. South Africa has the world's second worst income inequality, after neighbouring Botswana. This creates a situation in which microcredit NGOs must recover ‘First World’ costs, particularly salaries, from revenues based on clients who can only afford loans on a par with Third World countries. Compounding this situation are structural obstacles to microenterprise in South Africa, as well as obstacles to productivity in microcredit NGOs. Taken together, this creates a ‘salary burden’ for South African microcredit NGOs, which is the highest in the world according to relevant benchmarks. South African MFI managers face significant obstacles to improving productivity to compensate for the divergence between staff and client living levels. These include an inadequate skills base, the small scale of the market, rapid labour turnover, and limited resources for capacity development. South African MFIs face the options of moving upmarket (which many have done), adopting methodological innovation or new product development, or closure. Of these, there is a strong argument to be made for supported savings and credit approaches as an alternative to NGO-based microcredit. Such an approach has the advantages of greater voluntary input and social capital formation.     

绵阳市县域新型工业化与新型城镇化互动发展实证评价

基于新型工业化和新型城镇化的内涵和研究区实际,构建了综合评价指标体系,运用标准化评分法对绵阳市县域"两化"互动发展进行了实证评价。结果显示:绵阳市9县域整体的"两化"发展水平较低,分异明显,涪城区"两化"呈现良好的互动发展,其他8县域总体上尚未形成良性互动;在工业化水平不高的情况下,新型城镇化水平明显落后于新型工业化水平;各县域在表征工业化和城镇化的"传统"指标上得分差距相对小,但在"新型"要素上差距大;各县域应在工业化和城镇化的"新型"上下功夫,并根据自身的特点寻求"两化"良性互动发展之路。     

Asian trade: long‐term patterns and key policy issues

Fragmentation‐based specialisation has become an integral part of the economic landscape of East Asia. Dependence on this new form of international specialisation is proportionately larger in East Asia, in particular in the Association of Southeast Asian Nations, than in North America and Europe. In this regard, an important recent development has been the rapid integration of China into regional production networks. This development is a counterpoint to the popular belief that China's global integration would crowd out other countries' opportunities for international specialisation. The rise of product fragmentation has strengthened the case for a global, rather than a regional, approach to trade and investment policymaking. Given the global orientation of the region's economies, we question whether there would be a significant benefit from current efforts to promote regional cooperation, unless the principle of ‘open regionalism’ is recognised. With both the Doha Round and APEC floundering, this is one of the major multilateral policy challenges of our time.     

A SMALL-SCALE DSGE MODEL FOR FORECASTING THE SOUTH AFRICAN ECONOMY

This paper uses a version of Hansen's (1985) Dynamic Stochastic General Equilibrium (DSGE) model to forecast the South African economy. The calibrated model, based on annual data over the period of 1970‐2000, is used to generate one‐ to eight‐quarters‐ahead out‐of‐sample forecast errors for the period of 2001:1 to 2005:4. The forecast errors are then compared with the unrestricted versions of the Classical and Bayesian VARs. A Bayesian VAR with relatively loose priors outperforms both the classical VAR and the DSGE model.     

The Southern African customs union: A reappraisal

The paper attempts to evaluate, as far as possible quantitatively, the costs and benefits to the countries of the ‘Southern African periphery’ (Botswana, Lesotho and Swaziland) of participation with South Africa in the current customs union agreement. On balancing the agreement's measurable effects (on industrial development, exports, government revenue and the cost of living) against one another, it appears that on sanguine assumptions only, there would be a substantial benefit to Botswana and a much more moderate benefit to Lesotho if the customs union were dismantled and replaced by separately protected national markets. Such a calculation, however, neglects what may be the most important benefit and cost to the ‘peripheral’ countries of leaving the customs union, namely the increase of ‘economic independence’ and the risk of South African retaliation respectively: themes which are explored in the final section.     

De‐industrialization and re‐industrialization in the Middle East: reflections on the cotton industry in Egypt and in the Izmir region

This article presents an investigation of the process of decline and rebirth of textile manufacturing in two Middle Eastern regions, Egypt and the Izmir region, during the first wave of globalization (1850–1914). Through the application of the ‘Dutch disease’ model, it explores the linkages between terms of trade and industrialization. These are further related to the evolution of price transmission between domestic and global raw cotton markets. Findings indicate that different levels of market integration have contributed to diverging trajectories in industrial development in the two regions: while in Egypt the process of de‐industrialization was not reversed, in the Izmir region weaker international price transmission facilitated the creation of a nascent domestic textile industry. However, terms of trade patterns and relative price movements are only one of the causes that can explain the differences between the two regions.     

Mineral wealth – ‘in the name of morafe’? Community control in South Africa's ‘Platinum Valley’

Direct control of mineral resource wealth by communities in resource-endowed regions is advocated as a panacea to conflict and fundamental towards attainment of self-determination and local autonomy. Based on the study conducted in Royal Bafokeng and Bakgatla Ba Kgafela, the two prominent, platinum-rich traditional communities in South Africa's North West Province, this article reveals that, although mineral wealth in South Africa's platinum-endowed communities such as Royal Bafokeng is reportedly distributed ‘in the name of morafe’ (‘community’ in Setswana), inadequate participation produces polarised local priorities and tensions at the grassroots level. Community control of mineral wealth is thus likely to paradoxically generate conflict and exclusion at the traditional community level, particularly in contexts where participation in mineral wealth-engendered community development is championed by traditional leaders through customary-derived spaces of local engagement.     

When ‘community’ is not enough: Managing common property natural resources in rural South Africa

Common property natural resource management (NRM) informer ‘bantustan’ rural areas can provide important pointers for current and future land reform and local government policy. Using Tyefu Location in the Eastern Cape as a case study, this article outlines three of the constraints that currently fashionable ‘community‐based’ NRM models are likely to face in coordinating the use of common property resources in these areas. These three constraints are first, the entrenched socio‐economic differentiation that results in local people having varied, but generally weak incentives for contributing to collective action resource management. Second, are the high levels of institutional contestation that exist in these areas and third, the fact that the ‘fuzziness’ of existing NRM regimes allows for maximum flexibility in resource use, with the result that most rural (and urban‐based) people are unlikely to support the introduction of more formalised NRM regimes.     

The Role of Capital Flight and Remittances in Current Account Sustainability in Sub‐Saharan Africa

Abstract: The literature on capital flight and remittances is copious, as a plethora of studies in recent years have focused greater attention on the determinants and impact of capital flight and remittances in the development process. These issues are particularly pertinent to Africa in view of its relatively high incidence of capital flight in the presence of foreign exchange constraints, limited foreign capital inflows, external indebtedness and high dependence on overseas development assistance. The principal aim of this paper is to estimate the extent and magnitude of capital flights from Africa and remittance inflows to Africa, and to assess their role in current account sustainability. The paper employs standard methodological approaches to estimating capital flight and remittances for selected African countries and analyses their relationships with current account balance and key economic indicators. The findings from the statistical exercises in the paper yielded a number of important results:

• ? The magnitude of capital flight from Africa has increased considerably in recent years, with widespread fluctuations and volatility.
• ? The volume of remittances into Africa has increased dramatically but steadily.
• ? There is a negative association between balances on current account and capital flight, implying that capital flights tend to worsen current account difficulties.
• ? There is a positive relationship between remittances and current account, suggesting that remittances could play an important role in mitigating current account problems.
• ? The link between remittances and economic growth is positive, albeit insignificantly in the statistical sense, suggesting some evidence of the crucial role of remittances in the economic growth and development process.
• ? External debt and capital flight are positively intertwined, providing support to the so‐called ‘round‐tripping’ or ‘back‐to‐back’ hypothesis

The policy implications of these findings are that in spite of the good progress made by many African countries towards economic and political reforms, more innovative policy thinking and reform deepening must be initiated to create a conducive environment for private sector participation in general and foreign capital (including capital flight reversal) in particular. Similarly, there is a need for incentivising and mainstreaming remittances into national development strategies with the view to promoting the growth‐enhancing effects of remittances. A wide range of policy options and forward thinking analyses were advanced in the paper.