Transforming Economic Growth to Human Development in Sub-Saharan Africa: The Role of Elite Political Instability

In the light of the increasing attention on human development (HD) as well as the importance of political instability (PI) in economic performance, this paper examines the role of PI in the transformation of economic growth to HD. It finds that élite PI—the frequency of coups d'état in sub-Saharan Africa—adversely affected the transformation of economic growth to HD, measured as the change in an index of life expectancy and literacy, between 1970 and 1985. Coupled with an additional indirect negative effect on GDP growth, élite PI is found to have engendered a significant adverse impact on HD.     

Accounting for South Korean GDP Growth: Index-Number and Econometric Estimates

The paper estimates the contribution of each one of the major determinants of South-Korean nominal GDP growth: technological change, movements in the terms of trade, increases in the endowments of labor and capital, and changes in domestic output prices. An index-number technique is used as well as an econometric approach. Both have a tight theoretical foundation, being based on the GDP function approach to modeling the production sector of an open economy.     

Financial Contracting with Optimistic Entrepreneurs

Optimistic beliefs are a source of nonpecuniary benefits forentrepreneurs that can explain the "Private Equity Puzzle."This paper looks at the effects of entrepreneurial optimismon financial contracting. When the contract space is restrictedto debt, we show the existence of a separating equilibrium inwhich optimists self-select into short-term debt and realistsinto long-term debt. Long-term debt is optimal for a realistentrepreneur as it smooths payoffs across states of nature.Short-term debt is optimal for optimists for two reasons: (i)"bridging the gap in beliefs" by letting the entrepreneur takea bet on his project’s success, and (ii) letting the investorimpose adaptation decisions in bad states. We test our theory on a large data set of French entrepreneurs.First, in agreement with the psychology literature, we findthat biases in beliefs may be (partly) explained by individualcharacteristics and tend to persist over time. Second, as predictedby our model, we find that short-term debt is robustly correlatedwith "optimistic" expectation errors, even controlling for firmrisk and other potential determinants of short-term leverage.     

Capital structure,product market competition and firm performance: Evidence from South Africa

This paper investigates the relationship between capital structure and firm performance, paying particular attention to the degree of industry competition. The paper applies a novel measure of competition, the Boone indicator, to the leverage-performance relationship. Using panel data consisting of 257 South African firms over the period 1998–2009, this paper examines the effect of capital structure on firm performance and investigates the extent to which the relationship depends on the level of product market competition. The results suggest that financial leverage has a positive and significant effect on firm performance. It is also found that product market competition enhances the performance effect of leverage. The results are robust to alternative measures of competition and leverage.     

Will African Agriculture Survive Climate Change?

Measurement of the likely magnitude of the economic impact ofclimate change on African agriculture has been a challenge.Using data from a survey of more than 9,000 farmers across 11African countries, a cross-sectional approach estimates howfarm net revenues are affected by climate change compared withcurrent mean temperature. Revenues fall with warming for drylandcrops (temperature elasticity of –1.9) and livestock (–5.4),whereas revenues rise for irrigated crops (elasticity of 0.5),which are located in relatively cool parts of Africa and arebuffered by irrigation from the effects of warming. At first,warming has little net aggregate effect as the gains for irrigatedcrops offset the losses for dryland crops and livestock. Warming,however, will likely reduce dryland farm income immedia-tely.The final effects will also depend on changes in precipitation,because revenues from all farm types increase with precipitation.Because irrigated farms are less sensitive to climate, wherewater is available, irrigation is a practical adaptation toclimate change in Africa.     

Explaining Slow Growth in Africa

This paper critically reviews the empirical literature on growth, with a view to drawing some lessons for Africa. It illustrates the diversity of the results found by different authors, and calls for a more rigorous approach, paying attention to the identification of structural parameters and to simultaneity biases. It emphasizes the part played by openness and export orientation as the main policy variables affecting growth. Then, the choice of bad policies, which seems to be the main proximate cause of slow growth in Africa, is traced to the lack of social capital and deficient political institutions. Cet article est une critique de la littérature empirique sur le développement dont le but est d’en tirer quelques leçons sur l’Afrique. L’article démontre la diversité des conclusions tirées par plusieurs auteurs et fait appel à une démarche plus rigoureuse, prenant en compte l’identification des paramètres structurels et des penchants simultanés qui existent. L’importance du marché et son orientation vers l’export sont soulignées comme étant les deux variables principales qui touchent directement la croissance. Les auteurs démontrent ensuite que le choix de mauvaises politiques, qui semble Átre la cause principale de la faible croissance africaine, est due en effet à un manque de capital social ainsi qu’aux institutions politiques défectueuses.     

Exploring the potential of wireless technologies to accelerate universal Internet access in Ghana

Ghana was one of the first countries in sub-Saharan Africa to be connected to the Internet, yet has very low Internet usage (5.3 users per 100 inhabitants). A qualitative study including in-depth interviews with ISPs explored Internet diffusion in Ghana. Findings suggest that due to Ghana's inefficient and outdated fixed-line infrastructure, universal Internet access goals might not be achievable through fixed-line technologies. Rather, wireless technologies may be more efficient. However, high access costs continue to be a barrier. Policy options to encourage widespread deployment of wireless broadband and cost reduction are presented as suggestions for further research. These include using universal service funds to expand the national backbone with an open access high capacity wireless backbone to reach unserved and underserved areas, reducing license and regulatory fees for the wireless industry to encourage coverage and capacity expansion, and mandatory infrastructure sharing to reduce cost.     

Gains from Trade: Implications for Labour Market Adjustment and Poverty Reduction in Africa

Abstract: This paper reassesses the gains from trade for sub‐Saharan Africa, and draws their implications for labour market adjustment and poverty reduction. It reviews previous studies on multilateral liberalization, focusing on the findings from Computable General Equilibrium (CGE) models with relevance to African economies. The implications of these findings for poverty reduction are discussed. Our own CGE exercise supports the hypothesis that African countries cannot expect substantial gains from further multilateral liberalization. Moreover, given the sharp contraction of import‐competing sectors in response to trade liberalization in many African economies, coupled with insufficient compensation through labour market adjustments in other sectors, this study suggests that the ultimate impact on poverty reduction is likely to be small or even negative.     

Creating space for innovation—The case of mobile telephony in MSEs in Ghana

Mobile telephones have become important tools for socio-economic activities. In Africa, their diffusion is phenomenal. This paper adopts the innovation system conceptual framework for analyzing the state of mobile telephony in Ghana, the trends and implications for enhancing benefits. The paper emphasizes the role of the critical actors, and the internal and external environments they operate in. It uses primary and secondary data in analyzing the real and potential innovative use of mobile telephones by the MSEs in Ghana. It also examines the range of applications of mobile telephones in the MSEs, and assesses current public policies and the outcomes of such policies on innovations in MSEs. Finally, it advocates for a more holistic promotion of innovations from the broad perspectives. Efforts to stimulate innovation must be on the demand side of innovation as well as on the supply side.