Exiting from Fragility in Sub‐Saharan Africa: The Role of Fiscal Policies and Fiscal Institutions

This paper studies the role of fiscal policies and institutions in building resilience in sub‐Saharan African countries, focussing on 26 countries that were deemed fragile in the 1990s. We use a probabilistic framework together with GMM estimation to address endogeneity and reverse causality. We find that fiscal institutions and fiscal space, namely the capacity to raise tax revenue and contain current spending, as well as the quality of public expenditure, are significantly and robustly associated with building resilience. Similar conclusions arise from a qualitative study of 7 sub‐Saharan African countries in the sample that built resilience since the 1990s.     

How will good economic policy environments emerge in Africa?

In Africa, institutions were not established at independence that took proper account of the pluralism of the societies, while civil society failed to press for institutions to control the state. Political leaders have had little self‐interest in pursuing good economic policies, and there is weak civil societal demand for such policies. Foreign aid and the proposed peer review mechanism of the African Union could help strengthen this demand. Social scientists can help by focusing on corruption in top political leadership, reducing ethnicity, and improving political leadership. Selectivity for aid can be ex ante, with resoluteness in withdrawing aid for not keeping promises.     

Technological Competence And Firm Economic Performance In Zimbabwe's Manufacturing Industry

Using data obtained from firm interviews, the paper attempts to relate, statistically, economic performance with technology. The firms interviewed belong to four industries: food and beverages (ISIC 31), textiles and clothing (ISIC 32), wood and furniture (ISIC 33), and metalworking (ISIC 34). An aggregate, synthetic, technology variable was built using data on three components: transfer of technology channels, manpower technical skills, and technological efforts. The transfer channels component comprised three sub-components: number of licensing contracts, number of technical assistance agreements, and number of expatriate technical personnel. The skills component also included three sub-components: number of engineers, number of scientists, and number of middle level technical personnel employed. The technical efforts component was formed by the addition of two normalized sub-components: R&D expenditures and number of uses made of technical support services. All these variables were measured at the individual firm level. The paper explores first the relationship between technology (as defined above) and two potential explanatory variables: size of firm and foreign ownership. In a second statistical exercise, the technology variable is incorporated, with traditional factors of production, in a production function. In the last statistical exercise, firm performance indicators were related to technology. Based on the availability of reliable data, the two performance indicators selected were: output per worker and whether the firm exported part of its output or not. The possible incidence of sectoral (industry) effects was also taken into account. It could be concluded that the sample data used shows a statistically significant, though not very strong, effect of the technology variable on both, output and output per worker, and a somewhat stronger association with whether Zimbabwe's manufacturing firms export or not.