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2016 Archive

2016 ASSA Annual Meeting

Our Annual Meeting was a great success. Please see below for post event information, including presentation downloads.

Sunday, January 03, 2016

Human Capital Formation Role of Education, Health, and Food Security in African Economic Development (O1, O1)

African Finance & Economics Association
Presiding: DIERY SECK (Center for Research on Political Economy)

Foreign Aid, Access to Water and Sanitation and Implications for Health Outcomes in Sub-Saharan African Countries

LEONCE NDIKUMANA (University of Massachusetts-Amherst)
LYNDA PICKBOURN (Hampshire College)

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Although sub-Saharan African countries have made impressive strides over the past decades towards improving health outcomes, they continue to lag behind other regions, in major part because of inadequate investments in the health sector. In particular, lack of access to safe sources of drinking water and modern sanitation is a key cause of ill health and high death rates, especially among women and children in rural areas and poor urban agglomerations. In this paper, we seek to explore two questions: 1) whether increased allocation of foreign aid to the water and sanitation sectors contributes to improved access to these services in sub-Saharan countries; 2) whether improved access to water and sanitation is associated with improvement in health outcomes in these countries. The paper is based on panel data from OECD/DAC that provides volumes of aid disbursements by sector, in conjunction with country-level data on access to water and sanitation and health outcomes. The analysis uses pooled cross-sectional and panel data estimation techniques controlling for country specific effects, potential outliers, and potential endogeneity of regressors. The results from this study may shed light on strategies to accelerate progress in reaching key development goals in the health sector in African countries and to improve aid effectiveness.

On the Impact of Income Per Capita on Health Outcomes: Is Africa Different?

ELIZABETH ASIEDU (University of Kansas)
NEEPA B. GAEKWAD (University of Kansas)
MALOKELE NANIVAZO (University of Kansas)
MWANZA NKUSU (International Monetary Fund)
YI JIN (Monash University)

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This paper theoretically and empirically examines the link between GDP per capita, adult life expectancy and mortality rates for infants and children. We construct an overlapping generations model and show that when the income of parents increase, child mortality rate declines and life expectancy increases. The empirical analysis employs panel data from 121 developing countries over the period 1994-2014 and it estimates a dynamic panel model. We control for country and time fixed effects, health expenditure per capita, educational attainment and governance. We find that (i) health outcomes have improved over time; (ii) income per capita has a positive impact on health outcomes, however the effect is non-linear in that wealthier countries benefit more; (iii) countries in SSA have a lower adult life expectancy and higher infant/child mortality rate compared to countries outside Africa; (iv) The health indicators of countries in North Africa is comparable with that of countries outside Africa; (v) the effect of income per capita on health outcomes for SSA countries is significantly different from the effect for countries outside Africa.

Measuring Impacts of Health Insurance for the Poor: Bayesian Potential Outcomes Approach

ANDINET WOLDEMICHAEL (African Development Bank)
ABEBE SHIMELES (African Development Bank)

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One of the major reasons for low healthcare utilization rates in low-income counties is lack of affordable health insurance coverage. In recent years, Community-Based Health Insurance programs are widely implemented across developing countries to increase healthcare utilization of the poor. This study investigates the causal impact of Community Based Health Insurance schemes on utilization of healthcare services in Rwanda. In a Bayesian potential outcomes framework, we address issues of selection bias on observable and unobservable dimensions and heterogeneity in treatment effects by estimating treatment effects at the individual level. Using data from a nationally representative household survey, we find that the program significantly increases the likelihood of utilizing medical consultation and screening services but not the utilization of drug. We also find notable heterogeneity in the estimated treatment effects at the individual, intra-household, and area levels.

The Impacts of Improvements in the Delivery of Credit from Formal and Semi-Formal Institutions: Evidence from Ghana

SAMUEL AMPONSAH (Tokyo International University)

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Formal and semi-formal financial institutions (FSFI) have increasingly become involved in the financing of micro and small enterprises (MESs). For solving poverty issues, credit delivery plays a major role because it contributes to the development of the MSEs and improves the living and working conditions of the poor. Notwithstanding, the previous three rounds of the Ghana Living Standards Surveys (i.e. GLSS 3, GLSS4, and GLSS5) have shown that over 75 percent of loans taken by households were mainly from the informal financial sector (e.g., borrowing from family members, money lenders, etc.). The existing empirical evidence specifically suggests that a loan from this sector hinders SMEs growth and improvement in the living and working conditions of the poor because it usually comes with a high lending rate(s). Fortunately, the GLSS 6 shows much improvement in the delivery of loans from the formal and semi-formal financial institutions to households in Ghana. In contrast to the previous three rounds of the GLSSs where credits from the FSFI to households in the country were less than 10 percent, the GLSS 6 shows that about 46 percent of loans taken in 2012/13 survey year came from the these two institutions. The improvements in loans from FSFI to households could be attributed to the passing of new financial institutions bills such as the Borrowers and Lenders Act (ACT 773) and the Non-Bank Financial Institutions Act (Act 774) in 2008. To the extent that the impacts of expanding access to credit on household, especially the poor, need not to be positive, and could be negative, it is important to comprehensively examine the impact of improvement in the delivery of credits from these institutions. The main source of data for this study is the Ghana Statistical Service. This study employs four different household surveys conducted by the Ghana Statistical Service in 1991/92, 1998/99, 2005/06, and 2012/13 to comprehensively examine changes in the delivery of loans to households over the four different survey years. In addition, using the passing of these bills to implement difference-in-differences (DID) research design, I estimate the impact of loans from FSFI on not only income from household agricultural and self-employment activities but also assets and expenditure. The results of the DID estimates show that FSFI loan has positive on non-farm self-employment income but negative effect on income from household agricultural activities.

Flop or a Success? An Evaluation of the Welfare Impacts of the 6-3-3-4 Education System in Nigeria

RUTH U. OYELERE (Emory University)

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With the introduction of the New National Policy on Education in 1981, plans were underway to overhaul the prior Nigerian education system. According to Fabunmi (1986) the previous education system was deemed archaic and there was need for a modern dynamic and progressive educational system. These plans gave birth to the 6-3-3-4 system. A system that allowed for six years in primary school, three years in Junior Secondary School (JSS), three years for Senior Secondary School (SSS) while the last four years are for tertiary education. Previously the country had a 6-5-4 system, which represents six years in primary school, five in secondary and four in tertiary. However, as there were debates on the inadequacy of the 6-5-4 system to prepare Nigerians to face whatever challenges, including employment problems, they may come across in future, the system was replaced. The move to the 6-3-3-4 system was not solely about increasing the time spent in secondary education but also a radical change in the subject structure of education in secondary school. Also at the tertiary level, a professional orientation was adopted with an aim to minimize unemployment and produce skilled labor in science and technology. The 6-3-3-4 system was setup to be different from the previous system in its goals and objectives. For example it was supposed to focus on functional education" meaning an education that as noted in Uwaifo and Uddin (2009), allows those who pass through it function economically, intellectually, morally, politically and socially. Also, its main objective was to produce graduates who were more likely to be self-reliant, leading to a smooth school to work transition upon graduation. Despite the laudable objectives of the program, from its inception there were group who were opposed to it. By 2000 onwards, those opposed to the program increased rapidly and debates on the effectiveness of the system were at the core of this increased opposition. The diverse views of the program can be divided into two main ideas. One major view was that the 6-3-3-4 system if implemented correctly would yield success but in the Nigerian case had not been implemented properly. Those who hold this view further argue that despite the poor implementation, the 6-3-3-4 system better prepares students for success in the labor market compared to the prior system.

Effects of Agricultural Aid on Food Security

KWABENA GYIMAH-BREMPONG (University of South Florida and IZA Bonn)
MARGARET ADESUGBA (NSSP-IFPRI, Abuja, FCT Nigeria)

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Food security has been the bane of African countries even though these countries are agrarian economies. On average, about 50% of the labor force in African countries are engaged in agriculture which accounts for about 30% of GDP generally in Africa. This suggests that productivity in agriculture is very low in African countries. Low productivity in the largest sector of African economies has not only left many Africans poor, it has left African countries food insecure. The issue of food insecurity in African countries was brought to the fore during the 2008 world food crisis when grain prices in African countries almost doubled. In spite of the fact that African countries are agrarian economies, the United Nations Food and Agricultural Organization (FAO) data indicate that Africa is the only region in the developing world where food production per capita decreased during the last two decades. Despite efforts to increase agricultural output, productivity continues to be low with the consequence that food security is not assured. As a result, African countries have come to rely on food aid to meet food short falls. In addition to food aid, Sub-Saharan African countries have been, and continue to be, the recipients of large amounts of agricultural aid—including inputs, technology, infrastructural support, policy advice and capacity building to increase agricultural productivity and improve food security. For example the U.S. government has promised about half a billion US$ to the Nigerian government in support of its agricultural transformation agenda (ATA), and the G-8’s New Alliance for Nutrition (located at the World Economic Forum) has promised large infusion of aid and private sector investment to improve agricultural productivity in African countries. In spite of this large aid flows to the agricultural sector, very few studies have been conducted to test the effectiveness of this aid flows—studies that will inform aid policy of both donors and recipients. This paper uses panel data from a large number of African countries to investigate the impact of agricultural aid on food security in recipient countries. Specifically, we investigate the effects of agricultural aid on agricultural productivity in African countries over the 1980–2012 period. Particularly, we investigate whether agricultural aid has significant positive impact on agricultural productivity and if so, which components of agricultural aid are effective in improving agricultural productivity. Controlling for several variables, we find that agricultural aid, especially the provision of improved seeds and capacity development improves agricultural productivity in African countries. On the other hand, the provision of mechanical aid does not significantly improve agricultural productivity in African countries, contrary to expectations. We also find regional differences in the effect of agricultural aid on agricultural productivity in Africa: the effects are highest in Southern Africa and lowest in West Africa.

Discussants:

RUTH U. OYELERE (Emory University)
LEONCE NDIKUMANA (Depar University of Massachusetts-Amherst)
KWABENA GYIMAH-BREMPONG (University of South Florida and IZA-Bonn)
MALOKELE NANIVAZO (University of Kansas)

Monday, January 04, 2016

Luncheon – Invitation Only

African Finance & Economics Association/African Development Bank (AFEA/ADB)
Presiding: Bichaka Fayissa, Middle Tennessee State University
Speaker: Yaw Nyarko, New York University – By Invitation Only
Title: “Transforming Rural Africa – Economics, Technology and Governance”

Presidential Address and Board Meeting

African Finance & Economics Association (AFEA)
Presiding: John Anyanwu, African Development Bank

International Trade and Macroeconomic Policy Considerations in African Economic Development (F4)

African Finance & Economics Association
Presiding: ZUZANA BRIXIOVÁ (African Development Bank, IZA and University of Cape Town)

Empirical Evidence of Exchange Rate Pass-Through to Prices and Inflations in Ghana

EDWARD E. GHARTEY (University of West Indies)

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The study employs autoregressive distributed lag model to establish the relationships among changes in exchange rate, prices, petroleum prices, interest rates, cocoa prices, among others, after using 1988 to account for an exogenous structural change. Two price indices are employed alternatively to capture prices in the study, because of the introduction of new cedi in 2007 to facilitate the role of money as medium of exchange to enhance transactions in the country. Results of empirical analysis show that the extent of exchange rate pass-through to inflation in the country is incomplete but fairly larger than those observed on the average in other studies for advanced developed countries (ADCs). Additionally, the size of the exchange-rate pass-through to inflation is slightly larger in the short-run than in the long-run. The estimated impulse response functions show that inflation reinforces itself, increases Treasury Bills rates, and contributes more to depreciation than the latter’s effect on inflation. Improvements in cocoa prices strengthen the cedi’s value, and dampen Treasury Bills rates, although they slightly bump up inflation. However, increase in petroleum prices also depreciates the cedi, although it is not very inflationary. Monetary Authorities are cautioned that although monetary policy is effective and can be used to curb inflation, its excessive expansionary use is inflationary, and is the chief source of depreciation of the cedi.

Inflation Volatility and Labor Institutions

JONATHAN ATTEY (Temple University)
CRISTELLE KOUAME (Temple University)

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It has been well documented that the volatility of inflation exhibits a high degree of time variation. Few studies on explaining the time varying volatility of inflation focus on labor market institutions. While it is conceivable that labor market institutional factors do play a role in wage indexation and bargaining, research on the effects of these factors on the volatility of inflation is scant. We therefore investigate whether institutional factors with regards to the labor market can also explain time variability in the variance of inflation. An earlier theoretical work by Attey and De Vries (2011) posits a positive relationship between the variance of aggregate wage indexation and inflation. By exploiting the relationship between labor market institutional factors and the variance of wage indexation, we derive a readily testable hypothesis on the link between wage indexation and inflation. In order to test the aforementioned hypothesis, we make use of panel regression estimation on dataset covering 15 OECD countries from 1960 to 2011. We use volatility estimates obtained from applying a GARCH (1, 1) to country specific monthly inflation data as the dependent variable. Three groups of labor market institutional variables are used in our analysis: proxies for bargaining power, proxies for independence of wage bargaining process among unions and proxies for the number of unions engaged in wage bargaining process. In addition to these variables we do include some variables to control for monetary shocks and productivity shocks. In order to test the aforementioned hypothesis, we make use of panel regression estimation on dataset covering 15 OECD countries from 1960 to 2011. We use volatility estimates obtained from applying a GARCH (1, 1) to country specific monthly inflation data as the dependent variable. Three groups of labor market institutional variables are used in our analysis: proxies for bargaining power, proxies for independence of wage bargaining process among unions and proxies for the number of unions engaged in wage bargaining process. In addition to these variables we do include some variables to control for monetary shocks and productivity shocks. Preliminary results suggest that the institutional variables covering bargaining power of unions, independence of unions and number of unions engaged in wage bargaining process play significant roles in explaining inflation volatility. More specifically, the estimates imply that the volatility of inflation is decreasing in the number of independent unions involved in the bargaining process and increasing in unions’ bargaining power. An intuitive explanation becomes more apparent when one considers that the variance of aggregate wage indexation is decreasing in the number of individual random wage indexation outcomes, thus decreasing volatility of inflation.

Firm Level Determinants of International Certification in Sub-Saharan Africa

MAHELET G. FIKRU (Missouri University of Science and Technology)

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This paper investigates a wide range of plausible determinants of international certification (IC) such as ISO 9001 and ISO 14001 in some sub-Saharan African countries (SSA). IC in SSA is largely seen as being driven by pressure from international markets and trade relations with Western countries. That is, businesses trading with richer countries would have a need and/or ability to adopt IC. As a result, as Kaplinksky (2010) argues the importance of standards would diminish as exports to China grow at the expense of exports to the EU. In sharp contrast to Kaplinksky (2010) the percentage of certifying firms in SSA increased from 13% in 2006 to 17.4% in 2011, while SSA's export share to China doubled during the same period. The contribution of this study is to examine the relative significance of pressure from international markets vis-à-vis other factors in the adoption of IC in SSA. The other factors we consider are pressure from international banks and foreign investors, pressure from local officials and local community. We also control for plant specific capabilities which create opportunities for certification. We base our arguments on a combination of the Stakeholder Theory, New Institutional Theory and Resource-Based View of the Firm. Plant-level data obtained from Enterprise Surveys of the World Bank 2009 is used to test our hypothesis. Our result suggests that international markets are not the only determinants for certification in SSA. Besides export orientation, our evidence suggests that businesses may certify as a response to pressure coming from international banks. International banks may exert a coercive as well as mimetic pressure on African businesses, even when coercive pressure from international markets is missing. International banks, most of which are committed to socially and environmentally sustainable practices, may facilitate the diffusion of standards in the host country. International banks may also perform sustainability-related risk analysis urging customers to demonstrate corporate social responsibility. Our result suggests that pressure from local sources such as officials and community is relatively weak to push businesses towards certification. The contribution of this paper is to provide a comprehensive study on the plant-level determinants of certification in SSA. We adopt a much needed but yet missing micro-level and multilevel approach in addressing our research objectives. Furthermore, unlike previous studies we theoretical ground and empirically test the role of pressure from international banks as a possible factor in driving plants towards standardization.

Institutional Framework and Taxation in African Countries: A Comparative Analysis of Small-Scale Firms in Benin, Ghana, and Togo

MOUSSA P. BLIMPO (University of Oklahoma)
PAUL C. DOWER (New Economic School)

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The mobilization of tax revenue is crucial for economic and political development. If tax mobilization strongly depends upon government quality, then a vicious cycle could emerge whereby low tax revenue mobilization leads to poor government quality, which leads back to low mobilization. The institutions in most African countries are similar in nature to that of the formal colonial powers. While Benin and Ghana are closer in term of their level of democracy and the quality of institutions, Benin and Togo share the same institutional framework drawn from the French colonial legacy. Using a data set of over 700 small-scale firms, we exploit these differences and the proximity of these three countries to make cross-border comparisons of the tax and business environment in Benin, Ghana and Togo. We find that, across a number of dimensions related to tax payments, firms in Benin and Togo behave similarly to each other while both differ substantially from Ghana. This finding suggests that beyond the quality of the institutions, the basic institutional framework and layout may matter much as a determinant of several development outcomes.

Analysis of Gender Equality in Youth Employment in Africa

JOHN ANYANWU (African Development Bank)

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Gender equality in youth employment is currently one of the greatest development challenges facing countries globally, including those in Africa. In addition to analyzing the characteristics of gender equality in youth employment in Africa, this paper empirically studies the key drivers of gender equality in youth employment (proxied by the ratio of female youth employment rate to male youth employment rate for the age group 15-24 over the period) over the period, 1991 and 2010. Our results suggest that for the all-Africa and Sub-Saharan African samples, more primary education, quadratic element of real GDP per capita, higher youth population, being a Christian country, and higher urban share of the population increase gender equality in youth employment while more secondary education, higher levels of democracy (and its quadratic form), higher level of real GDP per capita, and a net oil-exporting country tend to lower it. However, North Africa is different. Apart from negative and highly significant North African dummy in the overall results, the North African specific sample result indicates that while more primary education, and higher levels of democracy increase gender equality in youth employment, higher domestic investment rates, higher levels of the quadratic form of democracy, and higher youth population, and being an oil-exporting country tend to lower gender equality in youth employment in the sub-region. The policy implications and lessons of these results are discussed. These policies are directed at making the African labor market more youth inclusive and hence enhancing female youth’s employment for the purpose of greater economic empowerment, household welfare and poverty reduction, in particular.

Investor Protection Law Effects on Venture Capital and Private Equity

JONATHAN O. ADONGO (Missouri Southern State University)

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This article exploits variation in investor protection laws to empirically investigate their effect on the number of country level venture capital and private equity investments in Africa. Results robust to alternative estimations indicate that stronger creditor protection has significantly positive effects on expansion venture capital and private equity investment, which supports theory that general partner firms use more debt for downside protection in better legal environments benefiting portfolio companies with adequate collateralizable assets. Robust results also indicate that stronger minority shareholder protection has significantly negative effects on seed, start-up, or early venture capital, expansion venture capital, and private equity investment, which supports theory that better country level shareholder protection increases conflict between equity and debt holders in a syndicate or substitutes for firm level protection but is not enough of a deterrent to overcome the negative effect of increasing monitoring costs on general partner firms and portfolio companies.

Discussants:

STEPHEN ARMAH (Ashesi University College-Ghana)
JOHN ANYANWU (African Development Bank)
EDWARD E. GHARTEY (University of West Indies)
MAHELET G. FIKRU (Missouri University of Science and Technology)
JONATHAN ATTEY (Temple University)
KIDAYA NTOKO (Orange County Community College)

Issues in African Development (O1, F5)

National Economic Association/American Economic Association
Presiding: MTHULI NCUBE (University of Oxford)

Are Bilateral and Multilateral Aid for Trade Complementary? Accounts from Africa

BEDASSA TADASSE (University of Minnesota-Duluth)
ELIAS SHUKRALLA (Qatar University)
BICHAKA FAYISSA (Middle Tennessee State University)

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Using data on aid for trade (AFT) inflows and a recent comprehensive estimates of bilateral trade costs data, we employ a multi-level mixed effects model and investigate: (1) the effect of AFT on bilateral trade costs, and (2) whether AFT from bilateral and multilateral sources complement each other in increasing the trade performances of recipients. In doing so, we distinguish among three pairs of trading partners: Recipients-and-Recipients, Recipients-and-Donors, and Recipients- and-Non-recipient-non-donor countries. Examining data spanning the years 2002 to 2012, we find a robust evidence indicating that AFT reduces bilateral trading costs of the recipients, more so among themselves than with donors. While we also find evidence indicating AFT from multilateral sources complements AFT from bilateral sources in increasing the trade performances of the recipients, we find considerable differences when comparing the observed effects across recipients in Africa with recipients in other regions. Taking into account these differences, we discuss the broader policy implications of our findings for increasing the effectiveness AFT in developing countries general, and African countries, in particular. Using data on aid for trade (AFT) inflows and a recent comprehensive estimates of bilateral trade costs data, we employ a multi-level mixed effects model and investigate: (1) the effect of AFT on bilateral trade costs, and (2) whether AFT from bilateral and multilateral sources complement each other in increasing the trade performances of recipients. In doing so, we distinguish among three pairs of trading partners: Recipients-and-Recipients, Recipients-and-Donors, and Recipients- and-Non-recipient-non-donor countries. Examining data spanning the years 2002 to 2012, we find a robust evidence indicating that AFT reduces bilateral trading costs of the recipients, more so among themselves than with donors. While we also find evidence indicating AFT from multilateral sources complements AFT from bilateral sources in increasing the trade performances of the recipients, we find considerable differences when comparing the observed effects across recipients in Africa with recipients in other regions. Taking into account these differences, we discuss the broader policy implications of our findings for increasing the effectiveness AFT in developing countries general, and African countries, in particular.

Do Public-Private Infrastructural Investments Promote Long-Run Economic Growth? Evidence from Africa Countries

CHRISTIAN NSIAH (Baldwin Wallace University)

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The controversial debates on the impact of public infrastructural investment on economic growth in the context of developed countries has been well documented. While Aschauer (1989), Munnell (1990, 1992), and Easterly and Rebelo (1993) found significant positive impact of infrastructural investment on growth, using new empirical methodologies Holtz-Eakin (1994) Garcia-la et al. (1996) find that the response (elasticity) of economic growth to infrastructural investment is either significantly negative or not significantly different from zero. On the other hand, in a study of the relationship between US economic growth and different types public capital expenditures (roads, electricity, gas transit systems, sewerage, water supply, educational and hospital buildings, conservation structures, development structures, and civilian equipment), Pereira (2000) uses a VAR approach and finds that long term public investment crowds in private investment and such it may be a powerful means of promoting economic growth. This study employs a more comprehensive panel data series for a cross-section of Sub-Sahara African countries over the period 2000 to 2012 and most appropriate empirical methodologies in an effort to disentangle the controversies that surround the impact of infrastructure investment on the economic growth of the sub-continent through the channels of job creation, the formation of capacities for domestic and regional economic integration, and enhancing the efficiency of the private rather than impeding them among the African states.

The Effects of Aid on Foreign Direct Investments in Africa and Other Regions

TONY ADDISON (UNU-WIDER)
MINA BALIAMOUNE-LUTZ (University of North Florida)

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We explore the effects of foreign aid on FDI in a large number of aid-recipient countries using data since the mid-1980s. We control for the various determinants of FDI and we specifically include the interplay of aid with social cohesion and the interplay of aid with human capital. The empirical results from dynamic GMM estimations indicate that the independent impact of aid on FDI is negative in sub-Saharan Africa (SSA) and Latin America (LAC) and positive in other regions. Aid in countries with high levels of human capital discourages FDI, implying that human capital and FDI are substitutes. The interplay of aid and social cohesion in SSA and LAC has an inverted-U relationship with FDI, implying diminishing returns to social cohesion in these two regions. On the other hand, the effects from the interplay of aid and social cohesion in other regions have a U shape, implying the presence of a threshold effect to social cohesion. Interestingly, once we control for human capital, aid, and social cohesion, we do not find strong evidence of a significant role of governance. We discuss the policy implications of these findings.

Exports, Foreign Ownership and Firm-level Efficiency in Ethiopia and Kenya: An Application of Stochastic Frontier Model

ADUGNA LEMI (University of Massachusetts-Boston)
IAN WRIGHT (Syracuse University)

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Using the World Bank Enterprise Surveys data for Ethiopia (2006 and 2011) and Kenya (2007 and 2013), this study empirically investigates the significance of exports and foreign ownership in influencing firm-level efficiency. We estimate a standard Cobb-Douglas production function using Stochastic Frontier Analysis. In addition to the two variables of interest, we control for firm characteristics, including firm size, type of industry, innovation activity, and employees’ characteristics in our efficiency analysis. The results of the study show that, in both Ethiopia and Kenya, exporting helps firms lower technical inefficiency, whereas higher share of foreign ownership has the expected sign but not statistically significant. The results also confirm that, in both countries, smaller firms and firms that employ temporary workers for a longer periods of time tend to be less efficient. For Kenyan firms, experience of managers of a firm helps to lower technical inefficiency, however, innovation activities within a firm tends to raise inefficiency; whereas for the case of Ethiopian firms experience of managers lowers efficiency, albeit weakly, and innovation activities do not appear to affect firm efficiency. Our robustness analysis on the nexus between exporting and productivity confirms that one-size-fits-all causal relationship is not valid. We conclude that policy-makers in Ethiopia and Kenya should look into these key variables in designing appropriate policy to improve firm efficiency in their endeavor for industrialization.

Returns to Controlling a Neglected Tropical Disease: Schistosomiasis Control Program and Education Outcomes in Nigeria

FRANCIS MAKAMU (Oklahoma State University)

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The proposed study investigates on the impact of the schistosomiasis control program on school-aged children education outcomes. Despite the extended literature on the health economics the topic remain of interest because of the prevalence and endemic nature of the disease in developing countries and the relative inexpensive way its damaging effects can be reversed. I exploit a pooled cross-sectional data set and develop a difference-in-differences strategy to argue that significant gains in child educational attainment can be achieved by treating the disease.

Discussants:

GBADEBO ODULARU (Forum for Agricultural Research in Africa)
BAMIDELE ADEKUNLE (University of Guelph & Ryerson University)
COLLINS A. KOKO AUOO (Carleton University)

Development and Migration (O1, Q1)

National Economic Association
Presiding: GREGORY N. PRICE (Langston University)

Can Agricutural (Rural Sector) Development Address the High Rate of Unemployment in the Urban Sector? The Case of Sub-Sahara Africa

JULIET ELU (Morehouse College)
BICHAKA FAYISSA (Middle Tennessee State University)

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This paper examines the problems of rural-urban migration and the widespread rate of urban unemployment in Sub-Sahara African (SSA) countries. As many SSA countries experience economic growth, structural transformation from the agricultural to manufacturing sectors exposes the economy to excessive unemployment and surplus of labor. Investment in human capital as an engine for growth is expected to provide a smooth transition, however, the urban sector has failed to absorb these skilled labor. We utilize the Solow Neo-classical growth model and data from the World Bank to estimate the rural-urban migration and reverse migration for SSA countries facing severe unemployment among skilled labor in urban sectors. Our parameter estimates can potentially reveal that agricultural industrialization can absorb the surplus labor with positive value-added effect on agriculture. This suggests that institutional policies in these countries with excess unemployment must emphasize on agricultural sustainability as an important component of achieving economic growth that is effective in reducing poverty.

HIV-AIDS and Development: A Reappraisal of the Productivity and Factor Accumulation Effects

THEOPHILE T. AZOMAHOU (United Nations University UNU-MERIT, Maastricht University, University of Auvergne and CERDI)
RAOUF BOUCEKKINE (Aix-Marseille University and GREQAM)
BITY DIENE (University of Auvergne & CERDI)

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We study how the interaction of AIDS, life expectancy and productivity over the life cycle influences the macro economic development, and we highlight the influence of life expectancy on growth through savings. To this end, we develop a general equilibrium model that improves upon the Cuddington and Hancock (1994)'s framework in various directions. In particular, the sharply declining life expectancy patterns are clearly reflected in the enlarged model through a generic Ben-Porath mechanism. AIDS-related health expenditures are incorporated as well. The model applied to South Africa shows that while a relatively short term assessment might not reveal any dramatic AIDS growth effect, the medium/long run impact can be truly devastating. In particular, the heavy trends in mortality and life expectancy currently induced by AIDS are shown to be potentially at least twice more detrimental for per capita economic growth in the period 2020-2030 compared to 2000-2010.

Corruption and Public Human Capital Investments in Developing Countries

MERCY LAITA PALAMULENI (Gustavus Adolphus College)

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Although the theoretical literature connects public spending to growth, individual empirical findings are conflicting. I propose that inefficiencies in public spending might explain these inconsistencies. I use a dataset from developing countries observed over the period of 1995 to 2010, and consider the endogeneity of public education spending and corruption. The GMM estimates demonstrate that the efficiency of public spending on growth depends on a country's level of corruption. These results suggest that mere increases in spending are a poor substitute for institutional improvements and growth-enhancing public policy.

Discussants:

PAMELA QUEEN (Morgan State University)
PHANINDRA V. WWNNAVA (Middlebury College and IZA)
SHARRI BYRON (Drew University)
GUY NUMA (University of Massachusetts-Boston)