Journal of African Economies - current issue

Regional Economic Integration in Africa: A Review of Problems and Prospects with a Case Study of COMESA

Geda, A., Kebret, H. — 2008-05-22

Major issues of regional economic integration in Africa could be grouped into two interrelated broad areas: issues of implementation and the limitation of insight form both the theoretical and empirical literature regarding the specific approaches that are appropriate for the continent. Implementation issues cover the economic, political and institutional constraints that surface at the implementation stage of economic integration treaties. The approach issue refers to the menu of options available to pursue economic integration. These options range from a step-wise bilateral cooperation to continent-wide integration. This paper critically reviews these issues and tests the determinants of trade flows using the experience of COMESA as a case study. The major conclusions that emerge from the study are, first, bilateral trade flows among the regional groupings could be explained by standard variables as demonstrated by the results of the conventional gravity model. The result shows that regional groupings had insignificant effect on the flow of bilateral trade. Second, the review of the issues indicates that the performance of regional blocs is mainly constrained by problems of variation in initial condition, compensation issues, real political commitment, overlapping membership, policy harmonisation, lack of diversification and poor private sector participation. These problems seem to have made building successful economic groupings in Africa a daunting task, despite its perceived importance in the increasingly globalised world.

Determinants of Agricultural and Land Management Practices and Impacts on Crop Production and Household Income in the Highlands of Tigray, Ethiopia

Pender, J., Gebremedhin, B. — 2008-05-22

This paper investigates the land management practices used in the highlands of Tigray, northern Ethiopia, the factors influencing them and their implications for crop production and income. Several factors commonly hypothesised to have a major impact on land management and agricultural production—including population pressure, small landholdings, access to roads and irrigation and extension and credit programmes—are found to have limited direct impact on crop production and income, though most affect the intensity of production. The increase in farming intensity due to these factors has limited impact on value of crop production and income due to low marginal product of labour in crop production, limited productivity impact of inputs such as fertiliser in the moisture-stressed environment of Tigray and limited adoption of such inputs. We find that profitable opportunities exist to increase agricultural production and achieve more sustainable land management in the highlands of Tigray. These opportunities include improvement of crop production using low-external input investments and practices such as stone terraces, reduced tillage and reduced burning. The comparative advantage of people in the Tigray highlands is apparently not in input-intensive cereal crop production but more in such low-input approaches and in alternative livelihood activities such as improved livestock management and non-farm activities. As a result, greater emphasis on developing these alternatives in agricultural extension—as the government of Tigray has been pursuing more recently with its extension programme—and other development programmes is needed. Food crop production should not be ignored in the development strategy, but more prudent use of external inputs such as fertiliser and improved seeds, and greater emphasis on low external input sustainable land management practices, would be helpful.

Explaining Procyclical Fiscal Policy in African Countries

Thornton, J. — 2008-05-22

Simple time series regressions for 37 low-income African countries during 1960–2004 suggest that government consumption is highly procyclical, with consumption responding more than proportionately to fluctuations in output in many cases. The results from a cross-country specification suggest that government consumption is more procyclical in those African countries that are more reliant on foreign aid inflows and that are less corrupt, and that it is less procyclical in countries with unequal income distribution and that are more democratic. These results contrast with those from recent research using data sets that comprise a more diverse groups of countries in terms of geography and income levels.

Who Benefits from Export-led Growth? Evidence from Madagascar's Textile and Apparel Industry

Nicita, A. — 2008-05-22

Fuelled by low labour costs and preferential trade agreements, exports of textile products originating from Sub-Saharan countries have grown dramatically in the last decades. This paper analyses some of the implications that export growth in the textile and apparel sector have for social welfare and poverty reduction in Madagascar. The paper proposes a simulation exercise utilising household level data and a methodology that combines the wage premium literature with matching methods. The results point to a large variation in the distribution of the benefits from export growth, with skilled workers and urban areas benefiting most. From a gender perspective, women are found to benefit substantially less than men. Although total welfare effects are significant, the benefits are largely reaped by non-poor households. From a poverty perspective, export-led growth in the textile and apparel sector is expected to have only a small effect on overall poverty.

Language and Labour Markets in South Africa

Cornwell, K., Inder, B. — 2008-05-22

This paper considers the role of language in employment outcomes and labour earnings in South Africa over the period 1996–8. Our pooled cross-section comprises more than 160,000 working-age adults, and the analysis considers the decision to participate in the labour force, employment outcomes and labour earnings. After conditioning on a number of socio-economic and demographic factors, we find that having English as one's mother tongue is one of the pivotal determinants of employment and labour earnings. Allowing for language effects leads to a much diminished role of race/population group as a driver of labour market success and earnings. There seems to be little variation in employment outcomes or earnings across the different African languages.