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Issues on African Development II

Paper Session

Saturday, Jan. 6, 2018 10:15 AM - 12:15 PM

Marriott Philadelphia Downtown, Meeting Room 404
Hosted By: African Finance and Economics Association
  • Chair: Rhonda Vonshay Sharpe, Women's Institute for Science, Equity and Race

Recognizing the Importance of Health Insurance in Mitigating Hazardous Child Labor in Ghana

Samuel Amponash
,
Tokyo International University

Abstract

This paper provides evidence on health insurance impact on child labour.
Findings from this study suggest that insured poor families with children
in school are less likely to allow their children to enter the labour market.
Children in insured households reduce hours of paid employment by about
an hour per week. Health insurance uptake had negative impact on both
earnings from paid employment and overall time spent working. On the
other hand, we find that health insurance reduces education gap, increases
schooling years completed and improves expenditure on education.

Does Human Capital Matter in Manufacturing Value Added Development in Africa?

John C. Anyanwu
,
African Development Bank

Abstract

Very few countries have been able to grow and accumulate wealth without investing in their manufacturing industries. Also, a strong and thriving manufacturing sector precipitates industrialization. Unfortunately, manufacturing value added (MVA) development in Africa has been low and declining over time. This paper empirically assesses the role of human capital in MVA (% of GDP) in Africa and the two key sub-regions for the period, 1990-2011, using the IV-SLS technique with year and sub-regional fixed effects. Our results indicate that not all human capital indicators are “born” equal with respect to MVA: Primary education has an inverted U-shaped relationship with MVA in Africa as a whole, SSA and North Africa; secondary education has a negative significant relationship with MVA in the whole of the continent and SSA but the reverse is true for North Africa; and tertiary education has a significant positive relationship with MVA in all thre e estimations - tertiary education is good for increasing MVA in Africa. The other drivers differ substantially across the sub-regions. For example, economic development significantly affects MVA to the third degree polynomial, with negative leading coefficients in the all-Africa estimation and SSA but not so in North Africa. We conclude with policy recommendations.

The African Growth Experience and Tourism Receipts: A Threshold Analysis and Quantile Regression Approach

Bichaka Fayissa
,
Middle Tennessee State University
Christian Nsiah
,
Baldwin Wallace University

Abstract

Using a linear estimation model, most previous studies have found a positive and statistically significant linear relationship between tourism receipts and economic growth. In this study, we apply a Threshold analysis and Quantile regression to investigate if the relationship between tourism receipts and economic growth may be nonlinear. We find the existence of a nonlinear relationship between tourism receipts and economic growth and that tourism receipts tend to contribute to economic growth relatively more below a threshold of 2.59% of the tourism/ GDP per capita ratio and less so above this threshold of the ratio. The Quantile regression results also suggest that countries tend to benefit more from tourism at the lower end than at the upper end of their GDP per capita distribution. A policy implication which may be drawn from the study is that African countries which heavily rely on tourism receipts for their economic growth have to understand that the impact of tourism receipts on growth wanes beyond the threshold. Consequently, it may be important to diversify their growth sources and to enhance tourism by committing their resources to building reliable infrastructure and security for tourist arrivals in order to realize maximum impact on their economic growth, particularly in the initial stage of their economic growth.

Information Contents of Term Structure of Interest Rates and Inflation Rates in a Developing Country

Edward Ghartey
,
University of West Indies

Abstract

The term structure of interest rates, inflation rates and their information contents are investigated in a developing country by using different measures of inflation rates and default-free Treasury instruments of different maturities. Results from high frequency monthly data from the inception of monetary policy committee, when the Bank of Ghana adopted inflation targeting as its policy goal to date, show that the country’s yield curve is asymmetrical. Error-correction adjustments of discrepancies from the long-run equilibrium or attractor are slow at low and high rates, and faster at intermediate rates. Short-term interest rates, monetary policy rates, expected forward rates, interest rates spread and risk premium explain the country’s long-term rates. Only short term 91-Day rates and monetary policy rates contain the information required to predict the country’s inflation rates, with the latter being more effective. Consequently, monetary authorities can effectively use those rates to curb the country’s inflation rates.

Revisting the Growth Effects of Sino–African Bilateral Trade on African Economies

Jean-Claude Maswana
,
University of Tsukuba

Abstract

In this paper, the effect of China-Africa’s bilateral trade intensity and concentration, which are alternatively incorporated as threshold variables, on economic growth of African countries, is examined through a non-linear panel threshold approach. Unlike the existing empirical literature on trade-growth nexus for African economies, our findings suggest a heterogeneous trade-growth nexus with the effect of bilateral trade intensity on Africa’s economic growth being higher in countries whose trade intensity with China is higher compared to those with lower-intensity. However, although the effect of bilateral trade concentration on Africa’s growth has been found for countries whose trade concentration is lower, the growth-effect of trade concentration for countries whose trade concentration is higher is unclear. These results are in contrast to some earlier literature relying on linear-based approaches which mask the parameter heterogeneity and may sometimes lead to inappropriate policy recommendations. Drawn implications emphasize the critical importance of addressing prevailing trade constraints as well as the provision of trade-capacity building for the Chinese market. Combined with the estimated thresholds for trade intensity and concentration, these findings imply four categories of trade policies depending on the position of countries in a trade intensity-concentration matrix.

Are Female Headed Households Less Food Secured? Evidence from Nigeria and Ethiopia

Ikechukwu D. Nwaka
,
Girne American University
Seyi Akadiri
,
Eastern Mediterranean University
Glen P. Jenkins
,
Eastern Mediterranean University

Abstract

Household headships and food security—access to sufficient, affordable and nutritious food at all times—have presented very important policy concerns in the drive towards achieving the first two of the Sustainable Development Goals (SDGs). This study, therefore, examines the determinants of food security amongst male and female-headed families in Ethiopia and Nigeria—and whether female-headed households are more food secured. Using the Ethiopia Socioeconomic Survey and General Household Survey (GHS) cross-sectional panel data for Nigeria while equally applying the Tobit and Probit models, we found significant differences in the determinants of food security between male and female-headed households and with significant differences across regions in both countries. The empirical findings further show that there are common determinants of food security between the two-panel countries, other than the gender of the family heads. The increase in household income and educational attainment increases the likelihood of food security for the male households than their female counterpart. Hence, educational attainment, higher levels of income, proximity to market, resident in the urban and household assets have a significant varying impact on household’s food security. The general findings, however, show that female-headed families are poorer and indeed less food secure than the male-headed households. This study, therefore, suggests the introduction of social justice in the area of food security through good governance, equity and equality that allows for the proper utilization, accessibility and availability of food for a typical developing countries of Ethiopia and Nigeria respectively.
Discussant(s)
Alice K. Ndikumana
,
Harvard University
Jane Karonga
,
Economic Commission for Africa
Mercy Palamuleni
,
McNeese State University
John Nana Francois
,
West Texas A&M University
Stephen Armah
,
Ashesi University College
Belinda Archibong
,
Barnard College
JEL Classifications
  • O1 - Economic Development
  • F2 - International Factor Movements and International Business