This paper informs the debate on the existence of agglomeration effects in Africa. It uses a structural estimation approach to investigate the impact of agglomeration economies and forward linkages on the localization of French affiliates in Africa. Using a sample of French subsidiaries in Africa, we compate the theoretically derived measure of market potential with the standard form used by geographers and with a measure of local demand. Our results show that maket potential matters for location choice.
This study identifies the key determinants of access to healthcare in Africa and estimates the short-run and long-run effects of these determinants. Panel data from 37 African countries, collected from the World Bank Development Indicators and World Health Organisation databases for the period 1995-2012, were analysed using the pooled mean group estimators. Income appeared the strongest determinant of access in the long run in countries in Africa included in the sample. Access to healthcare was a necessity with the long-run income elasticity for access to healthcare being 0.1149.
For economic transactions, including debt transactions, to occur in a market system, property rights are essential. The literature has focussed on finding empirical proof of the effect of property right regimes, noting differences between de jure and de facto property rights. Yet most of these studies focus on macroeconomic outcomes, like economic growth and public expenditure.
This paper assesses the extent of trade linkages and shock transmission between African economies and its main trading partners, namely China, Europe and the United States (US). Using the global vector autoregressive (GVAR) model, the paper investigates how shock transmission between Africa and its main trading partners evolves over the periods before and after the 1990s. Moreover, the paper assesses the extent of business cycle synchronization between Africa and the three trading partners during the same periods.
This paper investigates the causes and consequences of colonial Africa’s first financial crash, which happened in South Africa’s Dutch Cape Colony. The 1788–1793 crisis followed a common sequence of events: trade and fiscal deficits were monetized by printing money, credit extension accelerated, the exchange rate fell sharply and inflation spiked. The domestic conditions were compounded by a deterioration of international conditions and political uncertainty.
The current structure of South Africa’s economy is partly a product of the terms of the country’s political dispensation. The availability of capital mobility as an exit option is a key aspect of South Africa’s negotiated democracy. As long as inequality remains high, capital continues to gravitate towards sectors emendable for expedient capital mobility such as finance. Promoting manufacturing investment in a high inequality environment may require tailor-made policy innovations that are compatible with existing political constraints. Such policies include weaving industry-specific property rights provisions with the industrial policy framework and creating a sizable political constituency for industry-led development.
This paper develops a model positing a nonlinear relationship between public investment and growth. The model is then applied to a panel of African countries using nonlinear estimating procedures. The growth-maximizing level of public investment is estimated at about 10 percent of GDP based on System GMM estimation. The paper further runs simulations, obtaining the constant optimal public investment share that maximizes the sum of discounted consumption as between 8:1 percent and 9:6 percent of GDP.
This paper seeks to offer an economic explanation for the emergence of democracy in societies with high income inequality and narrow middle-class such as Apartheid South Africa. The presence of a credible threat of capital flight is shown to render democracy less unpleasant to the elites by making future tax concessions possible. However, inequality should be sufficiently low for the poor to have enough incentive to concede less redistribution to avoid capital flight.
Following several decades during which violent civil conflict was common in African countries, the period from 1990 onwards was notably marked by a spreading and deepening of adherence to democratic principles. However, it is true to say that many African countries are still experiencing political instability and civil unrest. This raises the question of why these countries cannot attain sustainable conflict resolution.