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2. Stunted Growth: Why Don't African Firms Create More Jobs?
- Author:
- Vijaya Ramachandran, Leonardo Iacovone, and Martin Schmidt
- Publication Date:
- 02-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Many countries in Africa suffer high rates of underemployment or low rates of productive employment; many also anticipate large numbers of people to enter the workforce in the near future. This paper asks the question: Are African firms creating fewer jobs than those located elsewhere? And, if so, why? One reason may be that weak business environments slow the growth of firms and distort the allocation of resources away from better-performing firms, hence reducing their potential for job creation.
- Topic:
- Economics, Industrial Policy, International Trade and Finance, Markets, and Fragile/Failed State
- Political Geography:
- Africa and Israel
3. Development as Diffusion: Manufacturing Productivity and Sub-Saharan Africa's Missing Middle
- Author:
- Vijaya Ramachandran, Alan Gelb, and Christian J. Meyer
- Publication Date:
- 02-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- We consider economic development of Sub-Saharan Africa from the perspective of slow convergence of productivity, both across sectors and across firms within sectors. Why have "productivity enclaves", islands of high productivity in a sea of smaller low-productivity firms, not diffused more rapidly? We summarize and analyze three sets of factors: First, the poor business climate, which constrains the allocation of production factors between sectors and firms. Second, the complex political economy of business-government relations in Africa's small economies. Third, the distribution of firm capabilities. The roots of these factors lie in Africa's geography and its distinctive history, including the legacy of its colonial period on state formation and market structure.
- Topic:
- Development, Economics, Industrial Policy, and Markets
- Political Geography:
- Africa
4. Self-Selection into Credit Markets: Evidence from Agriculture in Mali
- Author:
- Dean Karlan, Bram Thuysbaert, Christopher Udry, and Lori Beaman
- Publication Date:
- 09-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- We partnered with a micro-lender in Mali to randomize credit offers at the village level. Then, in no-loan control villages, we gave cash grants to randomly selected households. These grants led to higher agricultural investments and profits, thus showing that liquidity constraints bind with respect to agricultural investment. In loan-villages, we gave grants to a random subset of farmers who (endogenously) did not borrow. These farmers have lower – in fact zero – marginal returns to the grants. Thus we find important heterogeneity in returns to investment and strong evidence that farmers with higher marginal returns to investment self-select into lending programs.
- Topic:
- Agriculture and Economics
- Political Geography:
- Africa
5. Planning for Large-Scale Wind and Solar Power in South Africa: Identifying Cost-Effective Deployment Strategies Using Spatiotemporal Modeling
- Author:
- Kevin Ummel
- Publication Date:
- 09-2013
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- South Africa and many other countries hope to aggressively expand wind and solar power (WSP) in coming decades. The challenge is to turn laudable aspirations into concrete plans that minimize costs, maximize benefits, and ensure reliability. Success hinges largely on the question of how and where to deploy intermittent WSP technologies. This study develops a 10-year database of expected hourly power generation for onshore wind, solar photovoltaic, and concentrating solar power technologies across South Africa. A simple power system model simulates the economic and environmental performance of different WSP spatial deployment strategies in 2040, while ensuring a minimum level of system reliability.
- Topic:
- Climate Change, Economics, Energy Policy, Environment, and Science and Technology
- Political Geography:
- Africa and South Africa
6. The New Transparency in Development Economics: Lessons from the Millennium Villages Controversy
- Author:
- Michael Clemens and Gabriel Demombynes
- Publication Date:
- 09-2013
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- The Millennium Villages Project is a high profile, multi-country development project that has aimed to serve as a model for ending rural poverty in sub-Saharan Africa. The project became the subject of controversy when the methodological basis of early claims of success was questioned. The lively ensuing debate offers lessons on three recent mini-revolutions that have swept the field of development economics: the rising standards of evidence for measuring impact, the “open data” movement, and the growing role of the blogosphere in research debates.
- Topic:
- Development, Economics, Poverty, and Foreign Aid
- Political Geography:
- Africa
7. Is Anyone Listening? Does US Foreign Assistance Target People's Top Priorities?
- Author:
- Benjamin Leo
- Publication Date:
- 12-2013
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- The United States government has made repeated declarations over the last decade to align its assistance programs behind developing countries' priorities. By utilizing public attitude surveys for 42 African and Latin American countries, this paper examines how well the US has implemented this guiding principle. Building upon the Quality of Official Development Assistance Assessment (QuODA) approach, I identify what people cite most frequently as the 'most pressing problems' facing their nations and then measure the percentage of US assistance commitments that are directed towards addressing them. By focusing on public surveys over time, this analysis attempts to provide a more nuanced and targeted examination of whether US portfolios are addressing what people care the most about. As reference points, I compare US alignment trends with the two regional multilateral development banks (MDBs) – the African Development Bank and the Inter-American Development Bank. Overall, this analysis suggests that US assistance may be only modestly aligned with what people in Sub-Saharan Africa and Latin America cite as their nation's most pressing problems. By comparison, the African Development Bank – which is majority-led by regional member nations – performs significantly better than the United States. Like the United States, however, the Inter-American Development Bank demonstrates a low relative level of support for people's top concerns.
- Topic:
- Security, Crime, Development, Economics, and Foreign Aid
- Political Geography:
- Africa, United States, America, and Latin America
8. What's Wrong with Dodd-Frank 1502? Conflict Minerals, Civilian Livelihoods, and the Unintended Consequences of Western Advocacy
- Author:
- Laura E. Seay
- Publication Date:
- 01-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Although its provisions have yet to be implemented, section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act is already having a profound effect on the Congolese mining sector. Nicknamed “Obama's Law” by the Congolese, section 1502 has created a de facto ban on Congolese mineral exports, put anywhere from tens of thousands up to 2 million Congolese miners out of work in the eastern Congo, and, despite ending most of the trade in Congolese conflict minerals, done little to improve the security situation or the daily lives of most Congolese. In this report, Laura Seay traces the development of section 1502 with respect to the pursuit of a conflict minerals-based strategy by U.S. advocates, examines the effects of the legislation, and recommends new courses of action to move forward in a way that both promotes accountability and transparency and allows Congolese artisanal miners to earn a living.
- Topic:
- Security, Development, Economics, International Trade and Finance, Markets, Poverty, Natural Resources, and Financial Crisis
- Political Geography:
- Africa, United States, and Democratic Republic of the Congo
9. Hoping to Win, Expected to Lose: Theory and Lessons on Microenterprise Development
- Author:
- Dean Karlan, Ryan Knight, and Christopher Udry
- Publication Date:
- 11-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- We show how financial and managerial constraints impede experimentation and thus limit learning about the profitability of investments. Imperfect information about one's own type, but willingness to experiment to learn one's type, leads to short-run negative expected returns to investments, with some outliers succeeding. We find in an experiment that entrepreneurs invest randomized grants of cash and adopt advice from randomized grants of consulting services, but both lead to lower profits on average. In the long run, they revert back to their prior scale of operations. In a meta-analysis, results from 19 other experiments find mixed support for this theory.
- Topic:
- Development, Economics, Markets, Foreign Aid, and Foreign Direct Investment
- Political Geography:
- Africa
10. Energizing Rio+20: How the United States Can Promote Sustainable Energy for All at the 2012 Earth Summit
- Author:
- Nigel Purvis and Abigail Jones
- Publication Date:
- 04-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Worldwide, about 1.3 billion people lack access to electricity (one in five people), while unreliable electricity networks serve another 1 billion people. Roughly 2.7 billion—about 40 percent of the global population—lack access to clean cooking fuels. Instead, dirty, sometimes scarce and expensive fuels such as kerosene, candles, wood, animal waste, and crop residues power the lives of the energy poor, who pay disproportionately high costs and receive very poor quality in return. More than 95 percent of the energy poor are either in sub-Saharan Africa or developing Asia, while 84 percent are in rural areas—the same regions that are the most vulnerable to the adverse effects of climate change.
- Topic:
- Climate Change, Development, Economics, Energy Policy, Environment, and Poverty
- Political Geography:
- Africa, United States, and Asia
11. No Longer Poor: Ghana's New Income Status and Implications of Graduation from IDA
- Author:
- Todd Moss and Stephanie Majerowicz
- Publication Date:
- 07-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Ghana's largest and most important creditor for the past three decades has been the International Development Association (IDA), the soft loan window of the World Bank. That will soon come to an end. The combination of Ghana's rapid economic growth and the recent GDP rebasing exercise means that Ghana suddenly finds itself above the income limit for IDA eligibility. Formal graduation is imminent and comes with significant implications for access to concessional finance, debt, and relations with other creditors. This paper considers the specific questions related to Ghana's relationship with the World Bank, as well as the broader questions about the country's new middle-income status.
- Topic:
- Development, Economics, Poverty, Foreign Aid, and Foreign Direct Investment
- Political Geography:
- Africa
12. Direct Redistribution, Taxation, and Accountability in Oil-Rich Economies: A Proposal
- Author:
- Shantayanan Devarajan, Hélène Ehrhart, Tuan Minh Le, and Gaël Raballand
- Publication Date:
- 12-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- To enhance efficiency of public spending in oil-rich economies, this paper proposes that some of the oil revenues be transferred directly to citizens, and then taxed to finance public expenditures. The argument is that spending that is financed by taxation—rather than by resource revenues accruing directly to the government—is more likely to be scrutinized by citizens and hence subject to greater efficiency. We develop the case as follows: First, we confirm that public expenditure efficiency is lower in oil-rich countries compared with other developing countries. Second, we develop a theoretical model to explain why citizens' scrutiny over public expenditure can be increased by transferring oil revenues to citizens and then taxing them. By receiving transfers and then paying taxes, citizens are better informed about the level of government revenue, and they have an incentive to ensure that their taxes are spent on public goods. Third, we show empirically that enhanced citizens' scrutiny is associated with more efficient government spending decisions and that accountability is stronger in countries that rely more on taxation to finance public spending. We conclude that, while it may be difficult to implement such a proposal in existing oil producers, there is scope for introducing it in some of Africa's new oil producers.
- Topic:
- Economics, International Trade and Finance, and Oil
- Political Geography:
- Africa
13. Are Borders Barriers? The Impact of International and Internal Ethnic Borders on Agricultural Markets in West Africa
- Author:
- Jenny C. Aker, Michael W. Klein, Stephen A. O'Connell, and Muzhe Yang
- Publication Date:
- 04-2010
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This paper addresses two important economic issues for Africa: the contribution of national borders and ethnicity to market segmentation and integration between and within countries. Market pair regression analysis provides evidence of higher conditional price dispersion for both a grain and a cash crop between markets separated by the Niger-Nigeria border than between two markets located in the same country. A regression discontinuity analysis also confirms a significant price change at the international border. The international border effect is lower, however, if the cross-border markets share a common ethnicity. Ethnicity is also linked to higher price dispersion within Niger; we find a significant intranational border effect between markets in different ethnic regions of the country. This suggests that ethnic similarities diminishing international border effects could enhance international market integration, and ethnic differences could contribute to intranational market segmentation in sub-Saharan Africa. We provide suggestive evidence that the primary mechanism behind the internal border effect is related to the role of ethnicity in facilitating access to credit in agricultural markets. We argue that the results are not driven by differences in price volatility or observables across borders.
- Topic:
- Agriculture, Economics, Ethnic Conflict, and Markets
- Political Geography:
- Africa, West Africa, and Nigeria
14. Mobile Phones and Economic Development in Africa
- Author:
- Jenny C. Aker and Isaac M. Mbiti
- Publication Date:
- 06-2010
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- We examine the growth of mobile phone technology over the past decade and consider its potential impacts upon quality of life in low-income countries, with a particular focus on sub-Saharan Africa. We first provide an overview of the patterns and determinants of mobile phone coverage in sub-Saharan Africa before describing the characteristics of primary and secondary mobile phone adopters on the continent. We then discuss the channels through which mobile phone technology can impact development outcomes, both as a positive externality of the communication sector and as part of mobile phone-based development projects, and analyze existing evidence. While current research suggests that mobile phone coverage and adoption have had positive impacts on agricultural and labor market efficiency and welfare in certain countries, empirical evidence is still somewhat limited. In addition, mobile phone technology cannot serve as the “silver bullet” for development in sub-Saharan Africa. Careful impact evaluations of mobile phone development projects are required to better understand their impacts upon economic and social outcomes, and mobile phone technology must work in partnership with other public good provision and investment.
- Topic:
- Economics
- Political Geography:
- Africa
15. When Does Rigorous Impact Evaluation Make a Difference? The Case of the Millennium Villages
- Author:
- Michael Clemens and Gabriel Demombynes
- Publication Date:
- 10-2010
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- When is the rigorous impact evaluation of development projects a luxury, and when a necessity? We study one high-profile case: the Millennium Villages Project (MVP), an experimental and intensive package intervention to spark sustained local economic development in rural Africa. We illustrate the benefits of rigorous impact evaluation in this setting by showing that estimates of the project's effects depend heavily on the evaluation method. Comparing trends at the MVP intervention sites in Kenya, Ghana, and Nigeria to trends in the surrounding areas yields much more modest estimates of the project's effects than the before-versus-after comparisons published thus far by the MVP. Neither approach constitutes a rigorous impact evaluation of the MVP, which is impossible to perform due to weaknesses in the evaluation design of the project's initial phase. These weaknesses include the subjective choice of intervention sites, the subjective choice of comparison sites, the lack of baseline data on comparison sites, the small sample size, and the short time horizon. We describe how the next wave of the intervention could be designed to allow proper evaluation of the MVP's impact at little additional cost.
- Topic:
- Development, Economics, and Foreign Aid
- Political Geography:
- Africa and Nigeria
16. To Formalize or Not to Formalize? Comparisons of Microenterprise Data from Southern and East Africa
- Author:
- Vijaya Ramachandran, Manju Kedia Shah, Alan Gelb, and Taye Mengistae
- Publication Date:
- 07-2009
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Why do firms choose to locate in the informal sector? Researchers often argue that the high cost of regulation prevents informal firms from becoming formal and productive. Our results point to a more nuanced story.
- Topic:
- Development, Economics, Markets, and Labor Issues
- Political Geography:
- Africa
17. Saving Ghana from Its Oil: The Case for Direct Cash Distribution
- Author:
- Todd Moss and Lauren Young
- Publication Date:
- 10-2009
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Ghana can be considered a relative success story in Africa. We cite six variables—peace and stability, democracy and governance, control of corruption, macroeconomic management, poverty reduction, and signs of an emerging social contract—to suggest the country's admirable political and economic progress. The expected arrival of sizeable oil revenues beginning in 2011–13, however, threatens to undermine that progress. In fact, numerous studies have linked natural resources to negative outcomes such as conflict, authoritarianism, high corruption, economic instability, increased poverty, and the destruction of the social contract. The oil curse thus threatens the very outcomes that we consider signs of Ghana's success. This paper draws lessons from the experiences of Norway, Botswana, Alaska, Chad, and Nigeria to consider Ghana's policy options. One common characteristic of the successful models appears to be their ability to encourage an influential constituency with an interest in responsible resource management and the means to hold government accountable. The Alaska model in particular, which was designed explicitly to manufacture citizen oversight and contain oil-induced patronage, seems relevant to Ghana's current predicament. We propose a modified version of Alaska's dividend program. Direct cash distribution of oil revenues to citizens is a potentially powerful approach to protect and accelerate Ghana's political and economic gains, and a way to strengthen the country's social contract. We show why Ghana is an ideal country to take advantage of this option, and why the timing is fortuitous. We conclude by confronting some of the common objections to this approach and suggest that new technology such as biometric ID cards or private mobile phone networks could be utilized to implement the scheme.
- Topic:
- Corruption, Economics, Oil, and Poverty
- Political Geography:
- Africa and Ghana
18. Rice Crisis Forensics: How Asian Governments Carelessly Set the World Rice Market on Fire
- Author:
- Tom Slayton
- Publication Date:
- 03-2009
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- The world rice market was aflame last spring and for several months it looked as if the trading edifice that had exhibited such resilience over the last two decades was going to burn to the ground. World prices trebled within less than four months and reached a 30- year inflation-adjusted high. Many market observers thought the previous record set in 1974 would soon be toast. The fire was man-made, not the result of natural developments. While the governments in India, Vietnam, and the Philippines did not to set the world market on fire, that was the unintended result of their actions which threatened both innocent bystanders (low-income rice importers as far away as Africa and Latin America) and, ultimately, poor rice consumers at home. This paper describes what sparked the fire and the accelerants that made a bad situation nearly catastrophic. Fortuitously, when the flames were raging at peak intensity, rain clouds appeared, the winds [market psychology] shifted, and conditions on the ground improved, allowing the fire to die down. It remains to be seen, however, if the trading edifice has been seriously undermined by the actions of decision makers in several key Asian rice exporting and importing countries. In describing the cascading negative effects of these seemingly rational domestic policies, this paper aims to help policy makers in the rice exporting and importing nations to avoid a repeat of the disastrous price spike of 2008.
- Topic:
- Agriculture, Economics, Health, Humanitarian Aid, Markets, and Political Economy
- Political Geography:
- Africa, India, Asia, and Latin America
19. Heckle and Chide: Results of a Randomized Road Safety Intervention in Kenya
- Author:
- James Habyarimana and William Jack
- Publication Date:
- 04-2009
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- In economies with weak enforcement of traffic regulations, drivers who adopt excessively risky behavior impose externalities on other vehicles, and on their own passengers. In light of the difficulties of correcting inter-vehicle externalities associated with weak third-party enforcement, this paper evaluates an intervention that aims instead to correct the intra-vehicle externality between a driver and his passengers, who face a collective action problem when deciding whether to exert social pressure on the driver if their safety is compromised. We report the results of a field experiment aimed at solving this collective action problem, which empowers passengers to take action. Evocative messages encouraging passengers to speak up were placed inside a random sample of over 1,000 long-distance Kenyan minibuses, or matatus, serving both as a focal point for, and to reduce the cost of, passenger action. Independent insurance claims data were collected for the treatment group and a control group before and after the intervention. Our results indicate that insurance claims fell by a half to two-thirds, from an annual rate of about 10 percent without the intervention, and that claims involving injury or death fell by at least 50 percent. Results of a driver survey eight months into the intervention suggest passenger heckling was a contributing factor to the improvement in safety.
- Topic:
- Development, Economics, Political Economy, and Third World
- Political Geography:
- Kenya and Africa
20. Does Influence-Peddling Impact Industrial Competition? Evidence from Enterprise Surveys in Africa
- Author:
- Vijaya Ramachandran, Manju Kedia Shah, and Gaiv Tata
- Publication Date:
- 10-2007
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Prior research has emphasized that the high costs and risks arising from a poor investment climate—lack of clear property rights, macro-instability , the burden of regulation and taxation, poor infrastructure, lack of finance, and lack of human capital—have impeded the development of the private sector in sub-Saharan Africa, despite adoption of structural adjustment and liberalization policies. Given the resulting wide differentials in productivity, it is not surprising that most of the African manufacturing sector has not been competitive in exports. However, trade liberalization should have had greater impact on domestic markets for manufactured goods in Africa, leading to either a rapid decline in the size of the manufacturing sector due to import competition, or to a rapid increase in productivity of surviving enterprises. In fact, neither has happened to any significant degree over the last 20 years.
- Topic:
- Development, Economics, and Regional Cooperation
- Political Geography:
- Africa