Role of Fiscal Policy in Promoting Food Security, Social Protection, and Value Added in Manufacturing Through Human and Social Capital Development in African Countries

Paper Session

Saturday, Jan. 7, 2017 10:15 AM – 12:15 PM

Hyatt Regency Chicago, Ogden
Hosted By: African Finance and Economics Association
  • Chair: Edward E. Ghartey, University of the West Indies

Trends in Agricultural Production Efficiency and Its Implications for Food Security in Sub-Saharan African Countries

Bichaka Fayissa
,
African Finance and Economic Association
Christian Nsiah
,
Baldwin Wallace University

Abstract

The main objective of this paper is to estimate trends in the agricultural sector production efficiency of a cross-section of African countries over time using panel data and data envelopment type analysis in order to assess the state of food security, or insecurity in the African continent. In particular, the study employs data for 49 African countries from 1995 to 2012 to estimate the year to year agricultural efficiency for cereal, crop, food, and non-food sectors against natural inputs for the agricultural sector. We analyze the determinants of annual efficiency scores and their growth rate, and subsequently investigate the impact of agriculture efficiency on food security. We find that the agriculture aid, capital infrastructure for the agriculture industry, sanitation, and good governance are the main drivers of agriculture efficiency and its growth. We find that a large portion Africa’s agriculture sector growth for the period under consideration can be attributed to technical progress as opposed to efficiency changes. Substantively, we find that agricultural efficiency has a positive and significant effect impact on food security in Africa.
Key Words: Technical and Allocative Efficiency, Agricultural production Efficiency Food Security, Africa, Data Envelopment Analysis (DEA), Food Security, and Africa
JEL: D21, D24, L23 L25, 012
Keywords: Food Security, agricultural production efficiency, data envelopment analysis (DEA), African countries

Investigating the Desirability of the ‘Old People’s Home’ as a Viable Business in Ghana

Wendy D. Akinny
,
Ashesi University College
Stephen E. Armah
,
Ashesi University College

Abstract

Ghana’s population is ageing but the Ghanaian government is not making sufficient efforts to cater for the needs of the elderly. This study proposed the “Old People’s Home” as a solution to elderly care and investigated whether it will be viable in Ghana. A 3-pronged strategy was employed: (i) Questionnaires and interviews were administered to 60 potential family caregivers, aged between 25 and 59. (ii) The owner of an existing Old people’s home in Accra was interviewed to highlight challenges faced and evaluate the sustainability of such a venture and (iii) financial analyses were conducted to assess the feasibility of a hypothetical Old people’s home. Findings indicate majority of the respondents did not want to patronize Old People’s Homes as a result of their attitudes, cultural beliefs and general economic hardship. However, the “Old People’s Home” may be viable if people’s views about care homes change. The financial analysis concluded that the Old People’s Home could be sustained as a business as long as there were at least 15 customers under care. However, given the difficulty in attracting customers, and in changing people’s views about Old People Homes, the study finds evidence against such a venture in the short term.

Lucas Critique, Time Inconsistency and Economic Integration in Africa

Oladele Omosegbon
,
Indiana Wesleyan University and Indiana Purdue University

Abstract

As far as the African Union, AU, is concerned, the continent should move, inexorably, towards a peaceful, prosperous, and integrated continent. The paper shows why, in part, this goal has either, so far, eluded AU, its constitutive agencies, or its member states. The paper faults the [intellectual] minds, as expressed in various communications, including by policy advisers, academicians, and politicians alike, on which the movement and behavior of the continent toward a united continent has been built. The paper draws on the Lucas Critique as an expression of time or dynamic inconsistency, as a veritable explanation for the yawning gap between the predictions of models and policy implementation success in Africa. The idea is and in disagreement with the rational choice model, that agent’s or decision maker’s preferences do change over time and therefore, the optimality conditions or behaviors on which economic integration were constructed, in the first place, are now violated. Evidence is drawn from the efforts of the regional economic communities, RECs, and from the African Union’s policy agreements. Further examples are presented from leading research and scholarship and from core policies aimed at bringing about custom or monetary unions. As an illustration, political pressure arising from proto nationalism and external colonial ties often sway member countries to take measures that are different from those agreed upon earlier in the RECs. These would include agreements on common currency, the free movement of people and labor and on free trade. The paper then offers plausible solutions to the observed Lucas Critique and time inconsistency problems in the modeling of African economic integration and African development.

JEL: C1, E1; F150

Manufacturing Value Added Development in North Africa: Analysis of Key Drivers

John C. Anyanwu
,
African Development Bank

Abstract

It is widely recognized that structural transformation lies at the heart of economic development of any nation. Recent research suggests that the industrial sector, especially manufacturing, is a key engine of growth in the development process, including that of North Africa. The necessity for structural transformation in North Africa arises from the fact that the sub-region needs high and sustained economic growth in order to make significant progress in generating increased productive and quality jobs and livelihood for its teeming population, especially the youth. Unfortunately, manufacturing development in North Africa has not improved over time. For example, its manufacturing value added (MVA) in world MVA accounted for only 0.10 percent of world MVA in 2013. Also, the share of North African MVA in GDP was just 16.00% in 2013 compared with Asia & Pacific’s 25%. This paper empirically assesses the key drivers of manufacturing value added in the sub-region using a time series cross-sectional data set of the countries for the period, 1990 to 2014. Two estimation techniques, the pooled panel OLS regression with year fixed effects and the IV-2SLS estimation procedure, were used. There is also a strong support for a non-monotonic, cubic (third degree polynomial) relationship between MVA with economic development. The following factors are found to exert significant positive effect on manufacturing added in North Africa: secondary education, agricultural land, domestic credit to the private sector, trade openness, inward stock of FDI, population size, and ICT infrastructure/technology. On the other hand, the results indicate that dependence on oil, mineral and natural gas rents, domestic investment rate, political globalization, institutionalized democracy, age dependency ratio (young), and civil violence have significant negative effect on MVA in the sub-region. The paper concludes with policy recommendations.

Assessing the Effects of Trade-Induced Technology Imitation on Economic Growth in Africa

Jean-Claude Maswana
,
University of Tsukuba

Abstract

The study aims at quantifying the effects of trade-induced technology imitation (proxied by the share of imports in the “easy imitation” Standardized International Trade Classification (SITC) category) on economic growth in Africa, using a production function approach in a panel system-GMM estimator. Indicators of trade-induced technology imitation have been built on the Standard International Trade Classification (SITC) using raw data from the United Nations’ COMTRADE Statistics. Findings suggest that economic growth tends to be greater in countries with higher ratios of technology imitation conditional to the level of human capital index. Another noticeable finding is that the lower the level of GDP per capita, the higher the growth effects of technology imitation relative to other forms of technology progress.

Efficiency and Productivity Growth in Health Care Systems in Ghana: Regional Comparative Analysis Using DEA

Samuel Amponsah
,
Institute for International Strategy
Edward Amanfo
,
Tokyo International University

Abstract

Based on thirteen years of regional health care systems data, this paper analyzes efficiency and productivty growth of Ghana’s regional health care sysems using the ten administrative regional data sets on institutional maternal mortality ratio. The aim is to assess how each region had succeeded in reducing maternal deaths in relation to the Millinium Development Goals (MDGs) 4 and 5 and recent health care policy reforms. Data envelopment analysis was used to estimate the relative efficiency scores and DEA-Malmquist Productivity Index was used to calculate total factor productivity growth and sources of growth. Our results indicate that on average there was efficiency improvement index of about 12.26%, technological improvenment index of about 28.3% and Malmquist productivity index of 36.39%. The main source of productivity growth as per the components of the DEA-BCC Malmquist productivity growth index was as result of frontier-shift (innovation). From our DEA-tobit results, both total fertility rate and insurnace are found to be negatively related to Malmquist productivity growth index.
Discussant(s)
Oladele Omosegbon
,
Indiana Wesleyan University and Indiana Purdue University
Christian Nsiah
,
Baldwin Wallace University
Wendy D. Akinny
,
Ashesi University College
Samuel Amponsah
,
Tokyo International University
John C. Anyanwu
,
African Development Bank
Jean-Claude Maswana
,
University of Tsukuba
JEL Classifications
  • H3 - Fiscal Policies and Behavior of Economic Agents
  • O1 - Economic Development