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Trade, Service Sector and Conflict in Africa

Paper Session

Friday, Jan. 4, 2019 2:30 PM - 4:30 PM

Atlanta Marriott Marquis, L507
Hosted By: African Finance and Economics Association
  • Chair: Mina Baliamoune-Lutz, University of North Florida

In the Shadow of China: Bilateral Trade Structure and Economic Growth in Africa

Jean-Claude Maswana
,
University of Tsukuba

Abstract

In this paper, the growth-effect of China-Africa’s trade structure (e.g., primary, labor-intensive, technology-intensive categories, as in SITC Classification) from 2005 through 2016 is examined using GMM-System estimator, which permits to solve the problems of serial correlation, heteroskedasticity and endogeneity of some explanatory variables. Early findings suggest that economic growth tends to be greater in countries with higher ratios of resources and labor-intensive products traded with China conditional to the level of institutional quality index. Another finding is that the effects of technology-intensive exports products is ambiguous while the effects of technology-intensive imports is significant by relatively small. This latter finding suggests African countries have room for strengthening their manufacturing line and technological basis via imports of parts and components

Revisiting the Short and Long-Run Impacts of Trade Openness: Evidence from the African Growth Experience

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

Abstract

It is well established that international trade can impact economic growth directly through economies of scale and diversification, or indirectly through technological diffusion. There can, however, be differences in the impacts based on the various components of trade openness and the period under consideration. Most of the existing literature on the impact of trade on the African economic growth experience has primarily focused on the aggregate impact of trade, ignoring the differences in the components and the direction of trade. Using a panel dataset of 28 African countries over the 1980-2016 period, this study investigates the short and long-run impacts of the various trade openness components by employing the recently developed dynamic common-correlated effects panel model with heterogeneous coefficients. We find that services import only have a short-run positive impact on economic growth, while merchandise imports and service exports exhibit long-term positive impacts on growth. We also find that overall trade openness is beneficial for economic growth, but its impact is short lived.
JEL Classification: F13, F14, F14, 040
Keywords: Trade openness, economic growth, dynamic common-correlated effects panel model, Africa

Substitution Between Private and Government Consumption in African Economies

Taufiq Carnegie Dawood
,
Syiah Kuala University
John Nana Francois
,
West Texas A&M University

Abstract

In a context of elevated public debt and slower global growth, a number of countries in Africa are facing the prospect of sustained declines in public consumption. The macroeconomic impact of such adjustments will depend importantly on whether a decline in government consumption increases or decreases the marginal utility of private consumption. Employing a cointegration-panel approach, we estimate the intratemporal elasticity of substitution between private and government consumption in 24 African countries. Our estimates suggest that for plausible values of the relevant intertemporal elasticity, private and public consumption are Edgeworth substitutes in private utility. Countries facing fiscal consolidation can therefore expect some degree of demand-side offset to reductions in public consumption, and some resulting moderation in the impact of austerity on real GDP. In the presence of fungibility, our results also imply a labor-supply offset to declines in foreign aid for public investment. Country-level analysis suggests that these impacts of declines in public consumption may be heterogeneous across countries

Local-level exposure to conflicts and child health: evidence from Côte d’Ivoire

Didier Wayoro
,
Indiana State University

Abstract

This paper analyses the impact of the 2002-2011 period of instability in Côte d’Ivoire on child health. It uses two rounds of DHS surveys (1998-1999 and 2011-2012) and geo-referenced data on conflict events locations, which gives a more precise estimates of the effects of conflict on child welfare. Difference-in-difference regressions show a negative association between proximity to conflict events and child height-for-age z-scores. The study also suggests that maternal stress and disruptions of health care services are possible channels through which conflict affect child wellbeing.

Direct and Indirect Health Effects of Conflict in Nigeria

John Odozi
,
Edo University
Ruth Uwaifo Oyelere
,
Morehouse College and IZA

Abstract

Several papers have attempted to document and measure the impact of conflict on numerous education, health and socioeconomic outcomes. One lesson from this research is the heterogeneity in effect of conflict across and within countries. In this paper we attempt to estimate the casual impact of conflict in Nigeria on direct and indirect health outcomes. Nigeria has experienced significant conflict especially in the North Eastern Parts of Nigeria since the 2009 insurgence of Boko Haram. We estimate the effect of conflict using the third waves of the Nigeria General Household Survey (GHS)- combined with ACLED conflict data. We employ a fixed effect approach

Conflict and Regional Heterogeneity

Carolyn Chisadza
,
University of Pretoria
Matthew Clance
,
University of Pretoria

Abstract

The literature widely concurs that conflicts have adverse economic consequences that persist for many years even spreading beyond a country's borders. Conflicts cause widespread inequality and lower human capital delaying key 2030 targets of the Sustainable Development Goals (United Nations). Understanding the nature of conflict is an important focus but the existing literature does not typically distinguish between the types of conflict, and empirical evidence relies on the assumption that effects are similar across the world. We argue that treating the conflict effects as homogeneous across regions and not identifying the aggressor could result in misleading conclusions. This oversight in most of the literature guides the basis of our study: 1) identify the regions in Africa that are most affected by types of conflict, and 2) study the likely determinants contributing to various types of conflict. Using panel data analysis and a comprehensive disaggregated georeferenced conflict dataset from 1997 to 2016, we find significant evidence of heterogeneity between regions in Africa through the effects of income per capita, openness, and state fragility. We also find that military expenditure, resource rents, and population have consistent positive effects on all conflict types across different regions. In pursuing this research, we hope that the results will bring awareness to the nuances in assessing conflict and as such, policy recommendations should be carefully considered given the type of conflict and the region if we want to come close to meeting the 2030 targets of reduced violence across the world
Discussant(s)
Kwabena Gyimah-Brempong
,
National Science Foundation
Akpan H. Ekpo
,
West African Institute for Financial and Economic Management
Lloyd Ahamefule Amaghionyeodiwe
,
City University of New York-York College
Obed Quaicoe
,
North Carolina Agricultural and Technical State University
William Baah-Boateng
,
University of Ghana
JEL Classifications
  • F4 - Macroeconomic Aspects of International Trade and Finance
  • O4 - Economic Growth and Aggregate Productivity