African J. of Economic and Sustainable Development (7 papers in press)
Stability Analysis and Technical Efficiency of Major Cereal Crops in Ethiopia: A Stochastic Frontier Approach
by Hayimro Merie, Yohannes Yebabe Tesfay, Adem Kedir
Abstract: This article is premeditated to perform econometric scrutiny on technical efficiency (TE) of private farm households on cereal crops of Ethiopia. The paper also envisioned to test the instability of cereal crop production/productivity in the country. To analyse the technical efficiency, the authors applied the Cobb-Douglas (C-D) production function on agricultural sample survey data from the Central Statistical Agency (CSA) from 1998/99 to 2013/14. To establish effective and efficient model parameters, we applied more than a few model diagnostic techniques. The estimation results foreseen that, the mean level of technical efficiency of barley, maize, sorghum, Teff, and wheat production in Ethiopia found to be 66.96%, 77.34%, 64.09%, 70.52% and 73.37%, respectively. Correspondingly, the result prophesied that the technical inefficiency is a noteworthy component of the composed error term of the stochastic specification. Age and education level of household, regions and production year found to differentiate farmers in attaining different levels of technical efficiency in major cereal crop production. Therefore, policy makers should give emphasis on these identified factors to improve the technical efficiency of cereal crop production across the country.
Keywords: cereal crops; C-D function model; Ethiopia; instability index; production.
A CONCEPTUAL FRAMEWORK OF INNOVATION FOR ECONOMIC DIVERSIFICATION, NATIONAL COMPETITIVENESS AND SUSTAINABLE GROWTH
by Joseph Evans Agolla, Tshepiso Makara
Abstract: Innovation has become one of the fundamental drivers of todays competitiveness of countries as well as organisations. Although there is universal agreement on the role of innovation in spurring economic growth and development, few studies have explored the role that innovation plays in economic diversification; a void this paper sets out to fill. This paper investigates the role of innovation in economic diversification, through a review and synthesis of related literature on innovation and economic diversification. The study argues that leveraging innovation by developing economies is likely to result in robust diversification and competitiveness of such economies. The paper highlights some pertinent issues that countries need to put into place as a way to promote innovation, such as, friendly innovation and industrial policy, technology, seed fund for innovation, absorption of research and development, and national research funds. The study contributes to the literature by highlighting the underlying factors that need to be taken into play to promote innovation for economic diversification. The paper also presents a conceptual framework that can be used to guide innovation activities for competitiveness. In addition, the study provides suggestions that innovation practitioners and policy-makers can adopt to create an environment conducive for innovation.
Keywords: Africa; industrial policy; government; economy; innovation policies; developing countries; knowledge management; social capital; economic diversification.
Employees' compensation and profit persistence in emerging markets: empirical evidence from South Africa
by Dinesh Jaisinghani
Abstract: The main objective of the current study is to examine the nature of profit persistence and to estimate the relationship between employees' compensation and profitability for publicly listed firms in South Africa. The sample consists of 114 companies operating in South Africa for the period 2006 to 2013. Dynamic panel regression model, using the Arellano and Bond (1991) estimation technique, has been deployed to generate the results. The results highlight that there is positive profit persistence in South Africa. However, the degree of profit persistence is quite low and is below 0.2. The results also highlight that there is a nonlinear association between employees' compensation and profitability. The results signify that there may be few entry and exit barriers in South Africa and hence there are many bright prospects for multinationals to enter the market. The results also highlight that South African companies should focus on sustained investment in developing manpower resource in order to derive the benefits in the long-run.
Keywords: emerging economy; South Africa; dynamic panel regression; firms' profitability; employees' compensation.
Natural resource curse and its causation channels in Africa
by Richard Mulwa
Abstract: Natural resources are a source of economic growth in most countries. It has however been hypothesised that resource rich countries develop at a slower pace because of natural resource curse. This aim of study was therefore to test whether natural resource curse does exists in resource-rich African economies, and if present, determine whether it is caused by Dutch disease or institutional failure. The study used data from 47 African countries and analysis was done using linear regressions to assess the contribution of natural resources in economic growth and in determining the presence of natural resource curse. Seemingly unrelated regressions were used in explaining the role of institutions in resource curse. The study found that natural resource curse does exist especially in countries which rely heavily on primary products and mineral resources. Further, Dutch disease only explains part of resource curse but most is explained by institutional failure.
Keywords: natural resource curse; Dutch disease; institutional failure; causation channels; per capita income; primary resources; oil production; mineral resources; property rights index; linear regression; Africa.
Constraints faced by exporting small to medium enterprises in Zimbabwe
by Tapuwa Roseline Karambakuwa, Ronney Mcebisi Ncwadi
Abstract: The paper presents the constraints faced by small to medium enterprises (SME) exporters in Zimbabwe. The research sample consisting of 120 exporting SMEs was chosen from Harare, Mashonaland Central and Mashonaland East provinces. Convenient non-probability sampling method was used to select the SMEs. The triangulation method was used to collect primary data, which involved combining and utilising the questionnaire, interviews and focus group discussions. Secondary data was also utilised. The major challenges faced by SMEs are limited access to finance, lack of relevant information on the actual products that external customers prefer, lack of internal systems for efficiency in running the businesses, an unstable macroeconomic environment and failure to provide competitive products on the international markets. These constraints can be reduced by the intervention of both the government and support institutions in various ways.
Keywords: Zimbabwe; Zimtrade; export; small to medium enterprises; trade; constraints; finance; trade balance; trade deficit; institutions.
CO2 emissions in Africa. Persistence and economic implications
by Luis Alberiko Gil-Alana
Abstract: This paper deals with the analysis of the statistical properties of the CO2 emissions in Africa using both aggregated and disaggregated data by components (gas, liquid, solid, cement and flaring). The results indicate orders of integration which are in all cases equal to or higher than one, finding thus statistical evidence against the hypothesis of mean reversion, which implies shocks having permanent and/or explosive effects on the series under examination. This is in line with the results obtained by other authors for the developed countries, implying that in the event of shocks producing negative economic effects, strong measured should be adopted by the authorities to recover the original trends.
Keywords: CO2 emissions; mean reversion; fractional integration.
Resource gaps, foreign capital flows and economic growth in Sudan: an empirical econometric analysis
by Elwasila S.E. Mohamed
Abstract: The objective of this study is to investigate the contribution of foreign capital inflows in abridging the resource gaps and to economic growth of Sudan over the period 1978-2015. Existence of a long run relationship among economic growth, resource gaps and foreign capital inflows is established by the method of Johansen cointegration. The VECM shows that economic growth is significantly and positively affected by foreign aid and current account deficit but negatively affected by government budget deficit (GBG), foreign resource gap (FGR) and foreign direct investment (FDI) particularly in the long run. The study finds unidirectional causal relationship running from investment-savings gap to GDP as well as from GBG to GDP, with no feedbacks from both gaps to GDP. There is a unidirectional causality running from GDP to FRG but encountered with a unidirectional causality running from FDI to GDP. Bidirectional causality exists between GDP and current account deficit. Recommendations are provided accordingly.
Keywords: resource gaps; foreign direct investment; current account; cointegration; vector error correction; Granger causality; Sudan.