Exogenous shocks and resilience strategies in developing economies
The history of the global economy has been marked by numerous shocks, as illustrated by the financial crisis of 1929, which started on Wall Street and rapidly spread to the whole of the American economy, and then to the global economy. Indeed, from 1929 to the present day, the global economy has had to cope with multiple shocks at irregular intervals and of varying magnitude.
An exogenous shock can be defined as an event of external origin which has significant negative effects on the economy but which is beyond the control of the government. It can be an unfavourable trend in commodity prices, including oil, or a natural disaster, or a health crisis, or a disruption to trade following a conflict or crisis in one or more neighbouring countries.
Exogenous shocks are to a large extent unexpected and their impact is generally beyond market expectations. There are several types of shock, some of which affect demand, others supply, and still others have an impact on both demand and supply. They are also likely to have temporary or more lasting effects on economic activity, depending on the vulnerability of individual countries. As for their dissemination, they are likely to have wide repercussions on most economic sectors.
Econometric analysis shows a strong correlation between exogenous shocks and macroeconomic variables. In addition to the destruction of capital and the loss of income, exogenous shocks can have indirect repercussions on an economy, such as a fall in production and investment, macroeconomic imbalances and a deterioration in public debt indicators.
The effects of exogenous shocks spare no country, least of all developing countries, which are actually more vulnerable due to their inability to protect themselves by building up reserves or consolidating their public revenues. The recent COVID19 and Ukrainian crises have exposed the vulnerability of developing countries to exogenous shocks. Indeed, according to the World Bank, the fiscal stimulus measures taken by governments around the world to cope with the effects of COVID19 resulted in a 12% increase in the debt burden of low-income countries in 2020. The volume of external debt of low- and middle-income countries as a whole increased by 5.3% in 2020 to reach a record level of 8,700 billion dollars (World Bank, 2022). The African Development Bank (AfDB) has estimated that African countries need USD 432 billion to cope with the socio-economic impacts of COVID19 (AfDB, 2022).With regard to the Ukrainian crisis, many countries in sub-Saharan Africa are particularly vulnerable to the fallout, according to the IMF, particularly due to the rise in energy and food prices, the reduction in tourism and potential difficulties in accessing international capital markets. Record wheat prices are particularly worrying for this region, which imports around 85% of its supplies, a third of which come from Russia and Ukraine.
Furthermore, according to the AfDB, adapting to climate change could cost the African continent at least USD 50 billion a year by 2050, yet Africa has the lowest per capita climate finance flows in the world, a fact that contradicts the principles of true climate justice (AfDB, 2022).
The economic vulnerability of African countries and developing countries in general is not a new issue. In many economic studies, the problem of instability, especially in commodity exports and international prices, and the non-diversification of production are the main channels through which the effects of exogenous shocks are occuring in developing economies.
In this context, resilience strategies are being developed to counter the adverse effects of exogenous shocks in developing countries. These include the IMF’s Exogenous Shocks Facility, which provides economic policy support and financial assistance to low-income countries suffering the effects of external disruptions. At the African level, there are a number of mechanisms, namely the Peace and Security Council of the African Union and ECOWAS, which contribute to the prevention and resolution of conflicts in Africa. We can also mention the African Regional Strategy for Disaster Risk Reduction. This strategy aims to contribute to sustainable development and poverty eradication by integrating disaster risk reduction into development. The African Development Bank is also increasingly involved in vulnerability reduction. We can also see that governments are not standing on the sidelines of this move. Indeed, at their level, they are also developing resilience strategies by reforming their economic policy, adapting their fiscal and monetary policy, and establishing measures to mitigate the effect of shocks when they occur.
However, despite these initiatives, it has to be said that developing countries are still not immune to the effects of exogenous shocks, as shown by the effects of the latest health crisis and those of the Ukraine crisis. The issue of exogenous shocks and appropriate resilience strategies is therefore more topical than ever. It is essential for the economic, social and material well-being of developing countries to develop more effective strategies for adaptation, mitigation and resilience to the effects of exogenous shocks. This is the background to this year’s CISEA 2023.
CALL FOR PAPERS
As part of the third edition of the International Conference on Statistics and Applied Economics (CISEA-2023), which will take place from 20 to 21 June 2023 at ENSEA of Abidjan, Côte d’Ivoire, ENSEA is issuing a call for papers to researchers, PhD students and practitioners. The general theme of this year’s conference is “Exogenous shocks and resilience strategies of developing economies”, which focuses on the resilience strategies of developing economies facing multiple exogenous shocks (COVID-19, Russo-Ukrainian crisis, etc.). The conference will bring together leading academics, researchers, professionals, practitioners and experts.
CALL FOR SESSIONS
The conference invites proposals for sessions. Any researcher participating in the conference can propose to organise a session. For more information, visit the conference website.
NB: All papers accepted by the selection committee will be published in the conference proceedings.
Proposals should be sent to: cisea@ensea.ed.ci
How do I get there?
The conference will take place over the two days at ENSEA in Abidjan.
The Ecole Nationale Supérieure de Statistique et d’Economie Appliquée (ENSEA) is located in the Municipality of Cocody on boulevard Mitterrand, avenue des grandes écoles.
Location: https://goo.gl/maps/Lo5qoWvdYnA9Y9tu6
The means of transport to get there are
-Taxi-line
-Private taxi cab
For further information, please send an email to the following address: cisea@ensea.ed.ci
Participation fees
Registration for this 2023 edition of the CISEA is free for all those whose papers are accepted. Registration includes:
- Participation in scientific activities
- Lunches
- Coffee breaks
- Gala dinner
The registration fees does not include accommodation or transport costs.
Visa
It is the participant’s responsibility to examine the status of their visa and determine whether they need one or a visa renewal to travel to Côte d’Ivoire where the conference will take place. In addition, it is up to the participant to pay the relevant fees and obtain instructions on the visa application process. It is also possible to apply for a visa online.
Please do not hesitate to contact the Organising Committee if you have any questions about visas.
Please note that visa letters will only be issued at the request of the Organising Committee.
For details specific to your country, please consult the website of the nearest Côte d’Ivoire consulate or embassy.
All requests for visa letters should be addressed to the Organising Committee.
Travel information
Conference destination airport: Felix Houphouët Boigny International Airport, Abidjan (Côte d’Ivoire).
International airlines flying to Abidjan are: Ethiopian Airlines, Kenya Airways, South African Airlines, Emirates, Turkish Airlines, Air France, Brussels Airlines, Air Côte d’Ivoire, Air Burkina, etc.
Hotel rates: Decent hotel rates vary between $50 and $100 per night. Some luxury hotels may charge up to $500.
Climate: In June, the weather is fairly hot.
Tourism: Côte d’Ivoire has some beautiful beaches (Bassam, Assinie, Jacquesville, etc.). Please consult the Ministry of Tourism website. (http://www.tourisme.gouv.ci). For further information on the conference, please contact the Organising Committee.
Organisational Committee
Authors and Titles of Papers to be presented
Estimation and asymptotic properties of a stationary univariate GARCH (p, q) process
Abstract: In this paper, we determine the Hellinger Minimum Distance Estimator of a stationary univariate GARCH process. We construct an estimator based on the Hellinger Minimum Distance method. Under the φ-mixing conditions of the GARCH process, we establish the asymptotic properties of this estimator.
Impact of the Russo-Ukrainian crisis on foreign trade and poverty in Côte d’Ivoire
Abstract: This study assesses the impact of the war between Russia and Ukraine on foreign trade and poverty in Côte d’Ivoire. It aims to shed light on the government’s decision to implement measures to mitigate the effects of this conflict after a quantitative assessment of its impact on key economic variables. To this end, a dynamic computable general equilibrium model has been constructed for the period 2021 to 2025, with 2015 as the base year. The transmission channels chosen for the crisis are the rise in the international prices of raw materials, hydrocarbons and foodstuffs, and the fall in inward foreign direct investment. The results show that exports and imports will fall and the poverty rate will rise. These results suggest the need to diversify the economy and promote structural transformation. In addition, measures must be taken to counter the decline in household purchasing power.
Are innovation and e-commerce effective firm recovery strategies during the Covid-19 pandemic in sub-Saharan Africa?
Abstract: This study examines the effectiveness of innovation and e-commerce as firm strategies during the COVID-19 pandemic in Sub-Saharan African (SSA) countries. Specifically, it assesses whether these strategic responses allow them to quickly recover their normal activity after the negative shock of COVID-19. This paper uses the World Bank’s COVID-19 Follow-up Enterprise Survey along with the Enterprise Survey conducted before COVID-19. The use of an ordered probit model show that innovation and e-commerce have opposite effects on firm recovery. During the COVID-19 pandemic, the innovation strategy is much more effective than e-commerce in helping firms regain their pre-crisis performance level. The effects of these firm strategies on their recovery are virtually the same regardless of the level of development of the countries (SSA, other developing countries and developed countries), but with different magnitudes. However, these global results in SSA hide disparities according to firm size. Indeed, we observe that the recovery of sales is accelerated by innovations regardless of the firm size, whereas the recovery of jobs is favored by dynamic innovations only in large firms. Furthermore, e-commerce has no effect on the recovery of sales and jobs for small firms. Static resiliency policies have no effect on recovery. This study is essential for sub-Saharan Africa economies to bounce back from the pandemic, and build the foundations for future resilience.
Resilience of economic growth in a pandemic context: An explanation by Covid-19 control measures
Abstract: This study aims to assess the effects of COVID-19 control measures on the resilience of economic growth in sub-Saharan Africa. Thus, Oxford data on COVID-19 measures as well as International Monetary Fund data on economic growth are exploited for hypothesis testing over a daily period on a sample of 46 sub-Saharan African countries. Based on data on the growth rate of gross domestic product, the resistance (sensitivity) index is modelled for the 2020 period, while the recovery index is modelled for 2021. These indicators are made daily for econometric estimates. For the econometric modelling, in line with the empirical literature, we use the N-SIRD mathematical model, transformed into linear equations estimable by ordinary least squares. The results show that the austerity index, restrictions on the gathering of people, respect for public transport, quarantine, control of international travel, government responses and debt relief promote the resilience and recovery of economic growth. On the other hand, lockdown, school closures, workplace closures, cancellation of public events and the economic support index or economic index reduce the resilience and recovery of economic growth. The study suggests a scale of economic growth resilience for sub-Saharan African governments.
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Electricity consumption pattern for new subscribers: how does electricity consumption habits form ?
Abstract: We investigate electricity consumption habits formation in Cote d’Ivoire, with a focus on new subscribers. Electricity consumption habits are one of the factors behind the rapid growth of residential electricity consumption worldwide and may result in inertia and inefficient electricity consumption. Using the National Electricity Company unique database, we find highly persistent habits in electricity consumption, with persistence growing over time. These results call for designing policy for promoting electricity efficiency among new subscribers to help combating energy inefficiency by enhancing good electricity consumption habits at household level.
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Agricultural Shock Resilience Strategies and their Effects on Family Farms in Rural Senegal
Abstract: Family farming is an important source of income for rural populations in Senegal. However, due to the agricultural shocks effects coupled with the climate change hazards, farmers are unable to increase their production, let alone their income. Faced with these shocks and hazards, farmers are now compeled to adopt adaptation, resistance and prevention strategies for potential future shocks. This research aims to analyse the resilience strategies of family farms in rural areas and to assess the effect of these resilience strategies on farm productivity. For this purpose, we focus on three specific objectives. Firstly, we identify the most relevant resilience strategies used by rural family farms on the basis of a descriptive analysis. Secondly, we identify the main factors that limit or promote the adoption of these different resilience strategies, using a multivariate Probit model. Finally, we assess the impact of resilience strategies on the productivity of family farms. The results show that dyke construction, crop rotation and the use of certified seeds are the most relevant resilience strategies for rural farms in the face of agricultural and climatic shocks. The multivariate analysis shows that the adoption of resilience strategies by family farms is strongly linked to climatic variables, the level of education of the farm owner, the size of the farming household and the agro-ecological zone. The impact assessment shows that these non-native resilience strategies have a significantly positive impact on the productivity of family farms in rural areas.
On change point detection in regression function using nonparametric autoregressive processes
Abstract: We propose a new test to detect a change in the conditional mean of Nonparametric AutoRegressive processes. This test is based on the combining CUSUM and marked empirical processes. Our CUSUM test requires an estimator of the regression function to make it asymptotically distribution free under the no change null hypothesis. As a consequence, we obtain convergence of the developed test statistic. We show the asymptotic consistency of the test when the difference between the regression functions before and after the break is constant. We illustrate the applicability of our method by the means of Monte-Carlo simulation.
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M-Estimate for the stationary hyperbolic GARCH models
Abstract: In this manuscrit,we propose two classes of M-estimates for the hyperbolic GARCH models. The first class called M-estimate is defined by minimizing of a convenient bounded loss function. These cond, called BM-estimate is a modified version of the first with a mechanism that limit st he propagation of the effect of outliers in the conditional variance.The asymptotic properties of these classes of M-estimates are established. According to the Monte Carlo study, we compare the performance of the M and BM-estimates with that of the quasi maximum likelihood (QML) estimate. We show that the proposed M and BM-estimates are less affected by outliers than the QML-estimate. Moreover, in the last part, an empirical example indicates that the studied M-estimate is the best for the out-of-sample forecasting.
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Asymptotic properties of non-parametric quantile estimation with spatial dependency
Abstract: The purpose of this work is to nonparametrically estimate the conditional quantile for a locally stationary multivariate spatial process. The new kernel quantile estimate derived from the one of conditional distribution function (CDF). The originality in the paper is based on the ability to take into account some local spatial dependency in estimate CDF form. Consistency and asymptotic normality of the estimates are obtained under 𝛼-mixing condition. Numerical study and application to real data are given in order to illustrate the performance of our methodology.
The link between the length of democratic mandates and the formalisation of the informal sector: Theoretical evidence from the case of Côte d’Ivoire
Abstract: The main objective of this article is to analyse the effect of the length of democratic mandates on the formalisation of the informal sector in Côte d’Ivoire. To carry out this research, we developed a theoretical model by first modelling a function of durability in power of the principal. The objective was to analyse how the central authority’s power sustainability function behaves as a function of the policy choice made in a politically competitive environment. Secondly, we modelled a function of the principal’s future net revenue that it maximises under the constraint of its sustainability in power. As a result, this research has shown that, given political competition and the relatively short duration of mandates in democratic systems, when the central authority’s degree of commitment is high in the formalisation of the informal sector, which is part of structural policies and whose effects are perceived over the long term, this has a negative effect on the sustainability of its power. Thus, we find that political competition limits the central authority’s commitment to the formalisation of the informal sector, which is in fact a long-term action insofar as the sustainability of its power decreases when it chooses to sacrifice its available resources to encourage informal actors to become formal. Our results also show that in a democratic system, the degree of commitment of the principal in terms of tax incentives for formalisation is reduced by his short-term political autonomy.
Climate Change and Farm Household Income in Northern Cameroon: A Ricardian Analysis
Abstract: Using a Ricardian model, this study aims at assessing the impact of climate change on agricultural incomes in the periphery of the Bouba Ndjida National Park in northern Cameroon. The data used come from a survey of 450 farming households in 23 villages around the park. Since using cross-sectional data very often encounters problems of heteroscedasticity, multicollinearity and outliers in the estimates, quantile regression has been applied in this study. The results show that a 1mm increase in rainfall leads to an increase of 12.68 USD in farm income per hectare in summer, 0.92 USD in winter, 9.59 USD in spring and 13.30 USD in autumn. While a 1°C increase in temperature leads to a decrease in net farm income per hectare of 3.54 USD in summer, 1.26 USD in winter, 3.40 USD in spring and 6.11 USD. Furthermore, the results indicate that farm income is more sensitive to precipitation than to temperature. We also found that a temperature increase of 1.2°C coupled with an 8% decrease in precipitation will lead to a 31.13% loss in income. This loss represents more than 72% of net farm income if precipitation decreases by 16%. While an increase in temperature of 4.8°C combined with a decrease in precipitation of 8% will result in a loss of 42.8%, which can reach 78.6% if precipitation decreases by 16%. Thus, climate change, by imposing a new environment on households, concomitantly implies new economic policy orientations in the fight against food insecurity and poverty in the North Cameroon region. Measuring and analyzing the impact of climate change on agriculture is a necessary condition for making informed and anticipatory decisions that integrate both the risks and opportunities induced by climate change.
Estimation in the zero-inflated bivariate Poisson model with an application to health-care utilization data
Abstract: Data on the demand for medical care is usually measured by a number of different counts. These count data are most often correlated and subject to high proportions of zeros. However, excess zeros and the dependence between these data can jointly affect several utilization measures. In this paper, the zero-inflated bivariate Poisson regression model (ZIBP) was used to analyze health-care utilization data. First, the asymptotic properties of the maximum likelihood estimator (MLE) of this model were investigated theoretically. Then, asimulation study is conducted to evaluate the behaviour of the estimator in finite samples. Finally, an application of the ZIBP model to health care demand data is provided as an illustration.
Analysis of the determinants of domestic violence during a health crisis: the case of the Ivory Coast
Abstract: Using data from the quantitative survey conducted by the CIRES economic policy analysis unit among vulnerable households in the greater Abidjan area from 01 October 2021 to 02 November 2021, we analyse the determinants of domestic violence during covid 19. We use the vignettes to extract two indices respectively of the perception of physical violence and the perception of verbal violence and by the method of instrumental variables, we find that during the periods of strong restriction linked to covid 19, (i) When we move from the rural environment to the urban environment, we have a decrease in beliefs or perceptions with regard to physical violence and (ii) When we have decision-making power in the household, our approval of verbal violence decreases.
The impact of the Covid-19 health crisis on African financial markets
Abstract: In the main African financial markets, representing almost 87% of the continent’s market capitalisation, we examine the effects of the Covid-19 health crisis on venture capital markets. The methodological approach adopted is to first use an advanced ARMA-GjrGARCH-TVE model, which combines both ARMA-GjrGARCH and extreme value theory (EVT), to determine the marginal distribution of equity returns. Secondly, we use copula theory and stochastic simulation to understand the multivariate distribution of standardised residuals and the conditional distributions of returns, respectively. Finally, we assess equity market risk capital based on value-at-risk (VaR) and conditional value-at-risk (CVaR), while first backtesting simulated returns. This study reveals that the Covid-19 crisis is a major risk factor for African financial markets, resulting in an increase in VaR and CVaR of between 0.13% and 13.6%, with reference to the normal distribution. Against this backdrop, the study calls for the promotion of a financial culture, the diversification of financial products and hedging instruments, changes to the regulation of African financial markets, and the strengthening of the local investor base in order to combat the flight of capital observed during the Covid-19 health crisis.
The 1992-93 EMS Crisis and the South : Lessons from the Franc Zone System and the 1994 CFA Franc Devaluation
Abstract: The CFA franc devaluation on 11 January 1994 is the one major reform within the Franc Zone system since former African French colonies political independences in 1960, but subject to a profound taboo. So far, the economic literature made no connection between this major event in African macroeconomic history and its historical context : the 1992-3 European Monetary System (EMS) crisis. Using the narrative approach combined with a quantitative analysis (DCC-MGARH-X and SVARs), powered by an unprecedented set of archives data from the Banque de France, the Banque of England, and the Bundesbank, we document a brand-new route of understanding a certain integrated African-European common history, where evidence unveils the CFA devaluation as a fundamental role player in backing French franc market credibility amidst the 1992-3 EMS crisis. A new ‘Franc Zone’s Transition Committee’ at the Banque France, appears as a key feature for the future of the zone’s management.
Determinants of women’s participation in the labour market in ECOWAS
Abstract: Despite the reduction in gender inequalities in health and education, disparities in labour market participation persist in Africa. Women, who represent at least half of the population, however, account for less than half of the active population in the formal labour market in ECOWAS (Mbaye and Gueye, 2018). This paper aims to identify the determinants of women’s participation in the labour market, and hence the factors explaining the predominance of women in vulnerable employment in ECOWAS over the period 1990 to 2018. The relationship between the variables was examined using the pool mean group (PMG) method. The results show that in the short term, the male unemployment rate, and in the long term, education, gross domestic product per capita and fertility are the determinants of women’s participation in the labour market. Thus, the secondary education completion rate and GDP per capita have a positive influence on female participation in the labour market. But fertility, male unemployment and urbanisation discourage female labour supply. Conversely, fertility and urbanisation have a positive influence on women’s vulnerable employment, while education reduces women’s presence in vulnerable employment. On the basis of these results, the study suggests encouraging the education of girls and women in order to reduce the preponderance of women in vulnerable employment. Family planning policies should also be implemented to control women’s fertility in the ECOWAS zone.
External public debt and economic growth in ECOWAS: the role of governance
Abstract: This study mainly aims to analyse the role of ECOWAS in the external public debt – economic growth relationship in ECOWAS with or without Nigeria. To do so, the econometric analysis was carried out using a panel threshold regression (PTR) model introduced by Hansen (1999) and developed by Wang (2015). Our study applies to a balanced panel consisting of twelve ECOWAS countries over the period 2004-2018. It emerges from our study that when external public debt is taken as the transition variable the debt threshold in ECOWAS with Nigeria determined is 57.36% of GDP, while that in ECOWAS without Nigeria determined is 25.63% of GDP. However, when we consider institutional variables as transition variables, all governance variables decrease the external public debt threshold in ECOWAS with Nigeria, while the opposite is observed in ECOWAS without Nigeria. However, our results imply economically that the quality of governance can affect positively and significantly (corruption, government effectiveness, regulatory quality and rule of law) as well as negatively and significantly (political stability and citizen voice) the ECOWAS external public debt threshold.
Chinese Foreign Direct Investment and Capital Intensive Manufacturing in Sub-Saharan Africa
Abstract: This study mainly aims to examine the relationship between Chinese Foreign Direct Investment (FDI) and the capital intensity of manufacturing production in Sub-Saharan Africa (SSA). It is relevant to look at this relationship, as failure to take it into account could weaken the resilience strategy of Sub-Saharan African economies to exogenous shocks. To this end, the 02-stage GMM method was used, based on data from WDI (2020) and UNIDO (2022). They cover the period 2009-2018 for 23 Sub-Saharan African countries. The results indicate that Chinese FDI has a positive, non-significant effect on capital-intensive manufacturing. In contrast, FDI from other sources has a positive and significant effect on manufacturing. Taking into account the role of the number of Chinese employees in SSA, it appears that Chinese FDI has a negative effect on this type of industry up to a threshold number of employees, from which this effect becomes positive. This threshold is 4,564 Chinese employees in SSA. We therefore recommend that the relevant authorities encourage Chinese FDI in the sub-Saharan manufacturing sector. Above all, to facilitate the integration of Chinese workers, in order to improve the capital intensity of sub-Saharan manufacturing production.
Impact of the expansion of pan-African banks on credit to the economy in West Africa: A difference-in-differences approach
Abstract: The African banking sector has changed over the last two decades. One of the main features of this change is the expansion of pan-African banks through the absorption of domestic banks. In order to find out the impact of the expansion of pan-African banks on the financing of the economies of West African states, this article sets out to assess the impact of the expansion of pan-African banks on credit to the economy of West African countries. To this end, we use the difference-in-differences method with heterogeneous treatment effect to compare bank credit allocated to the economy by newly acquired pan-African banks through the absorption of domestic banks and bank credit allocated to the economy by existing domestic banks that have not been absorbed. To this end, we are building a database of data collected manually from banks’ financial statements and reports published by the Banking Commission of the Central Bank of West African States (BCEAO) over the period 2007-2020. The results of our econometric methods indicate that, overall, the impact of the expansion of pan-African banks on credit to the economy is positive but not significant. This means that the expansion of pan-African banks does not significantly increase access to bank credit. On the other hand, from a specific point of view, the expansion of pan-African banks has a positive and significant impact on credit in the short term, while in the long term the impact is positive but not significant.
ICT and financial inclusion in WAEMU
Abstract: This study has a dual objective: it analyses the effect of ICT use on financial inclusion and determines the nature of the relationship between ICT and financial inclusion in WAEMU countries. The data used are those of the CBWAS and the World Bank for the period 2008-2020. To achieve the general objective, we used an error correction model (ECM) and a causality approach (Toda-Yamamoto). The results show that the use of ICT has a significant and positive effect on long-term financial inclusion in WAEMU and that there is a bidirectional causal relationship between ICT and financial inclusion within the union.
Resilience factors of informal enterprises in times of shock: the case of Covid-19 in Côte d’Ivoire
Abstract: This study aims to analyse the resilience factors of informal enterprises during COVID 19. It focuses on a sample of 758 informal enterprises surveyed in 2022 as part of the international research project led by CAPEC and funded by IDRC. Based on descriptive and econometric analyses, using a binary Probit, the study manages to demonstrate that women were less resilient than men, and that the age of the business boosts its resilience. In addition, the manager’s experience, partial formalisation and innovation are decisive in explaining the resilience of informal businesses as measured by job retention. Furthermore, managers with a higher level of education and those who had received funding for the payment of salaries were more resilient in maintaining their activity. On the other hand, companies that had experienced labour disruptions prior to COVID-19 were less resilient. Similarly, the low level of capital is an obstacle to the resilience of informal businesses in terms of maintaining their activity. In view of these determinants, the actions of the public authorities must build the entrepreneurial capacities of women and people with a low level of education, give more support to young businesses and continue to provide financial support to finance salaries in times of crisis.
Diversification, structural transformation and economic development: the case of sub-Saharan African countrie
Abstract: This article aims to analyse the effect of the level of development and structural transformation on export diversification in sub-Saharan countries. Considering different diversification indicators, we combine a non-parametric and a parametric approach on a sample of 41 sub-Saharan African countries for the period 1995-2018. We find that the most developed economies and those most advanced in the process of structural transformation are more likely to experience greater diversification of their exports than the least developed countries. The static analyses carried out do not seem to validate the thesis of Imbs and Wacziarg (2003). However, the dynamic results show the presence of asymmetric effects of the level of development on diversification and confirm this thesis in the long term. As for structural transformation, the results show the existence of an inverted-U relationship with diversification, with the presence of asymmetric effects in the long term.
Diversification, structural transformation and economic development: the case of sub-Saharan African countries
Abstract: Non-Available
Resilience and memory of stock prices during periods of exogenous shocks: the FIGARCH model approach
Abstract: This study analyses the resilience of the regional securities exchange to exogenous shocks. We use daily data from the BRVM Composite index, covering the period from 04 March 2014 to 29 March 2023, collected on the investing.com website. The descriptive statistic of the returns obtained from the transformation of the composite index by the Campbell, Lo and Mackinlay (1996) method presents a non-linear, asymmetric and leptokurtic series. Using dummy variables, we capture the effects of shocks on an AR(2) process. The presence of heteroskedasticity in the dynamics of the residuals leads to the use of a GARCH-type model and the search for long memory implies the use of its extensive form FIGARCH. Our results indicate the presence of long memory in the dynamics of BRVM stock prices. This implies a low resilience to shocks. As a result, all negative shocks that directly or indirectly affect the BRVM should be dealt with by implementing a support plan like the one initiated by the government a few days after the covid case appeared, because the market is incapable of self-regulating in the presence of exogenous shocks.
An empirical analysis of the social contract in the MENA region and the role of digitalization in its transformation
Abstract: This paper presents an empirical analysis of the social contract in MENA countries based on the conceptual framework proposed by Loewe et al. (2021). We suggest a simple operational model synthesizing a social contract’s three main characteristics: Participation, Protection, and Provision, between a government and its citizens. This empirical “3-P” framework allows us to investigate the role that government provision and protection may have on citizen participation, which is particularly pertinent given the political and economic development of MENA countries. We compare our evaluation of the health of MENA countries’ social contract to that of OECD countries, and find robust empirical evidence that the social benefits provided to citizens through improved delivery of basic services have come at the cost of impaired political Participation. This feature of the social contract in MENA may be considered as one of the root causes of the social turmoil some countries have been struggling with in recent decades. Digital transformation is one potentially powerful channel through which the relationship between government and citizens can improve, and we find that it has a three-year lagged positive effect on the quality of the social contract in MENA and that this effect is inversely U-shaped. This suggests that structural and institutional improvements in MENA countries are called for before the quality of their social contract reaches levels comparable to those of OECD countries.
Resilience of Ivorian public finances to commodity price shocks
Abstract: This article aims to examine the resilience of Ivorian public finances to price shocks for cocoa and crude oil, which are strategic commodities for the proper functioning of the Ivorian economy. Using data from the national accounts and the international environment within the framework of the macro-structural demand model developed by McIsaac et al (2021), we show that the implementation of an austerity fiscal policy favours the resilience of Côte d’Ivoire’s public finances to cocoa and crude oil price shocks. Indeed, the implementation of a fiscal austerity policy not only mitigates the depressing effects of cocoa and oil price shocks on the tax burden, but also optimises public spending, which is a major source of macroeconomic imbalance.
Resilience of Ivorian public finances to commodity price shocks
Abstract: Sovereign debt restructuring has considerable costs that can affect economic efficiency and the well-being of populations over a long period, hence the interest of governments and economic agents to have an idea of its consequences on Foreign Direct Investment (FDI), which is considered to be one of the essential components of economic growth. We use a non-cylindrical panel of 72 countries over the period 1975-2020 based on restructuring data with private creditors and Foreign Direct Investment (FDI) data. Rather than showing the decline in Foreign Direct Investment in the restructuring process, we characterise the loss of earnings by estimating Average Treatment Effects using a doubly robust estimator, the Augmented Inverse Propensity Weighted (AIPW). This method of impact analysis enables us to resolve the issue of the endogeneity of restructuring, the lack of data and thus to capture a causal impact. We use a new econometric method which combines the impact analysis method and Jordà’s (2005) local projection method in order to highlight the average short-term dynamics (5 years) of net foreign direct investment inflows. Our results enable us to draw the attention of the governments of debtor countries to the fact that sovereign debt restructuring is not a panacea, although it does give them room for manoeuvre, but it reduces the potential level of Foreign Direct Investment (FDI) that should flow into the said economy over a certain period in order to boost economic growth, which is a source of well-being. Furthermore, restructuring that takes place before a default is more costly than post-default restructuring. The costs of FDI are higher in periods of economic expansion than in periods of recession, while the costs of restructuring are identical regardless of the mode and intensity (HIPC or non-HIPC, high intensity or low intensity), but the reflux of FDI is greater when restructuring is combined with a banking crisis.
Is information asymmetry an obstacle for agricultural credit supply? Evidence from Benin using instrument variable approach
Abstract: There is a significant gap between agricultural financing policies and agricultural sector transformation objectives in sub-Sahara Africa. This transformation requires significant financial capital, access to which is unfortunately limited by the information asymmetry. This latter is considered as one of the major barriers limiting credit supply, as reported in the economic literature. This paper analysed the effect of information asymmetry on agricultural credit supply in Benin using a sample of 574 famers. This evidence is tested as a hypothesis using data from the 2018/2019 Harmonized Household Living Conditions Survey (EHCVM). The results obtained using the instrumental variable regression method show that the presence of information asymmetry between financial intermediaries and farmers reduces agricultural credit supply in Benin. The findings call for agricultural development policies that aim to facilitate credit contracting between financial institutions and farmers through the implementation of an effective system for sharing information on farmers’ default risk.
Role of Governance in Debt and income Relationship: Evidence from dynamic panel threshold model for Sub-Saharan African countries
Abstract: This paper aims to explore the mediating role of governance in the relationship between per capita income and public debt in Sub-Saharan Africa. From a neoclassical production function and a dynamic panel threshold model, the paper estimates a model based on a sample of 39 countries in Sub-Saharan Africa over the period of 2002 to 2019. Our results indicate a non-linear relationship between per capita income and public debt, which is influenced by the quality of governance. In particular, the impact of public debt on per capita income depends on the level of governance quality. A governance threshold is identified, showing a minimum level of good quality of governance from which public debt has a positive effect on income. Moreover, the paper identified the most critical governance dimensions for optimizing the relationship between public debt and per capita income and provided policy suggestions.
Effect of Uncertainty on Income Inequality in Developing Countries: the Stabilizing Role of Fiscal Policy
Abstract: This paper analyses the effect of uncertainty on income inequality on a dataset of 66 developing countries over the period 2000-2020. The generalized method of moments is used to address the problems of simultaneity and endogeneity. The results show that uncertainty, approximated in the study by the World uncertainty index – a new innovative measure of uncertainty – increases income inequality. However, the effect is not robust and depends on the fiscal position of the country. Uncertainty increases income inequality during periods when countries present fiscal deficits. However, during periods of fiscal surplus, there is no effect. These results reveal the important socio-economic stabilizing role that fiscal policy management plays during periods of uncertainty.
Does Chinese aid promote manufacturing industry in Africa ?
Résumé: We examine the effects of Chinese aid on manufacturing industry in Africa, using methodology that enables to account for endogeneity and heterogeneity across the sample. We find a negative and immediate effects on the manufacturing industry in Africa. We provide evidence that it is a brake on development of manufacturing industry in Africa since it is linked to the consumption of raw materials from China such as steel, aluminum, cement, timber used in the implementation of major infrastructure projects in Africa. Our study brings two major contributions. The first one is the empirical implementation of the theoretical framework developed by McCormick (2008) which illustrates how manufacturing industry could be promoted by Chinese aid, especially targeted aid to productive infrastructure. Second one provides new evidence on how Chinese aid, which is tied, hinder manufacturing industry promotion in Africa. Therefore, policymakers should ensure that this aid is not linked to the purchase of raw materials from China needed to implement infrastructure projects when they are produced and available by local industries.
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