3. Electronic Theses and Dissertations (ETDs) - All submissions
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Item The curse that plagues the content of Africa: in-depth analysis of the resource curse and policy recommendations to avoid it(2020) Feldman, ZacThe resource curse is a phenomenon that is both paradoxical and controversial. It is argued that the curse both exists and is a construct of western discrimination. The resource curse as coined first by Auty (1993) claims that an increase in natural resource growth will cause a decrease in domestic growth should certain factors exist. This paper examines the nature of the curse and empirically demonstrates the true nature of this occurrence. Furthermore, this paper engages with some of the factors that cause this curse to rear its head. It proposes policy recommendations that will help nations create GDP growth when faced with increasing resources and avoid some of the pitfalls other economies have suffered. The first section of this paper tests the existence of the resource curse empirically using Sachs and Warner(Warner, 1997), Gylfason (2001) and Manzano and Rigabon (2001). We prove the existence of the curse in African developing countries and show the severity of the curse. Moreover, the section assesses the severity of the curse in each economy and provides indications as to how drastic the presence of the curse is. Moreover, section two of the paper examines some of the root causes of the resource curse. We examine the resource pull effect, degrading of human capital as well as lack of savings. We test these results empirically using Mehlum Moene Torvik (2006), Oskenbayev et al (2013) and Gylfason and Zoega (2004). Furthermore, we construct an optimum model that both diagnoses the resource curse as well as indicates some of the potential causes in the given economy. We provide some Policy recommendations that can be taken in order to avoid some of these causesItem Sources of macroeconomic fluctuations and stabilization policies in African economies(2016-01-29) Rasaki, Mutiu GbadeThe thesis focuses on the sources of macroeconomic uctuations in ten (10) selected African economies over the period 1990-2011. Data for the study were obtained from the International Financial statistics (IFS), the World Bank, and Central Bank database of the selected countries. We formulate a dynamic stochastic general equilibrium (DSGE) model for the thesis. We estimate the model using quarterly time series data. Due to data availability, the sample size di¤ers from one country to the other. First, we investigate the relative contributions of internal and external shocks to economic uc- tuations in African economies. Second, we evaluate the signi cance of the balance sheet channel in African economies. Third, we investigate the ef- fectiveness of sovereign wealth funds in reducing macroeconomic volatility caused by commodity price shocks. The thesis has 5 chapters. Chapter 1 is the general introduction. Chapters 2, 3, and 4 are stand-alone related papers on macroeconomic uctuations. Chapter 5 is the conclusion. Chapter 1 introduces the study. We discuss the research problem, the moti- vation, the objectives, and the research questions. We also explain both our theoretical and empirical contributions to the literature. Moreover, we high- light the signi cance and the key ndings of the study. Finally, we conclude the chapter with a brief outline on the organisation of the study. Chapter 2 investigates the relative contributions of internal and external shocks to macroeconomic uctuations in African economies. We formulate and estimate a monetary DSGE model to examine the sources of economic uctuations in ten African countries. The model is estimated with the Bayesian technique using twelve macroeconomic variables. Generally, the ndings indicate that both the internal and external shocks signi cantly in- uence output uctuations in African countries. Over a four quarter horizon, internal shocks are dominant while over eight to sixteen quarter horizons, the external shocks are dominant. Among the external shocks, external debt, ex- change rate, foreign interest rate and commodity price shocks account for a large part of output variations in African economies. Money supply and productivity shocks are the most important internal shocks contributing to output uctuations in African countries. To ensure macroeconomic stability, African countries need to formulate appropriate exchange rate and exter- nal debt management policies, diversify the economies, and create sovereign wealth funds (SWFs) or use hedging instruments. Chapter 3 evaluates the quantitative signi cance of the balance sheet chan- nel in African economies. We construct an open economy monetary DSGE model where entrepreneurs nance investment by issuing foreign currency- denominated debt. The model is estimated with Bayesian technique. The evidence suggests that the balance sheet e¤ects are empirically important in African economies. The marginal likelihood results clearly favour the model with nancial frictions. Moreover, the ndings indicate that the balance sheet e¤ect reduces the e¤ectiveness of monetary policy, raises the sensitiv- ity of the risk premium to external debt, and contracts output. This indi- cates that exchange rate depreciation is contractionary in African economies. We conclude that African countries should reduce their exposure to foreign currency-denominated debt and also deepen their domestic bond markets. Chapter 4 investigates the e¤ectiveness of sovereign wealth funds (SWFs) in reducing macroeconomic volatility in commodity exporting African countries. We formulate and simulate a dynamic stochastic general equilibrium (DSGE) model that features SWFs. The simulation results suggest that the creation of SWFs can reduce macroeconomic volatility in commodity exporting coun- tries. Particularly, SWFs can reduce government expenditure, real exchange rate, and external debt volatility. Since these are the channels through which commodity price shocks are transmitted to the African economies, we rec- ommend that African countries should create SWFs to sterilize the in ow of commodity revenue and to prevent the resource curse problem. Chapter 5 concludes the study. We summarize the key ndings in Chapters 2, 3, and 4. We highlight the policy implications of our ndings. Finally, we suggest areas for further research.Item Political contestation and ownership models in Debswana and Sonangol(2015-08-25) Taodzera, Shingirai LExtractive natural resources have always been associated with negative outcomes in sub- Saharan countries. However, it is essential to investigate the extent to which domestic political conditions influence ownership structures, which may or may not subsequently result in adverse outcomes. Through a comparative analysis between the cases of Angola and Botswana, this study finds that, political contestation influences ownership models as hypothesized to an extent. In Angola, the post-independence civil war pitting the ruling MPLA against UNITA resulted in Sonangol being managed as a wholly owned state enterprise, albeit serving the interests of the MPLA elite instead of broad-based developmental interests. In Botswana, however, Debswana was managed as a public-private entity located within a democratic political system, and this ownership structure was more a result of rational policy planning than political contestation. Nevertheless, the cases’ history of colonial rule and political institutions established upon the attainment of political independence are substantially influential factors as well. Non-settler colonialism and non-militarized political transitions to independence facilitated the growth of “organic” political and economic institutions and public-private ownership structures in Botswana, while settler colonialism and pre-independence militarization influenced the growth of centralized post-colonial state structures internal strife in Angola. The timing of resource extraction was also important, with pre-independence oil extraction influencing militarized rivalry in Angola, while postindependence extraction of diamonds in Botswana was a causal factor in the development of strong state institutions. External factors, particularly the Cold War influenced militarised outcomes in Angola, while the nature of the global diamond market had a contributory factor to the establishment of the public-private ownership model in Botswana.