On the engineering of systems of systems: key challenges for the requirements engineering community!

Software intensive systems of the future will be ultra large-scale systems of systems. Systems of Systems Engineering focuses on the interoperation of many independent, self-contained constituent systems to achieve a global need. The scale and complexity of systems of systems possess unique challenges for the Requirements Engineering community. Current requirements engineering techniques are inadequate in addressing these challenges and new concepts, methods, techniques, tools and processes are required. This paper identifies some immediate key challenges for the Requirements Engineering community that need to be scoped and describes some road-mapping activities that aim to address these challenges

Economic Growth, Entrepreneurship and the Business Environment in Africa

Research on causes of underdevelopment traps and economic growth can be traced back to the work of Young (1928), Rosenstein-Rodan (1943) and Nurkse (1953). The seminal work of Kormendi and Meguire (1985), Grier and Tullock (1998), Barro (1991), Abramovitz (1986) and Baumol (1986), revived the debate on causes of economic growth. Later work by Quah (1997), Salai-I-Martin (1987,2004) has sought to identify the factors driving economic growth across various regions around the world in a manner that would explain why various regions are growing at such different rates. A stark example is the vast di¤erences in growth rates between Africa and Asia. Asia, on one hand, was at the same level of development withmost African countries in the early sixties, but has since overtaken Africa in the pace of economic growth. Explanations and solutions for Africa’s poor growth are found in the research work by Collier (2004), Berthelemy and Varoudakis (1996), Berthelemy and Soderling (2001), and Sacks, et al (2004). The “big-push†initiative, which argues for financial transfers in developing countries especially, Africa has been pushed heavily by Sacks, et al (2004) and is also linked to the African Commission Report driven by the British government, and accompanied by proposals for debt forgiveness for poorer countries.

Amalgamation of South Africa’s rural municipalities: is it a good idea?

The majority of South African municipalities facing the challenges of unemployment, poverty and weak infrastructure are in rural areas. To fulfil their mandate, they depend significantly on financial transfers.  This is something that the government is focused on minimising as evidenced by the recent Department of Cooperative Governance and Traditional Affairs proposal of amalgamating many municipalities to make them self-reliant and functional.  This paper asks the question: ‘will amalgamations of rural municipalities correct for financial viability and functionality’? Using case studies of amalgamated municipalities, the paper observes that amalgamations will not make all rural municipalities self-sufficient and functional

AN ECONOMETRIC MODEL OF EMPLOYMENT IN ZIMBABWE¡¯S MANUFACTURING INDUSTRIES

This paper is concerned with the estimation of employment relationship and employment efficiency under production risk using a panel of Zimbabwe¡¯s manufacturing industries. A flexible labour demand function is used consisting of two parts: the traditional labour demand function and labour demand variance function. Labour demand is a function of wages, output, quasi-fixed inputs and time variables. The variance function is a function of the determinants of labour demand and a number of production and policy characteristic variables. Estimation of industry and time-varying employment efficiency is also considered. The empirical results show that the average employment efficiency is 92%.Labour demand, Variance, Efficiency, Manufacturing, Industries, Zimbabwe

Working Paper 134 - Inflation Targeting, Exchange Rate Shocks and Output: Evidence from South Africa

This paper derives the inflation equation to search for a possible transmission channel between the real interest rate, inflation rate, exchange rates, real output growth rate using a Bayesian VAR sign restriction approach. Our findings show that the real interest rate reacts negatively to inflation rate shocks and the Fisher effect holds in the long run. We show that strict inflation targeting approach is not compatible with significant real output growth. However a flexible inflation-targeting framework which attaches a large weight to the role of real effective exchange rates results in a significant real output growth given the Central Bank desire to accumulate more foreign exchange reserves and high oil price inflation. Thus real effective exchange rate measuring competitiveness against trading partners matters more than domestic currency and nominal effective exchange rate depreciations.

Corporate Governance, Manager Behavior, and Analyst Behavior as Determinants of Mergers and Acquisitions

The literature on Mergers and Acquisitions activity has espoused various explanations for M&A activity. Some of this captures the nature of defence mechanisms again takeovers. In all the expositions the agency conflicts and degrees of collusion among the claimants to the firm’s cash-flows, are apparent. In this paper we add to the literature by presenting an integrated framework that classifies manager behavior and corporate governance, and show how a manager can use M&A bids as a vehicle for maximising their own benefits, rather than shareholder value. The M&A bid targeted by the manager could simply be for diversionary reasons that seek to enable the manager to hold on to his employment and benefits, even though he may be a poor manager. We also consider M&A activity that benefits both managers and shareholders. In this analysis, M&A activity is driven by the manager’s appetite for M&A activity, both beneficial and unbeneficial. The analysts, who are employed by investment banks, that advise on the M&A activity, collude with management. The analysts forecast inflated earnings for a company because the fees they earn as a portion of what the investment bank earns, are related to the size of the transaction which in turn is determined by the inflated future earnings. The agency conflicts between shareholders, investment banks and their analysts, and managers of the company, are central to our framework.

A Flexible Adjustment Model of Employment with Application to Zimbabwe's Manufacturing Industries

This paper presents a dynamic adjustment model of employment. The model is applied to a panel of ten Zimbabwean manufacturing industries observed over the period 1970-1993. The adjustment process is industry and time specific. The adjustment parameter is specified in terms of factors affecting the speed of adjustment. Industries are assumed to adjust their labour inputs towards a desired level of labour-use. A labour requirement function is specified in terms of observable variables and is used to model the desired level of labour-use. In evaluating alternative specifications, we used a flexible translog functional form where the labour requirement is a function of wages, output and capital stock. The empirical results show that in the long run, employment demand responds greatest to wages, followed by capital stock changes, and least by output. The sample mean annual speed of adjustment in employment is 33%. We further examined labour-use efficiency of different industries defined as the ratio of optimal to the observed level of employment. The rate of over-use of labour ranges across industries from 6.8% to 8.1% over the period of this study.Dynamics; employment; labour-use efficiency; panel data; Zimbabwe's manufacturing; speed of adjustment;

An Econometric Model of Employment in Zimbabwe's Manufacturing Industries

This paper is concerned with the estimation of an employment relationship and employment efficiency under production risk using a panel of Zimbabwe's manufacturing industries. A flexible labour demand functions are used and consist of two parts: the traditional labour demand function and labour demand variance function. Labour demand is a function of wages, output, quasi-fixed inputs and time variables. The variance function is a function of the determinants of labour demand and a number of production and policy characteristic variables. It appears in a multiplicative form with the demand function and it accommodates both positive and negative marginal effects with respect to the determinants of the variance. A multi-step procedure is used to estimate the parameters of the model. Estimation of industry and time-varying employment efficiency is also considered. Employment efficiency is defined in terms of the distance from the employment frontier defined as minimum employment required to produce a given level of output. The empirical results show that the average employment efficiency is 92%.Labour demand; variance; efficiency; manufacturing industries; Zimbabwe;

Working Paper 133 - Monetary Policy Transmission, House Prices and Consumer Spending in South Africa: An SVAR Approach

The study used a structural vector autoregressive approach to estimate and quantify the percentage decline in consumption expenditure, which can be attributed to changes in housing wealth, after monetary policy tightening. The effects are separated using a disaggregated Absa house price data, namely all-size, large-size and medium-size and small-size house prices.The results suggest that at the peak of the interest rate effects on consumption the combined effect of housing wealth and credit extension changes, following a monetary policy tightening, was a decline of 9.8 per cent in all-size, 3.7 per cent in small-size, 4.7 per cent in medium-size and 5.3 per cent in large-size houses. The findings indicate heterogeneity in the transmission of interest rate effects operating through housing wealth and the credit channel. Moreover, we reached the same conclusion after modifying the baseline model by adding the restrictions that house price also respond to both aggregate demand and aggregate supply variables. Lastly, the differences between the counterfactual consumption and the baseline consumption responses, provided little support for the assumption that the housing wealth channel is the dominant source of monetary policy transmission to consumption.This paper thus provided an understanding of the indirect channels through which monetary policy influences real variables by focusing on monetary policy transmission to consumption via house prices. We showed interest rate effects, working through both housing wealth and the credit channel, influence real spending. Thus, interest rate effects operating through housing wealth and the credit channel are felt differently by the four house categories. Moreover, the differences between the consumption impulse responses from the counterfactual and baseline scenarios provide little support that combined house wealth and credit effect channels are the dominant sources of monetary policy transmission to consumption. These findings suggest that the direct effects of high interest rates on consumption appear to be more important in transmitting monetary policy to the economy than through the indirect effects. Hence, monetary policy tightening can only marginally weaken inflationary pressures arising from excessive consumption operating through housing wealth and the credit channel.