Does Aid Improve Public Service Delivery?

The expected increase in aid to Africa will put a big challenge for public service delivery. Using a simultaneous equation model, this paper provides an analysis of the effects of the volume and volatility of aid on education, health, water and sanitation outcomes, taking also into account the institutions related to public service delivery, including freedom of press, corruption and decentralization. Overall, the share of official development assistance (ODA) that is provided for education and health seems to have a positive impact on the outcomes in these sectors, whereas total aid seems to be negatively associated. Aid volatility is associated with better outcomes in sanitation, water and infant mortality, contrary to expectations.public expenditure, aid, education, health, water, sanitation, Africa

Use of ICTs and the Economic Performance of SMEs in East Africa

This paper assesses the use of information and communication technologies (ICTs) and their impact on the economic performance of small- and medium-scale enterprises (SMEs) of three East African countries: Kenya, Tanzania and Uganda. Findings of the paper suggest that the diffusion of ICT among East African SMEs is both industry and country specific. The empirical findings suggest that investment in ICT has a negative impact on labour productivity and a positive impact on general market expansion. However, such investment does not have any significant impact on enterprises’ return, nor does it determine enterprises exporter (non-exporter) status.information and communication technology, small and medium enterprises, firm performance, market expansion, East Africa

Export Performance and Investment Behaviour of Firms in Ghana

From the theoretical literature a strong relationship between export performance and investment behaviour at the firm level is expected. A 2003 survey of 100 Ghanaian enterprises is used to analyse the factors that influence the investment and exporting behaviour of firms using a simultaneous equation model to allow for the endogeneity of investment and exporting. In addition, the different factors that influence the investment and export decisions in different sectors are investigated. However, no significant positive relationship between exporting and investment could be found. There seems rather to be a negative association, which might be explained by constraints in the access to capital. On the other hand there are several factors that work in the same direction, for example, younger firms, larger firms and more efficient firms are more likely to invest and more likely to export. --

Does aid improve public service delivery?

The expected increase in aid to Africa will put a big challenge for public service delivery. Using a simultaneous equation model, this paper provides an analysis of the effects of the volume and volatility of aid on education, health, water and sanitation outcomes, taking also into account the institutions related to public service delivery, including freedom of press, corruption and decentralization. Overall, the share of official development assistance (ODA) that is provided for education and health seems to have a positive impact on the outcomes in these sectors, whereas total aid seems to be negatively associated. Aid volatility is associated with better outcomes in sanitation, water and infant mortality, contrary to expectations

EU aid for ACP investment

The partnership between the EU and the ACP countries (that include 38 of the world's 49 least developed countries) has a long standing history and was renewed in 2000 with the Cotonou Agreement. Furthermore, the European Commission has become the world's fifth largest donor of development aid - and therefore one of the most important - in the 1990's. When total aid is looked at the ACP countries are disproportionally among those receiving the most foreign aid per capita in the world and hence the effects of European aid are of special relevance for them. The aim of this paper is therefore to investigate the effect European aid has on investment in the ACP countries. It contributes to the ongoing debate on aid effectiveness by arguing that the impact f aid does not only depend on the characteristics of the recipient but also of the donor. The EU-ACP Partnership Agreement could increase incentives for private investment in the ACP countries either through direct support measures or more indirectly through complementary spending for infrastructure and administration. The special private sector chapter in the Cotonou Agreement makes it visible that private sector support is a primary objective and brings the existing provisions into a more coherent and refined framework. However, given the limited funds that were available under the Lomé Conventions direct investment support cannot be expected to increase total investment considerably. The empirical findings show that total aid has a positive but declining effect on the share of gross domestic investment in GDP. The effect of aid from the European Commission on gross domestic investment seems to be smaller partly due to its allocation towards ACP countries with a relatively poor investment performance.Die Partnerschaft zwischen EU und AKP-Staaten (von denen 38 zu den 49 am wenigsten entwickelten Ländern gehören) hat eine langjährige Geschichte und wurde im Jahre 2000 mit dem Cotonou Abkommen erneuert. Zudem hat sich die Europäische Kommission in den 90er Jahren zum fünftgrößten Geber von Entwicklungshilfe in der Welt entwickelt. Die AKP-Staaten liegen bei Betrachtung der Gesamthilfe überproportional unter denen, welche die meiste Entwicklungshilfe pro Kopf in der Welt erhalten. Es werden daher die Auswirkungen der EU-Hilfe insbesondere auf die Investitionen in den AKP Staaten untersucht. Damit wird ein Beitrag zu der gegenwärtigen Debatte über die Wirksamkeit von Entwicklungshilfe geleistet. Es wird argumentiert dass die Wirksamkeit von Hilfe nicht nur von den Gegebenheiten im Empfängerland, sonder auch vom Geber abhängt. Das Abkommen von Cotonou soll die Anreize für Privatinvestitionen in den AKP-Staaten steigern, entweder durch direkte Förderungsmaßnahmen oder indirekt durch ergänzende Ausgaben für Infrastruktur und Administration. Das Sonderkapitel über den Privatsektor im Cotonou-Abkommen macht deutlich, dass die Unterstützung des privaten Sektors ein primäres Ziel ist und bringt die bestehenden Bestimmungen in einen kohärenten und verbesserten Rahmen. Einer der Schwerpunktsektoren ist daher die Förderung von Investitionen und privatem Sektor. Bei den begrenzten Geldmitteln, die durch die Lomé-Abkommen verfügbar waren, kann allerdings nicht erwartet werden, dass die Förderung direkter Investitionen die Gesamtinvestitionen wesentlich steigert. Die empirischen Ergebnisse zeigen, dass die Gesamthilfe einen positiven, aber sinkenden Einfluss auf den Anteil der inländischen Investitionen am BSP hat. Die Auswirkungen der EU-Hilfe auf Investitionen in den AKP Staaten sind weniger stark. Dies kann insbesondere auf die stärkere Ausrichtung der EU-Zusammenarbeit auf die AKP Staaten mit schlechteren allgemeinen Investitionsbedingungen zurückgeführt werden

Private sector development and competitiveness in Ghana

Ghana has a relatively good international reputation with respect to political stability and macroeconomic reforms. However, its success with developing the private sector and attracting investment has at best been mixed. Therefore the new government that came into power in 2001 proclaimed a Golden Age of Business. Competitiveness and private sector development are closely interlinked. On the one hand the factors that influence the competitiveness of a country are a precondition for private sector development. On the other hand only if the private enterprises act in a competitive manner and use their entrepreneurial possibilities to compete, support programmes for the private sector will be successful. Competitiveness can be measured at different levels. The real exchange rate covers the competitiveness of a whole economy, it fluctuated significantly in Ghana over the past decade. The revealed comparative advantage index and value added per employee explore the relative competitiveness of different sectors. Especially for plastic and metal products they both show that Ghana is increasingly competitive

Private sector development and competitiveness in Ghana

Ghana has a relatively good international reputation with respect to political stability and macroeconomic reforms. However, its success with developing the private sector and attracting investment has at best been mixed. Therefore the new government that came into power in 2001 proclaimed a “Golden Age of Business”. Competitiveness and private sector development are closely interlinked. On the one hand the factors that influence the competitiveness of a country are a precondition for private sector development. On the other hand only if the private enterprises act in a competitive manner and use their entrepreneurial possibilities to compete, support programmes for the private sector will be successful. Competitiveness can be measured at different levels. The real exchange rate covers the competitiveness of a whole economy, it fluctuated significantly in Ghana over the past decade. The revealed comparative advantage index and value added per employee explore the relative competitiveness of different sectors. Especially for plastic and metal products they both show that Ghana is increasingly competitive

The role of ICT for the performance of SMEs in East Africa: Empirical evidence from Kenya and Tanzania

Small and medium enterprises are an important factor in the East African economies especially with respect to employment. The increasing competition through globalisation puts them under considerable pressure. Through the rapid spread of information and communication technologies (ICT) and ever decreasing prices for communication, markets in different parts of the world become more integrated. Therefore, one basic question is whether the use of ICT (as production technology, as information processing technology or as information communication technology) can help them to cope with these new challenges. Information asymmetries are one of the major causes for high transaction costs, uncertainty and therefore market failure. A reduction of the information gap also reduces the ability of the better informed to extract rents from the less informed be it buyers or sellers of goods or factors. A reduction of information asymmetry will also create new opportunities and therefore enhance the efficiency of resource allocation. On a macro level this will then lead to faster growth and diversification of the economy. Our sample of 300 SMEs in East Africa shows that the use of ICT by SMEs in Kenya as well as in Tanzania is increasing over time. The usage of fixed phone lines nearly reaches the saturation point but is still lower in Tanzania than in Kenya. The percentage of firms that uses mobile phones is increasing fast in both countries. Especially in Tanzania, despite its late start only in 1994 it has already outgrown the usage of fax machines. Those enterprises that use different forms of ICT rate their effects mostly positive. On top are computer applications that are assumed by 88 % and 76 % of users to considerably increase management efficiency and competitiveness respectively. Mobile phones are considered to contribute significantly to regional market expansion by most enterprises, followed by fixed phones and faxes. For all sectors in both countries the average size of enterprises is generally bigger for users of more advanced ICTs. The average years of schooling also increase with the use of advanced ICTs with only small differences between sectors. Also with respect to exporting the relation with ICT is positive and similar for all sectors. By regressing a Cobb-Douglas production function on a dataset of Kenyan and Tanzanian enterprises we analyse determinants of productivity. Our main empirical findings are that investment in ICT has a negative sign in different specifications of the regression but is never significant. However, the use of fax machines that gives managers access to formal information has a significant positive relationship with productivity in both countries