Browsing by Author "G/Meskel Atnafu"

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    The Effect of External Indebtedness on Poverty Reduction in Sub-saharan Africa Countries
    (A.A.U, 2021-09) Senbeto Solomon; G/Meskel Atnafu
    Foreign borrowing by itself not a problem when properly utilized for productive investment and does not suffer from macroeconomic instabilities and policies that distort economic incentives. It may not also be a problem when economic growth is high enough to repay the debt as well as to finance additional investment demand. However, reckless borrowing and poor debt management system crowds-out investment and social safety net expenditures, thus adversely affecting poverty reduction efforts. This thesis examines the impact of external indebtedness on poverty in sub-Saharan African (SSA). By employing system generalized method of moments and random/fixed effects estimation, the thesis models the impact of external debt with income and other variables of interest on poverty, measured by poverty headcount ratio, life expectance at birth child, child mortality rate and gross primary school enrolment rate. The empirical results indicate that there exist negative impacts of external debt on GDP growth, and poverty headcount ratio, life expectance at birth and gross primary school enrolment rate. However, under-five child mortality was lower in SSA countries with high external debt. Another important finding is that the life expectance at birth increase as improvement in real GDP per capita and capital formation as well as in the absence of violence/terrorism, but it decreases by inflation rise. Similarly, the rate of child mortality reduces as per capita income of GDP and capital formation increases and in the absence of violence/terrorism, but it rises by inflation increases. The main conclusion is that external debt indicators have a direct impact on poverty. The study also concluded after the effect of income of the level of poverty has been taken into account, external indebtedness has a limited but significant impact on poverty reduction. A negative relationship finding between external debt and poverty indicators does not necessarily indicate that SSA countries should restraint on external borrowing in order to improve growth. Rather, given external debt impact on the poverty reduction, governments in SSA would ensure external borrowings are invested in projects sooner or later generate enough earnings to reimburse the debt back. The nexus between external debt, economic growth and poverty require further research by controlling for institutional quality and management factors.
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    The Impact of China and India on African Manufacturing Exports on the Third Market: Gravity Approach and a Test of Flying - Geese Theory for Africa
    (Addis Ababa University, 2007-06) G/Meskel Atnafu; Geda Alemayehu
    In this paper, we address two major questions. First, the question of whether China and India displace the African manufacturing export from the third market and, secondly, the question of whether there is an evidence for shifting comparative advantage from China and India to Africa as predicted by the flying-geese theory of industrial development. The commodity is disaggregated down to three-digit SITC Rev.3 according to the UN Comtrade classification. We employed the gravity equation to test whether China and India are crowding out the African manufacturing exports from the third market. In contrast to most of the researches which estimate gravity model on averages of bilateral trade flows from cross-section data, we estimated the gravity model on panel data of imports of six third market countries from thirteen African exporter countries for the period 1995-2005. To test whether there is an evidence of shifting of comparative advantage from China and or India to Africa as predicted by flying-geese theory, we estimated Spearman’s rank correlation coefficients on indices of the revealed comparative advantage vectors of the African exporters and China and India for the period 1995-2004. Both the gravity and flying-geese models predicted same outcome. The major finding of this paper is that there is strong evidence that China has been displacing African manufacturing from the third market but India has been complementing in the early years. However, the overall third market impact of China and India has been that of complementarity in the later years of the sample period. Furthermore, we found an evidence for shifting comparative advantage from China and India to Africa as the flying-geese theory predicts, South Africa being the leading goose. South Africa gained comparative advantage earlier than other African countries and moved to the higher stage of industrialization followed by Kenya. The major implication of this study is that, in the world where China and India are reshaping the global economic order dynamically, the outcomes of the traditionally received wisdom of trade liberalization and industrialization policies in the spirit of export promotion may be uncertain