Research

Optimal Investments in Africa's Road Network

Kiel Working Paper and World Bank Policy Research Working Paper (Last Updated August 2024)

This paper characterizes economically optimal investments into Africa's road network in partial and general equilibrium - based on a detailed topography of the network, road construction costs, frictions in cross-border trading, and economic geography. Drawing from data on 144 million trans-continental routes, it first assesses local and global network efficiency and market access. It then derives a large network connecting 447 cities and 52 ports along the fastest routes, devises an algorithm to propose new links, analyzes the quality of existing links, and estimates link-level construction/upgrading costs. Subsequently, it computes market-access-maximizing investments in partial equilibrium and conducts cost-benefit analysis for individual links and several investment packages. Using a spatial economic model and global optimization over the space of networks, it finally elicits welfare-maximizing investments in spatial equilibrium. Findings imply that cross-border frictions and trade elasticities significantly shape optimal road investments. Reducing frictions yields the greatest benefits, followed by road upgrades and new construction. Sequencing matters, as reduced frictions generally increase investment returns. Returns to upgrading key links are large, even under frictions.

Mapping Africa's Infrastructure Potential with Geospatial Big Data and Causal ML

Kiel Working Paper (Last Updated November 2024)

Using rich geospatial data and causal machine learning (ML), this paper maps potential economic benefits from incremental investments in all major types of public and economic infrastructure across Africa. These 'infrastructure potential maps' cover all African populated areas at a spatial resolution of 9.7km. They show that the local returns to infrastructure are highly variable and context-specific. For example 'hard infrastructure' such as paved roads and communications is more beneficial in cities, whereas 'social infrastructure' such as education, health, public services and utilities is more critical in rural areas. Market access and agglomeration forces largely govern these returns. The open Africa Infrastructure Database built for this project provides granular data classified into 54 economic categories. Its exploration further reveals that Africa's infrastructure is concentrated and often inefficiently allocated. All notable findings are consistent with economic literature, highlighting causal ML's ability to extract insights from geospatial data and assist spatial planning.

collapse: Advanced and Fast Statistical Computing and Data Transformation in R

Journal of Statistical Software, Revise and Resubmit (Last Updated February 2024)

collapse is a large C/C++-based infrastructure package facilitating complex statistical computing, data transformation, and exploration tasks in R - at outstanding levels of performance and memory efficiency. It also implements a class-agnostic approach to R programming, supporting vector, matrix and data frame-like objects and their popular variants (e.g., factor, ts, xts, tibble, data.table, sf), enabling its seamless integration with large parts of the R ecosystem. This article introduces the package's key components and design principles in a structured way, supported by a rich set of examples. A small benchmark demonstrates its computational performance.

Patterns of Global and Regional Integration in the East African Community

Review of World Economics, 2024

Using detailed global trade and novel Multi-Region Input-Output (MRIO) data, this paper examines the East African Community’s (EAC) global and regional integration through trade, global, and regional value chains (GVCs and RVCs). With surgical attention to detail, the first part of the paper dissects key patterns and trends of EAC members’ participation in global and regional trade and production networks at the aggregate, bilateral, sectoral, and bilateral-sectoral levels. The second part then provides causal reduced-form evidence for the economic benefits of EAC integration through trade, GVCs, and RVCs at the sector level. Findings imply that the region is moderately integrated into GVCs and RCVs but shows no overall trend towards greater integration. Regional integration is advancing in agriculture and food processing, and Kenya is becoming a more dominant regional supplier of manufactures. Integration through trade and GVCs positively affects economic development in the region, particularly deeper forward GVC linkages in manufacturing. Deepening regional trade and forward linkages yields additional economic benefits vis-a-vis global linkages.

Africa's Great Moderation

Journal of African Economies, 2023

Over the past 30 years, African economies have experienced remarkable improvements in macroeconomic conditions, characterised by higher and more stable real per-capita growth rates and lower and more stable inflation. This paper documents the persistent decline in macroeconomic volatility at the aggregate and sectoral levels and seeks to provide explanations. Sectoral analysis shows a particularly strong reduction of growth volatility in agriculture and, to a lesser extent, in services. Classical structural change only explains a small fraction of the moderation. Analysis of further factors yields that changes in structural characteristics such as institutions, trade intensity and diversification, natural resource dependence or conflict incidence do not explain the moderation. On the positive side, the paper provides evidence to suggest that changes in the external environment, improved macroeconomic policy frameworks and ‘softer’ structural improvements, such as the deepening of the domestic financial sector, were important in reducing macroeconomic volatility on the continent.

Macroeconomic Dynamics and the Effects of Fiscal Spending in Uganda

Research Paper in the Macroeconomic Policy Department, MoFPED, Uganda, 2021

This paper investigates the effects of Government fiscal spending and borrowing on the Ugandan Economy. Towards this end initial analysis is done regarding the measurement of economic activity independent of government spending. A dynamic factor index is proposed alongside with a unified quarterly GDP series, which are compared to various World Bank and survey based activity indicators. This is followed by a decomposition of government spending and a set of growth regressions examining the effect of various forms of fiscal spending on various measures of economic activity while controlling for various forms of private sector borrowing. The final part of the paper conducts an SVAR analysis relating fiscal spending to other leading macroeconomic and financial aggregates. Results imply that only spending in key growth sectors (infrastructure, minerals, trade, industry, ICT, science and tourism) relates significantly to economic activity, where each shilling spent brings an approx. 2-3 fold return in value added over the course of 3 years. All types of fiscal spending raise the T-Bill rate with 3-year elasticities between 0.3 and 1.3, but do not appear to crowd out credit to the private sector. Annecdotal evidence suggests that fiscal spending is significantly procyclical.

Climate, Conflict and Growth in Africa: Reverse Causality and Predictive Power

Extended Term Paper for a Course in 'Environment and Development Economics' at UNIGE + Presentation at PEGNet Conference, 2022

In this paper I investigate two aspects of the climate-economy conflict nexus that have thus far been neglected in the literature: Reverse causality and predictive power. With regards to predictive power, I employ a machine learning approach and show that climate moments can successfully predict a good part of African growth rates and conflict incidence. In the second part of this paper, I attempt to model the reverse causality between conflict and growth using two different instrumentation approaches. The results confirm the existence of a strong channel from conflict outbreak to negative growth, but could not provide convincing evidence of a strong channel from negative growth to conflict outbreak.

Policy Brief: Effects of an Increase in the Excise Duty on Petrol and Diesel by 100 UGX

Policy Brief by the Macroeconomic Policy Department, MoFPED, Uganda, 2020

Econometric analysis suggest that the import volume elasticity of petrol in response to past duties is -0.5, and the import elasticity of diesel to past duties is between -0.5 and -1, with most estimates around -1. Regressions of changes in petroleum revenue on both duties further suggest that higher duties on petrol resulted in significant revenue gains in the year following implementation, while higher diesel duties did not yield significant revenue gains in the year following implementation. Simulations investigating the sectoral effects of the policy show that the most affected sector is transport services with a contraction in output of 0.08%, and agroprocessing and other agriculture with a contractions of 0.02% each. Other industrial activities and cash crops are also adversely affected by the policy.

The Development of Cultural Tourism in Uganda: Status, Potential and East African Experiences

Strategy Paper for the Macroeconomic Policy Department, MoFPED, Uganda, 2020

This paper seeks to situate Uganda in terms of its cultural tourism development, assess the nascent potential of further developing cultural tourism in Uganda, and provides policy recommendations towards that end. In line with these aims, several case-studies of cultural tourism development in Uganda and its neighbours Tanzania and Kenya are provided to exhibit a breadth of experiences and viewpoints as well as some of the potential challenges and pitfalls to promoting cultural tourism in Uganda.

Secondard Education in Uganda: New Survey Evidence

Study for BRAC Uganda Research and Term Paper for a Course in 'Education and Development' at IHEID, 2018

This study reviews the state of secondary education and government policy in secondary education in Uganda and presents findings from statistical analysis of recent a survey of 450 secondary schools, executed by BRAC Uganda in January and February 2018, which it contextualizes against recent policy trajectories.

Rapid Technological Change - Challenges and Opportunities: Tanzania & Indonesia Case Studies

Pathways for Prosperity Comission Background Papers, [7|8]. Oxford, UK, 2018

Africa's Economic Transformation: A Big Data Perspective

CAU Kiel and Kiel Institute for the World Economy, 2024

Africa is a continent of great economic potential. With a population of 1.5 billion at a median age of 19 today, projected to reach 2.5 billion by 2050, vast natural and mineral resources, yet a share of only ~3% in global GDP and trade, Africa's economic transformation must materialize to provide opportunities for its youth and to foster a more balanced, equitable, and secure world order in the face of shared global challenges. The African Union's Agenda 2063 sets an ambitious path to achieve this, and with the formal enactment of a continental free trade area, a substantial landmark has been passed. However, trade and regional value chains (RVCs) must pick up significantly to generate the desired economic transformation, supported by industrialization and increases in productivity. For this, macroeconomic and financial stability are needed alongside industrial/RVC policies and large-scale investments in infrastructure and human capital. This doctoral dissertation contributes to our understanding of these critical ingredients. It documents the continent's progress in macroeconomic stability and investigates its drivers. It also dissects Africa's integration into global and regional value chains, eliciting progress, benefits, potentials, and challenges towards/of regional economic integration. Last but not least, it zooms in on the continent's infrastructure, utilizing geospatial big data and modern structural and empirical methods to provide evidence on local and global investment potentials at unprecedented spatial detail and scale. By combining rigorous quantitative economics and (causal) machine learning with the richest data on global production, trade, infrastructure, and economic geography available at the time of writing, it produces very detailed and substantive evidence on critical aspects of Africa's present and future economic transformation. It thus enhances our academic understanding of the continent, its economic potential and challenges, but also informs policies to accelerate economic progress and transformation at scale.

Endogenous R&D and Technology Diffusion in a Multi-Sector RBC Economy

Geneva Graduate Institute (IHEID), 2019

Starting from Long & Plosser (1983), multi-sector DSGE models have challenged the notion of aggregate technology shocks as the main driver of business cycle fluctuations, and provided a strong evidential basis for the relevance of independent sectoral shocks amplified by asymmetric production networks. More recently, with Comin & Gertler (2006) short-run conceptions of the business cycle were challenged, and medium-run cycles are modelled in terms of endogenous technology mechanisms. This dissertation presents a pioneering attempt to reach a synthesis between these different strands of literature. It introduces a multi-sector RBC economy in which each sector independently makes decisions to invest in R&D and adopt new technologies. Sectors interact with each other in a productive network via intermediate inputs, but are also affected by R&D and technology adoption spillovers transmitted from upstream or downstream sectors in the value chain. Evidence is provided that this model is capable of accounting for extended observed aggregate and sectoral fluctuations.

The Interdependence of Economic Growth, Human Development and Political Institutions: A General Equilibrium Framework

University College Roosevelt (UCR) and Student Undergraduate Research E-journal, 2017

The causal links between growth, human development and institutions are central to understanding the long-run development process. The turn of the millennium has seen influential research in development economics attempting to uncover some of these links, but a focus on root-causes of growth has limited its insights in both scope and method. This paper provides an extended analysis of the interdependence of growth, human development and institutions using a general equilibrium framework. The framework is tested using 4 different cross-sectional and panel-data specifications including data from 1820. Findings implicate that both growth and human development, but also human development and institutional progress strongly depend on each other in the long run. The results signify the existence of significant general-equilibrium effects shaping the long-run trajectories of countries. These mechanisms defy overly deterministic views of development, and invite careful further study.