Johannes Fedderke

• PhD (Cantab)
• Professor (Full) at Pennsylvania State University

Research suggests that institutions affect the levels of corruption in a country. We take these arguments a step further and examine whether it is the presence of inclusive institutions and/or the credible and consistent implementation of institutions that matter, as regards corruption. We use a novel approach to theoretically conceptualise and emp...

Multinational corporations operate across locations with different risk profiles. We examine how multinational corporations address the optimal allocation of capital across multiple locations and analyze the transition path to the intertemporal equilibrium. Our model considers returns, risks and adjustment costs to reflect the dynamics of allocatin...

This paper employs a simple but general representation of an economy, in order to derive mutually consistent estimates of steady‐state growth and inflation for South Africa over the period from 1960Q1 through to 2020Q2, as well as the implied “gaps” between actual growth and inflation and their steady‐state values. Analysis is under both closed and...

As South Africa’s national debt has been on a steady upward trend since the late 2000s, this paper aims to construct an Early Warning System (EWS) using logit regressions to predict the likelihood of future public sector and private sector debt pressure. Results show that real GDP growth and the exchange rate matter for the prediction of private se...

This paper addresses the identification of supply and demand shocks in the South African economy over the 1960–2020 period, the relative importance of the two types of shock to fluctuations of growth and inflation from their steady‐state values, as well as the potential impact of the two types of shocks on the steady‐state growth and inflation valu...

The yield spread of South African to United States 10-year government bonds over the last 5 years has increased substantially to levels approaching those last seen during the mid-1980s. This paper examines the association between the spread and macroeconomic fundamentals over the 1960–2019 sample period, under the GARCH and GARCH-M class of estimat...

Over the coming decade, much more genetic data will enter into the study of economic development. This paper provides an example and emphasizes the uses and misuses of such information. It has assembled for the first time national frequencies of the ACP1 genetic polymorphism and the Interleukin-6 (IL6-174G) and Interleukin-10 (IL10-1082G) cytokines...

The relationship between economic growth and inequality has not been settled. Using South African time series data, the core finding of this article is that growth and inequality codetermine one another: growth lowers inequality, and falling inequality in turn serves to stimulate growth. There are additional statistically and substantively signific...

Real asset markets are characterized by illiquidity and heterogeneous assets, presenting challenges to price estimators. Use of a new dataset of 7,553 auction fine art lots brought to market in South Africa, for 2009–14, allows us to examine the full sales hedonic price estimator over a wide set of characteristics. Results validate full sale hedoni...

We consider the relative empirical performance of a range of inflation models for South Africa. Model coverage is of Phillips curve, New Keynesian Phillips curve, monetarist and structural models of inflation. Our core findings are that the single most robust covariate of inflation is unit labour cost. We further decompose unit labour cost into cha...

This paper presents empirical evidence in support of an account of unbalanced growth in the South African economy: an interaction between sectorally differentiated total factor productivity growth, with a price elasticity of demand below unity. As sectors with faster TFP growth produce more real output over time, their relative prices fall, with th...

This paper uses newly available firm-level tax data to evaluate the market structure in South African manufacturing sectors in the period 2010-2012. To describe the market structure, we compute markups for South African manufacturing firms and concentration indexes for 4-digit manufacturing sectors. We find both significant markups and significant...

Historical pathogen burdens are examined as possible triggers for genetic adaptation. Evidence of adaptation emerges for the acid phosphatase locus 1 (ACP1), interleukin-6 (IL6), interleukin-10 (IL10 ), human leukocyte antigen (HLA) polymorphisms, along with a measure of heterozygosity over 783 alleles. Results are robust to controlling for the phy...

This article presents a new data set of institutional indicators for Zambia covering the period 1947–2007. Coverage is of political rights and freedoms, property rights, and political instability. The new data set can be usefully employed to explore the interactions of different institutional dimensions and their linkage with economic growth in the...

This paper estimates the potential output of the South African economy using several filters. We demonstrate that potential output measures are very sensitive to the different methodologies. We also provide estimates of South Africa's potential growth rate over the 1960–2015 period. Current estimates of the potential growth rate fall in the 1.9%–2....

This paper examines the nature and sources of productivity growth in South African manufacturing sectors, from an international comparative perspective. On panel data estimations, we find that the evidence tends to support Schumpeterian explanations of productivity growth for a panel of countries including both developed and developing countries, a...

This paper explores the appointment of career diplomats and political appointees to ambassadorial positions. We present models of the strategic interaction of political donors and presidential candidates, which predicts that donations will match the quality of diplomatic posting granted by the candidate. We test this prediction and confirm it for f...

This paper presents a test diagnostic that determines whether financial shocks are due to the propagation of idiosyncratic shocks originating in a single source country (or group of countries), or a reflection of market interdependence due to factors common across markets. The test is given by the ratio, λ, of the unconditional to the conditional c...

Credit rating agency assessments of sovereign risk bear weak statistical association with the quality of country policies. This paper demonstrates that where endogenous responses by policy makers to credit rating outcomes, and the degree of responsiveness of credit rating agencies to policy changes are accounted for, strong associations between pol...

In this study we evaluate whether a substantial increase in public funding to researchers is associated with a material difference in their productivity. We compare performance measures of researchers who were granted substantial funding against researchers with similar scholarly standing who did not receive such funding. We find that substantial f...

This paper explores the impact of some key infrastructure measures in transportation, telecommunication, and electricity production sectors on labor productivity, using data on two-digit sectors for the Turkish economy for the years 1987-2006. We find both statistical and economic significance for the positive productivity impact of infrastructure...

This paper examines the strength of association between the outcomes of National Research Foundation (NRF) peer review based rating mechanisms, and a range of objective measures of performance of researchers. The analysis is conducted on 1932 scholars that have received an NRF rating or an NRF research chair. We find that on average scholars with h...

Do better political rights yield more economic development? By addressing the econometric challenges plaguing this question, we find support for a positive impact of rights on development. For a significant grouping of countries the association is nonlinear: the positive impact of rights is particularly strong at low rights levels; it is either abs...

This paper analyses the relationship between trade liberalization and economic growth using a Schumpeterian framework of technological innovation and applies it to sector-level South African data. The framework examines direct and indirect effects of trade liberalization on productivity growth. Indirect impacts operate through a differential impact...

Criticisms levied against the conventional measures of institutions, and the assumption of institutional persistence often made explicitly or implicitly in institution-development debates yet not empirically tested, calls for the construction of new alternative institutional indicators that can be used to either validate or refute these criticisms,...

The South African labor market has been characterized by high and persistent levels of unemployment, and a poor capacity to create jobs. This paper examines existing evidence on what rigidities have generated this outcome. Pricing power in output markets, as well as labor supply and demand side rigidities are all found to have contributed, resultin...

This study advances previous work on the effects of trade and technological change on labour markets within the framework of Heckscher–Ohlin trade theory. We provide evidence for an unskilled labour abundant developing country by employing dynamic heterogeneous panel estimation techniques. For South African manufacturing, trade‐mandated increases i...

This paper provides an overview of South African economic growth and employs modern growth theory to structure the historical record. The recent literature on growth is large and investigates the impact of a great many variables on economic growth. Constraints of space and information confine this analysis to the following core issues: the relative...

This paper constructs a new set of institutional indicators for Malawi. We develop indicators of political rights, of freehold, traditional (communitarian) and intellectual property rights, based on the Malawian legislative framework. In exploring the association between our rights measures and a range of indicators of socio-economic development, w...

This paper presents a diagnostic of the source of financial shocks (idionsyncratic country specific versus common fundamental), which is robust to a range of forms of crisis propagation across markets. Size and power characteristics of the test appear strong. An application of the proposed test statistic to the Asian financial crisis of 1...

Recent cross sectional growth studies have found that ethnolinguistic fractionalization is an important explanatory variable of long-run growth performance. In presenting variation over time in a number of social, political and economic dimensions, this paper adds longitudinal evidence on a range of variables that have been linked to long run econo...

We examine a two country aid model with performance intensive aid. The aid budget is determined by a donor country legislature, but allocated by a donor agency in terms of a performance criterion of its choice. Five sources of slippage in policy delivery are introduced. The donor agency observes the true performance of the aid recipient with error....

It is often argued that since the social return to R&D exceeds the private return, the government should provide incentives for R&D expenditure. This article considers the issue of the impact of such incentives on the fiscal position of the government, using a simple comparative static model. In particular, it is argued that it is possible that the...

This paper presents a joint analysis of labor market flexibility and product market structure. Our investigation confirms earlier results of imperfect competition in South African manufacturing where we find an average mark-up of 50% for the period 1970 to 2004 that is without consistent trend over time. The contribution of the paper is to provide...

We consider the optimal choice set of candidates standing for elected office. The decision dimensions are in the number of candidates standing for election, the experiential base of the candidates standing for election as measured by the length of prior experience held by the candidates, and the proportion of candidates with such prior experience....

This paper presents new institutional measures for Zambia. Coverage is of political rights and freedoms, of property rights, and of political instability. The sample period is from 1947 to 2007. Comparison of the indices with directly comparable Zimbabwean and Malawian series, shows strong sources of divergence in institutional conditions. The pape...

The current, persistent growth problem in Zimbabwe is often attributed to poor economic and political institutional frameworks characterised by insecure property rights and an unreliable rule of law. An empirical test of this hypothesis presents some methodological difficulties. Although political scientists have been constructing measures of socia...

This paper presents a diagnostic of the source of financial shocks (idionsyncratic country specific versus common fundamental), which is robust to a range of forms of crisis propagation across markets. Size and power characteristics of the test appear strong. An application of the proposed test statistic to the Asian financial crisis of 1997-98 con...

This paper explores the appointment of career diplomats and political appointments to ambassadorial positions, across a range of characteristics that serve to indicate the attractiveness of the posting. The results of the paper suggest that political appointees are more likely to become ambassadors in high income OECD countries, that are strong tou...

This paper presents a database on institutional measures for Namibia for the period 1884 to 2008. Using the techniques of principal components and factor analysis in aggregating these indicators, the study does two things. First, it illustrates a methodology for constructing de jure and de facto institutional measures by means of using pieces of le...

The focus of this paper is on the presence of economies of scale in administering pension funds. We make use of a unique dataset with extensive information on South African retirement funds from 1996 to 2006. For almost fifty years now, South Africa has operated under a system with small social security beneÂ…ts but with considerable options and fr...

Testing for purchasing power parity (PPP) and uncovered interest parity (UIP) has been the focus of many empirically oriented studies. While these simple economic theories of exchange rate and interest rate determination are theoretically attractive, the empirical support for these equilibrium conditions is at best mixed. Many potential reasons hav...

Although economic theory assumes that risk is of central importance in financial decision making, it is difficult to measure the uncertainty faced by investors. Commonly used empirical proxies for risk (such as the moving standard deviation of the returns on an asset) are not firmly grounded in economic theory. Risk measures have been developed by...

This paper presents a model to account for the behaviour of social elites, in terms of their decisions to distribute resources between themselves, and a mass of disadvantaged members of society. Privileged members of society have the opportunity to allocate resources either to improve their own productive capacity, or to enhance the productive capa...

This chapter reviews the literature on the drivers of growth in South Africa. While growth has picked up since the mid-1990s, there are a number of impediments to faster, sustainable growth. These include a continued impact of uncertainty on physical capital investment, uncertainty surrounding property rights, incomplete recovery of infrastructure...

This paper argues that the pattern of decolonisation was a logical consequence of the nature of human capital transfers from the colonisers to the elites of the former colonies, and this shaped the strategic interaction between these two groups. Where the educational practice emphasized the notion of assimilation, the system generally tended to pro...

This paper investigates the channels through which colonial origin affects economic outcomes in sub-Saharan Africa (SSA). It focuses on four key channels of transmission namely, human capital, trade openness, market distortion and selection bias. In contrast with previous studies where only initial conditions at independence were held to influence...

This paper aims to construct a new set of institutional indicators for Malawi. Our political freedom index correlates strongly with the Freedom House political rights and civil liberties indices, but consists of a far longer time series, which can be used to examine long-run issues with greater efficacy. The high correlations between the political...

This paper investigates the determinants of the absolute volumes and composition of foreign capital stocks in South Africa, focusing on the role played by institutional quality (property rights), domestic risk and neighbourhood effects as potential determinants. The empirical findings show that secure property rights and low risk in the host countr...

This paper considers conditions of optimality in a co-optive strategy of colonial rule. It proposes a simple model of elite formation emanating from a coloniser's quest to maximise extracted rents from its colonies. The results suggest multiple optimal solutions, depending on the specification of the production function, the governance technology c...

This paper employs a theoretical framework that allows for both direct and indirect impacts of trade liberalization on productivity growth. Indirect impacts operate through both scale effects as well as a differential impact on firms conditional on their distance from the international technological frontier. Empirical results from panel estimation...

Summary Empirical explorations of the growth and aggregate productivity impacts of infrastructure have been characterized by ambiguous (countervailing signs) results with little robustness. This paper, utilizing panel data for South African manufacturing over the 1970-2000 period, and a range of 19 infrastructure measures, explores the question of...

A substantial body of literature on investment in South Africa has emerged over the past decade, with diverse findings. This chapter provides an assessment of reported findings. It considers domestic private physical capital accumulation and public capital accumulation, and it reflects briefly on the likely growth consequences of the evidence revie...

This paper reports industry concentration measures for the South African manufacturing sector over the 1972–1996 period for the three digit industry classification. Noted are high level of industry concentration in South African manufacturing, and a rising trend in concentration across a wide range of industries as measured by the Gini coefficient,...

This article examines industry concentration for the South African manufacturing sector over the 1972-2001 period, for the three-digit industry classification. The article notes both the high level of industry concentration in South African manufacturing and a rising trend in concentration across a wide range of industries as measured by the Gini a...

This paper presents an analysis of the interaction of human capital investment and the development of social and political institutions. We find that human capital matters—for growth through its quality dimension; for distributional conflict by raising political aspirations. But human capital does not stand alone either. The level of economic devel...

The modern theory of investment identifies the importance of uncertainty to investment. A number of empirical studies have tested the theory on South African time series, employing political instability measures as proxies for uncertainty. This paper verifies that political instability measures are required in the formulation of the investment func...

This paper presents a model in which two groups in society are engaged in strategic interaction. Privileged members of society have the opportunity to allocate resources either to their own productive capacity, or to enhance the productive capacity of the disadvantaged. Redistribution to the disadvantaged can increase the productive ca-pacity of so...

This paper examines whether there necessarily exists a conict between allocative and pro-ductive e¢ ciency in small open economy markets. That productive e¢ ciency favours market concentration is not in dispute, and the sole question we face is whether allocative e¢ ciency su¤ers under high market concentration. We proceed theoretically and econome...

Recent cross-country growth studies have found that ethnolinguistic fractionalization is an important explanatory variable of long-run growth performance. This paper highlights some limitations of cross-country studies by focusing on the time series evidence for South Africa. In presenting variation over time in a number of social dimensions, this...

This article shows that mark-ups are significantly higher in South African manufacturing industries than they are in corresponding industries worldwide. We test for the consequences of this low-level of product market competition on productivity growth. The results of the paper are that high mark-ups have a large negative impact on productivity gro...

We study a Lucas (1978) "fruit-tree" economy under the assumption that agents are Choquet expected utility (CEU) rather than standard expected utility (EU) decision makers. The agents’ non-additive beliefs about the economy’s stochastic dividend payment process may thus express ambiguity attitudes and accommodate violations of Savage’s sure-t...

The current, persistent growth problem in Zimbabwe is often attributed to poor economic and political institutional frameworks characterised by insecure property rights and an unreliable rule of law. An empirical test of this hypothesis presents some methodological difficulties. Although political scientists have been constructing measures of socia...

Abstract This paper provides a broad overview of the relationship between infrastructure and growth, focusing,on the South African case. The paper,develops,an intuitive theoretical framework,in which to analyse this relationship, identifying …ve speci…c channels through which infrastructure may e¤ect growth: as a factor of production, a complement...

This paper examines growth patterns in the Western Cape over the 1970-1996 period by means of primal growth accounting decompositions. Evidence by magisterial district, by sta- tistical region and by SIC 3-digit manufacturing sector is presented. We find that the Western Cape differs from national growth patterns. Manufacturing in the Western Cape...

Recent cross-sectional growth studies have found that ethnolinguistic fractionalization is an important explanatory variable of long-run growth performance. In the present article, we follow the call of earlier studies to conduct a more detailed clinical analysis of the growth experience of a specific country. South Africa constitutes an interestin...

South Africa was named 'the Japan of Africa' in the 1960s, but then followed a long period of stagnation with sanctions and Apartheid struggle, and with reluctant growth after new rule. We reproduce the development experienced during 1960-2005 by calibrating a growth model assuming catching up to the world technology frontier influenced by trade po...

While economic theory assumes that risk is of central importance in financial decision making, it is difficult to measure the uncertainty faced by investors. Commonly used empirical proxies for risk (such as the moving standard deviation of the returns on an asset) are not firmly grounded in economic theory. Risk measures have been developed by oth...

This paper researches the change in regional specialisation and industry concentration in South African (SA) manufacturing 1970-96, and evaluates possible determinants of industry location. No evident trend towards greater regional specialisation or despecialisation emerges over most of the period if we take the economic weight of the regions into...

This paper investigates the extent of the mark-up of the South African manufacturing sector, taking into account a number of characteristics of its component industries. We find significant mark-ups to be present in the South African manufacturing sector. In comparative terms, the mark-up is approximately twice that found for the US manufacturing s...

The paper is concerned with the growth impact and the determinants of foreign direct investment in South Africa. Estimation is in terms of a standard spillover model of investment, and in terms of a new model of locational choice in FDI between domestic and foreign alternatives. We find complementarity of foreign and domestic capital in the long ru...

The paper provides a first, systematic benchmarking of infrastructure performance in the Southern African Customs Union (SACU) countries (South Africa, Botswana, Lesotho, Namibia, and Swaziland) in four major sectors-electricity, water and sanitation, information and communication technology, and transportation-against the relevant group of compara...

Empirical explorations of the growth and productivity impacts of infrastructure have been characterized by ambiguous (countervailing signs) results with little robustness. A number of explanations of the contradictory findings have been proposed. These range from the crowd-out of private by public sector investment, non-linearities generating the p...

The paper uses 52-country panel-data for the period 1980-2002 to estimate demand for electricity and telecom services and, based on these estimates, project investment needs in South Africa through 2010 for two growth scenarios. Projections of average annual investment needs in electricity and telecom for the current growth scenario (3.6% per annum...

The authors use a panel-data set for the period 1980-2002 to estimate demand for electricity and telecommunications services and project investment needs in South Africa through 2010 for two growth scenarios. Projections of average annual investment needs in electricity and telecommunications for the current growth scenario (3.6 percent a year) are...

The paper provides a first systematic, comprehensive benchmarking of South Africa's infrastructure performance in four major sectors--electricity, water and sanitation, information and communication technology, and transportation--against the relevant group of comparator countries using a new World Bank international data base with objective and pe...

Productive public expenditure in the area of infrastructure (such as roads, transportation, and housing) can play an important role in promoting economic growth and encouraging private investment. Developments in endogenous growth theory introduce the possibility of a productive role for public expenditure. This paper seeks to explain the relations...

In this article we undertake a detailed exploration of the research and development activities in one particular middle-income country. We explore what the data from R&D surveys can tell us about the levels, the determinants and the effectiveness of R&D in the manufacturing sector. We point to some of the broader factors that may have influenced So...

Abstract The paper,takes stock of South Africa’s past growth,experience,during,the period 1970-2000. It discuses major factors of growth, including physical and human capital, and institutions, and draws conclusions about the constraints to long-run growth in the future. We highlight three main conclusions on physical capital and uncertainty, marke...

Our investigation of industry structure in South African manufacturing reveals evidence of imperfect competition. We find an average mark-up of 50% for the period 1970 to 2004. Results suggest that there is no consistent trend in the mark-up over time. This paper extends the analysis of industry structure by linking it to labour market flexibility....