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The author wishes to acknowledge Prof. Xavier Sala-i-Martin’s (Economics Faculty, Columbia University) interesting work that inspired me to write this paper as an alternative view; and Mr. Anupam Basu (Deputy Director, African Department of the IMF) for a very useful analytical suggestion and, in particular, for his encouragement.
The fact that fewer SSA countries were covered in the Deininger and Squire dataset (24) than in the 2003 WDI (30) may be due to belated additions to WDI data since the mid-1990s, when, presumably, the Deininger and Squire dataset was put together. Such belated additions may underscore unspecified problems of statistical consistency.
Nigeria is Africa’s most populous country, with about 18 percent of the continental population. We estimate that it may have represented 37 percent of the combined populations of the countries with data that served as the basis for extrapolations to the SSA countries for which there were no data.
A body of literature on “benefit incidence” discusses who benefits from public spending policies. A recent piece by Davoodi, Tiongson, and Asawanuchit (2003) provides a comprehensive reference on this topic.
This formulation simplifies the fact that social spending will improve certain social indicators only after long lags (literacy rates for example). However, in other cases (immunization rates and school enrollment ratios), indicators improve, by definition, at the time the public good is provided.
Using the Deininger and Squire (1996) dataset would allow additional observations, but these would not be consistent with the more recent observations available for some countries in the World Development Indicators (World Bank, 2003). We also chose to use only one (the most recent) data point for each country, to avoid biasing the results by giving more weight to the countries that had more than one data point.