scholarly journals Education and economic growth in South Africa: an empirical investigation

2020 ◽  
Vol 48 (1) ◽  
pp. 1-16
Author(s):  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Causal Relationship ◽  
Granger Causality ◽  
Bounds Testing ◽  
Content Type ◽  
Level Of Education ◽  
Causality Model ◽  
Ardl Bounds Testing Approach ◽  
Education And Economic Growth

PurposeThis paper examines the dynamic causal relationship between education and economic growth in South Africa using annual time-series data from 1986 to 2017. The study attempts to answer one critical question: Does education, which is one of the priority sectors in South Africa, drive economic growth?Design/methodology/approachThe study uses the ARDL bounds testing approach and ECM-based Granger causality model to examine this linkage. The study also uses three proxies to measure the level of education. In addition, the study uses two variables: investment and labour, as intermittent variables between the various proxies of education and economic growth, thereby creating a system of multivariate Granger-causality models.FindingsThe study finds that the causal relationship between education and economic growth in South Africa is dependent on the variable used to measure the level of education. In addition, the causality tends to change over time. Overall, the study finds the causal flow from economic growth to education to supersede the causal flow from education to economic growth.Originality/valueUnlike some previous studies, the current study uses three proxies of education in South Africa and two intermittent variables in a multivariate setting. To our knowledge, this may be the first study of its kind to examine in detail the dynamic causal relationship between education and economic growth in South Africa – using the ARDL bounds testing approach and a multivariate Granger causality model.

Research publications and economic growth in South Africa: an empirical investigation

2016 ◽  
Vol 43 (7) ◽  
pp. 662-675
Author(s):  
Nicholas M Odhiambo ◽  
Lydia Ntenga
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Causal Relationship ◽  
Series Data ◽  
Bounds Testing ◽  
Content Type ◽  
Research Publications ◽  
Long Run ◽  
Ardl Bounds Testing ◽  
Short Run

Purpose – The purpose of this paper is to examine the causal relationship between research publications and economic growth – using time-series data from South Africa. The paper attempts to answer two critical questions: is there a long-run relationship between research publications and economic growth in South Africa? Do research publications from South African researchers Granger-cause economic growth? Design/methodology/approach – Unlike some of the previous studies, the current paper uses a trivariate ECM-based Granger-causality model to examine this linkage. Specifically, the study incorporates education as an intermittent variable between research and economic growth. In addition, the paper uses the recently developed autoregressive distributed lag (ARDL)-bounds testing procedure, which has numerous advantages, especially when the sample size is small. Findings – The results of this study show that there is a long-run relationship between research publications and economic growth in South Africa. The results also show that there is a distinct causal flow from research publications to economic growth in South Africa. This applies both in the short-run and in the long-run. Other results also show that: there is a short-run bidirectional causality between research publications and education; and there is a short-run bi-directional causality between education and economic growth, but a long-run unidirectional causal flow from education to economic growth. Practical implications – The findings of this paper underscore the crucial role that research plays in economic growth and development. Overall, the findings of this study show that research in South Africa is pro-growth. This implies that the recent significant increase in government expenditure on research and innovation, which is aimed at increasing the country’s scientific research outputs, is likely to pay off. Originality/value – To the best of the authors’ knowledge, this paper is the first of its kind to examine in detail the dynamic causal relationship between research outputs and economic growth in South Africa – using the recently developed ARDL-bounds testing approach within a trivariate setting.

By applying an ARDL bounds testing approach and causality test to investigate the electricity consumption and production with economic growth

2019 ◽  
Vol 17 (2) ◽  
pp. 182-199 ◽  
Author(s):  
Abdul Rehman ◽  
Muhammad Irfan ◽  
Sehresh Hena ◽  
Abbas Ali Chandio
Keyword(s):  
Economic Growth ◽  
Electricity Consumption ◽  
Electricity Production ◽  
Bounds Testing ◽  
Causality Test ◽  
Content Type ◽  
Ardl Bounds Testing ◽  
Bounds Testing Approach ◽  
Testing Approach ◽  
Ardl Bounds Testing Approach

Purpose The purpose of this paper is to explore and investigate the electricity consumption and production and its linkage to economic growth in Pakistan. Design/methodology/approach The authors used an augmented Dickey–Fuller unit root test to check the stationarity of the variables, while an autoregressive distributed lag (ARDL) bounds testing approach and causality test were applied to investigate the variables long-term association with the economic growth. Findings The study results show that electricity consumption in the agriculture, commercial and industrial sector has significant association with economic growth, while electricity consumption in the household and street lights demonstrate a non-significant association with the economic growth. Furthermore, results also exposed that electricity production from coal, hydroelectric, natural gas, nuclear and oil sources have significant association with the economic growth of Pakistan. Originality/value This study made a contribution to the literature regarding electricity consumption and production with economic growth in Pakistan by using an ARDL bounds testing approach and causality test. This study provides a guideline to the government of Pakistan that possible steps are needed to improve the electricity production and supply to fulfill the country demand.

scholarly journals Is export-led growth hypothesis still valid for sub-Saharan African countries? New evidence from panel data analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Low Income ◽  
Middle Income ◽  
Content Type ◽  
Middle Income Countries ◽  
Stage Of Development ◽  
Panel Granger Causality ◽  
Causality Model ◽  
Ssa Countries

PurposeThis study examines the causal relationship between exports and economic growth in sub-Saharan African (SSA) countries during the period 1980 to 2017. The study also examines whether the causality between these two macroeconomic variables depends on the countries' stage of development as proxied by their per capita income.Design/methodology/approachThe study uses a panel cointegration test and panel Granger-causality model to examine the link between exports and growth. The study also incorporates external debt as an intermittent variable in a bivariate setting between exports and economic growth, thereby creating a dynamic multivariate panel Granger-causality model.FindingsAlthough the study found the existence of a long-run relationship between exports and economic growth, the study failed to find any export-led growth response in both low-income and middle-income countries. Instead, the study found evidence of a bidirectional causality and a neutrality response in middle-income and low-income countries, respectively. The study, therefore, concludes that the benefits of an export-led growth hypothesis may have been oversold, and that the strategy may not be desirable to some low-income developing countries.Practical implicationsThese findings have important policy implications as they indicate that the causality between exports and economic growth in SSA countries varies with the countries' stage of development. Consistent with the contemporary literature, the study cautions low-income SSA countries against over-relying on an export-led growth strategy to achieve a sustained growth path as no causality between exports and economic growth has been found to exist in those countries. Instead, such countries should consider pursuing new growth strategies by building the domestic demand side of their economies alongside their export promotion strategies in order to expand the real sector of their economies. For middle-income countries, the study recommends that both export promotion strategies and pro-growth policies should be intensified as economic growth and exports have been found to reinforce each other in those countries.Originality/valueUnlike the previous studies, the current study disaggregated the full sample of SSA countries into two subsets – one comprising of low-income countries and the other consisting of middle-income countries. In addition, the study uses a multivariate Granger-causality model in order to address the emission-of-variable bias. To our knowledge, this may be the first study of its kind in recent years to examine in detail the causal relationship between exports and economic growth in SSA countries using an ECM-based multivariate panel Granger-causality model.

scholarly journals Public debt and economic growth: contemporary evidence from a developing economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sam Kris Hilton
Keyword(s):  
Economic Growth ◽  
Causal Relationship ◽  
Granger Causality ◽  
Public Debt ◽  
Consumption Expenditure ◽  
Government Consumption ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
Investment Spending

Purpose Considering the continuous rise in the public debt stock of developing countries (particularly Ghana) with the unstable economic growth rate for the past decades and the recent borrowing because of the impact of COVID 19, this paper aims to examine the causal relationships between public debt and economic growth over time. Design/methodology/approach The paper uses a dynamic multivariate autoregressive-distributed lag (ARDL)-based Granger-causality model to test the causal relationships between public debt and economic growth [gross domestic product (GDP)]. Annual time-series data that spanned 1978–2018 were sourced from the World Bank Development Indicator database and the IMF fiscal Affairs Department Database and WEO. Findings The results reveal that public debt has no causal relationship with GDP in the short-run but there is unidirectional Granger causality running from public debt to GDP in the long run. Again, investment spending has a negative bi-directional causal relationship with GDP in the short-run but they have a positive bi-directional causal relationship in the long run. Conversely, no short-run causal relationship exists between government consumption expenditure and GDP but long-run Granger causality runs from government consumption expenditure to GDP. Finally, public debt has a positive impact on the inflation rate in the short run. Practical implications The findings imply that government(s) must ensure high fiscal discipline to serve as a precursor for the effective and efficient use of recent borrowing, that is, the loans should be used for highly prioritized projects (preferably investment spending) that are well evaluated and self-sustained to add positively to the GDP. Originality/value This paper provides contemporary findings to augment extant literature on public debt and economic growth by using variables and empirical models, which prior studies could not sufficiently cover in a developing country perspective and affirms that public debt contributes to GDP only in the long run.

Do fisheries and aquaculture production have dominant roles within the economic growth of Pakistan? A long-run and short-run investigation

2019 ◽  
Vol 121 (8) ◽  
pp. 1926-1935
Author(s):  
Abdul Rehman ◽  
Zhang Deyuan ◽  
Sehresh Hena ◽  
Abbas Ali Chandio
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Government Expenditure ◽  
Series Data ◽  
Bounds Testing ◽  
Content Type ◽  
Ardl Bounds Testing ◽  
Bounds Testing Approach ◽  
Testing Approach ◽  
Ardl Bounds Testing Approach

Purpose The purpose of this paper is to investigate and explore the connection between aquaculture and capture fisheries production and economic growth in Pakistan. Fisheries play an important role in Pakistan’s national economy, and Pakistan has sufficient fishery resources to be developed. Most of the population in the coastal areas depends on fisheries for their livelihood. Design/methodology/approach This research was based on time series data of aquaculture and capture fisheries production and the analysis of their relationship with economic growth in Pakistan. The study used an autoregressive distributed lag (ARDL) bounds testing approach to check the dynamic causality between the study variables. Findings The results showed that aquaculture and capture fisheries production have had a positive effect on the economic growth in Pakistan. Practical implications Better infrastructure for the fishing industry, increased government expenditure on facilities and financial support for the fish farmers could contribute to economic growth in the future. Recommendations for improvements in these areas have been made. Originality/value By using an ARDL bounds testing approach, this study contributes to the literature regarding fisheries production and economic growth in Pakistan.

scholarly journals Financial Development, Savings and Investment in South Africa: A Dynamic Causality Test

2017 ◽  
Vol 17 (3) ◽  
pp. 20170042 ◽  
Author(s):  
Brian Muyambiri ◽  
Nicholas Odhiambo
Keyword(s):  
South Africa ◽  
Causal Relationship ◽  
Granger Causality ◽  
Financial Development ◽  
Financial Sector ◽  
Policy Implications ◽  
Bounds Testing ◽  
Causality Test ◽  
Development Indicators ◽  
Financial Sector Development

This study investigates the causal relationship between financial development and investment in South Africa during the period from 1976 to 2014. The study incorporates both bank-based and market-based segments of financial sector development. In addition, composite indices for bank-based and market-based financial development indicators are used as explanatory variables. The study incorporates savings as an intermittent variable – thereby creating a simple trivariate Granger-causality model. Using the ARDL bounds testing approach to cointegration and the ECM-based Granger-causality test, the study finds a unidirectional causal flow from investment to financial development, but only in the short run. In the long run, the study fails to find any causal relationship between financial development and investment. These results apply irrespective of whether bank-based or market-based financial development is used as a proxy for financial sector development. The findings of this study have important policy implications.

scholarly journals Energy consumption and economic growth in Ethiopia: A dynamic causal linkage

2018 ◽  
Vol 29 (8) ◽  
pp. 1393-1412 ◽  
Author(s):  
Sheilla Nyasha ◽  
Yvonne Gwenhure ◽  
Nicholas M Odhiambo
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Granger Causality ◽  
Trade Openness ◽  
Bounds Testing ◽  
Policy Makers ◽  
Long Run ◽  
Short Run ◽  
Variable Bias ◽  
Causality Model

In this study, we have explored the causal relationship between energy consumption and economic growth in Ethiopia, during the period from 1971 to 2013. We have employed a multivariate Granger-causality framework that incorporates financial development, investment and trade openness as intermittent variables – in an effort to address the omission-of-variable bias. Based on the newly developed ARDL bounds testing approach to co-integration and the error-correction model-based causality model, our results show that in Ethiopia, there is a distinct unidirectional Granger-causality from economic growth to energy consumption. These results apply, irrespective of whether the estimation is done in the short run or in the long run. We recommend that policy makers in Ethiopia should consider expanding their energy-mix options, in order to cope with the future demand arising from the real sector growth.

Insurance market development and economic growth

2016 ◽  
Vol 43 (3) ◽  
pp. 321-339 ◽  
Author(s):  
Abdul Latif Alhassan
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Causal Relationship ◽  
Time Series Data ◽  
Insurance Market ◽  
Market Development ◽  
Series Data ◽  
African Countries ◽  
Content Type ◽  
Bound Test

Purpose – The purpose of this paper is to examine the causal relationship between insurance penetration and economic growth in eight selected African countries. Design/methodology/approach – The auto-regressive distributed lags bounds approach to cointegration is employed on annual time-series data from 1990 to 2010 to test the causal relationship between insurance and economic growth in Algeria, Gabon, Kenya, Madagascar, Mauritius, Morocco, Nigeria and South Africa. The ratio of life and non-life insurance premiums to gross domestic product are employed as proxies for insurance market development. Findings – The results of the bound test shows a long-run relationship between insurance market activities and economic growth for Kenya, Mauritius, Morocco, Nigeria and South Africa. Causality analysis within the vector error correction model indicates a uni-directional causality from insurance market development to economic growth except for Morocco where there is evidence of a bi-directional causality. Causality within the vector autoregressive framework also provides evidence of a uni-directional causality for Algeria and Madagascar to support the “supply-leading” hypothesis while mixed causality was found for Gabon. Practical implications – This findings provides policy direction for governments and regulatory authorities for developing insurance market in the sample countries. Originality/value – This is the first study to examine the finance-growth relationship from the perspective of insurance markets in a cross-section of African countries.

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