Africa-China investment and growth link

2018 ◽  
Vol 11 (2) ◽  
pp. 132-150 ◽  
Author(s):  
Isaac Koomson-Abekah ◽  
Eugene Chinweokwu Nwaba
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Policy Design ◽  
Granger Causality Test ◽  
Causality Test ◽  
Content Type ◽  
External Threats ◽  
Long Run ◽  
Macroeconomic Indicators ◽  
Short Run

PurposeThis paper aims to investigate China–Africa Investment link, using over two decades of FDI’s data. During the specified periods, African economic growth path has been predominantly upward trending, despite multiple external threats. This impressive growth was partly because of the growth of FDI stock across the region. This study explores the various sources of FDI to Africa, mainly China’s FDI’s and how they influence African macroeconomic indicators, i.e. unemployment, export and import activities.Design/methodology/approachPesaran autoregressive distributive lag (ARDL) is used as a framework to test the short-run and long-run relationship of indicators. Granger causality test checked the causality between growth and macroeconomic indicators.FindingsThe link between China’s FDI and African economic growth reported a negative/declining effect in both short and long run. In the long run, the effect of world FDI on growth was significant but not the in the short run. However, US FDI to Africa, China Export and Import from Africa reported an insignificant effect on growth. There was no evidence of Okun’s law, as a decrease in Africa unemployment does not increase growth. Overall, China’s FDI’s inflows to Africa are allocated to capital-intensive activities which has less labor employability. The Granger causality test reported a uni-directional link between growth and all series, except for human capital which experienced no link at all in all directions. Despite the issue of socio-infrastructure militating against growth in the region, African economy is likely to perform better, if more FDI’s are channeled into labor-intensive activities, because it has a reductive effect on unemployment.Research limitations/implicationsThe research considered point annual FDI data but not accumulated stock and is a macro-based study, i.e. regional economy.Practical implicationsThis paper bridged the literature gap in African investment performance by providing an empirical justification in understanding the inflow of FDI, especially China. This is a useful guard in policy design and implementations in the attraction of the right type of investment, so as to reduce unemployment and promote growth.Originality/valueThe authors confirm that this study has not been published elsewhere and is not under consideration in whole or in part by another journal.

The relationship between financial development and economic growth in Eswatini (formerly Swaziland)

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Siphe-okuhle Fakudze ◽  
Asrat Tsegaye ◽  
Kin Sibanda
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Financial Development ◽  
Granger Causality Test ◽  
Causality Test ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Relationship

PurposeThe paper examined the relationship between financial development and economic growth for the period 1996 to 2018 in Eswatini.Design/methodology/approachThe Autoregressive Distributed Lag bounds test (ARDL) was employed to determine the long-run and short-run dynamics of the link between the variables of interest. The Granger causality test was also performed to establish the direction of causality between financial development and economic growth.FindingsThe ARDL results revealed that there is a long-run relationship between financial development and economic growth. The Granger causality test revealed bidirectional causality between money supply and economic growth, and unidirectional causality running from economic growth to financial development. The results highlight that economic growth exerts a positive and significant influence on financial development, validating the demand following hypothesis in Eswatini.Practical implicationsPolicymakers should formulate policies that aims to engineer more economic growth. The policies should strike a balance between deploying funds necessary to stimulate investment and enhancing productivity in order to enliven economic growth in Eswatini.Originality/valueThe study investigates the finance-growth linkage using time series analysis. It determines the long-run and short-run dynamics of this relationship and examines the Granger causality outcomes.

scholarly journals TRADE OPENNESS AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM INDIA

2014 ◽  
Vol 16 (1) ◽  
pp. 188-205 ◽  
Author(s):  
Qazi Muhammad Adnan Hye ◽  
Wee-Yeap Lau
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Granger Causality ◽  
Trade Openness ◽  
Granger Causality Test ◽  
Causality Test ◽  
Long Run ◽  
Rolling Window ◽  
Short Run ◽  
The Impact

The main objective of this study is to develop first time trade openness index and use this index to examine the link between trade openness and economic growth in case of India. This study employs a new endogenous growth model for theoretical support, auto-regressive distributive lag model and rolling window regression method in order to determine long run and short run association between trade openness and economic growth. Further granger causality test is used to determine the long run and short run causal direction. The results reveal that human capital and physical capital are positively related to economic growth in the long run. On the other hand, trade openness index negatively impacts on economic growth in the long run. The new evidence is provided by the rolling window regression results i.e. the impact of trade openness index on economic growth is not stable throughout the sample. In the short run trade openness index is positively related to economic growth. The result of granger causality test confirms the validity of trade openness-led growth and human capital-led growth hypothesis in the short run and long run.

The Relevance of the Tourism-Led Growth Hypothesis to Malaysia

2017 ◽  
pp. 188-202 ◽  
Author(s):  
Chor Foon Tang ◽  
Eu Chye Tan
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Granger Causality Test ◽  
Developed Countries ◽  
Causality Test ◽  
Full Sample ◽  
Aggregated Data ◽  
Long Run ◽  
Short Run ◽  
Disaggregated Data

This paper explored whether the tourism-led growth (TLG) hypothesis is empirically relevant to Malaysia based upon both full sample and rolling sample analyses. Data from January 1995 to December 2010 have been utilised for the purpose. Instead of relying upon aggregated data of tourist arrivals, disaggregated data of arrivals from 12 major tourism markets are relied upon for more insightful and accurate findings. The empirical results suggest that there was cointegration between Malaysia's economic growth and tourist arrivals from these tourism markets. However, the results of the full sample Granger causality test indicate that only 2 out of 12 tourism markets contributed to economic growth in the short-run. The TLG hypothesis is only supported in the long run by tourist arrivals from 10 out of the 12 tourism markets. The rolling-based Granger causality test shows that it is also these 10 markets situated mostly in developed countries that could provide a stable support for the TLG hypothesis.

Does any nexus between electricity consumption and economic growth exist? Evidence from Haryana using VAR model

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kamaljit Singh
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Renewable Energy Sources ◽  
Electricity Consumption ◽  
Granger Causality Test ◽  
Economic Downturn ◽  
Causality Test ◽  
Content Type ◽  
Long Run ◽  
Per Capita

Purpose In the fast-changing technological environment, electricity is the essence of the world economy and a significant means for all the modern world’s possessions. The ongoing economic downturn focuses on energy’s role in the economy. This study aims to explore the nexuses between per capita electricity usage and per capita state gross domestic product (SGDP) in Haryana, India. Design/methodology/approach The statistics from 1989 to 2015 have been analyzed using Johansen cointegration, vector autoregression and paired Granger-causality test. Findings The Granger causality test results show that a long-run association is absent. A short-run unidirectional relationship runs from per capita SGDP to per capita electricity usage. Practical implications As a policy suggestion, the policymakers may encourage energy conservation measures and renewable energy sources to lead the country’s sustainable energy supply. Moreover, Haryana can increase its influence in this sector and enter rapidly in the growing markets worldwide by stimulating the production and adoption of digital solutions for energy efficiency. Originality/value To the best of the author’s awareness, this research is one of its nature regarding systematically analyzing electricity usage and economic growth relationship in Haryana.

scholarly journals Economic Growth, Domestic Investment, Real Exchange Rate and Trade Openness in India: A multi-cointegration analysis

2016 ◽  
Vol 12 (3) ◽  
pp. 169-184
Author(s):  
Md. Samsur Jaman
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Granger Causality ◽  
Trade Openness ◽  
Granger Causality Test ◽  
Domestic Investment ◽  
Causality Test ◽  
Long Run ◽  
Short Run

This study examines the relationships between economic growth, gross domestic investment, real exchange rate and trade openness in Indian Economy using the Johansen –Juselius cointegration test and VEC Granger causality test. The results suggest that there exists a long-run relationship among the variables. All the estimated coefficients of the long-run equation have the correct positive signs and significant at least at the 5 per cent level. Specifically, in the long run, a 1% increase in Gross Domestic Investment (GDI) increases 0.066% in economic growth. Similarly, a 1% increase in trade openness leads to 0.082% increase in economic growth and a 1% increase in real exchange rate leads to 0.26% increase in economic growth. Thus, in the long run, Gross Domestic Investment (GDI), trade openness and real exchange rate have positively impact on economic growth. The results from the VEC Granger causality test suggest that in the short run only economic growth has short run impact on Gross Domestic Investment (GDI). The other variables have no short run impact on each other. Thus, there is a unidirectional causality from economic growth to GDI, but there is no feedback effect.

scholarly journals The Causal Relationship Between Institutions and Economic Growth: An Empirical Investigation for Pakistan Economy

2019 ◽  
Vol 5 (1) ◽  
pp. 1 ◽  
Author(s):  
Danish Ahmed Siddiqui ◽  
Qazi Masood Ahmed
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Economic Performance ◽  
Empirical Investigation ◽  
Institutional Quality ◽  
Granger Causality Test ◽  
Causality Test ◽  
Long Run ◽  
Study Results ◽  
Short Run

This paper investigates relationship between institutional quality and economic performance in Pakistan using the Johansen-Juselius cointegration technique and the Granger causality test. The study results indicate that Institutions and growth are cointegrated and thus exhibit a reliable long run relationship. The Granger causality test findings indicate that the causality between Institutions and growth is uni-directional.However, there is no short run causality from Institutions to growth and vice versa. Therefore, as a policy implication that institutional quality may cause to the sustainable increase in country’s income in the long run, and success of any policy could be influenced by the soundness of institutions.

Relationships between Financial Development, Trade Openness, and Economic Growth

2015 ◽  
pp. 183-196
Author(s):  
Fahri Seker ◽  
Murat Cetin ◽  
Birol Topcu ◽  
Gamze Yıldız Seren
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Financial Development ◽  
Trade Openness ◽  
Granger Causality Test ◽  
Bounds Testing ◽  
Causality Test ◽  
Vector Error Correction ◽  
Long Run ◽  
Short Run

The aim of this chapter is to investigate the cointegration and causal relationship between financial development, trade openness, and economic growth in Turkey for the period of 1980-2012. To analyze the data, the bounds testing and Johansen-Juselius approaches to cointegration and Granger causality test based on vector error-correction model are employed. The cointegration tests suggest that there is a long-run relationship between the variables. The Granger causality test reveals long-run bidirectional causality between trade openness and economic growth. The findings also indicate unidirectional causality running from financial development to trade openness and economic growth in the long run as well as a bi-directional causality between financial development and economic growth in the short run. The results support supply-leading and trade-led growth hypotheses. Therefore, it can be suggested that Turkey can accelerate its economic growth by improving its financial systems and encouraging foreign trade.

Cointegration and Causality between Disaggregated Exports and Economic Growth in ASEAN-4 Nations

2021 ◽  
Vol 12 (3) ◽  
pp. 633-645
Author(s):  
Shahrun Nizam Abdul-Aziz Et.al
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Time Series Data ◽  
Granger Causality Test ◽  
The Philippines ◽  
Series Data ◽  
Causality Test ◽  
Long Run ◽  
Short Run ◽  
Manufactured Exports

This study aimed to examine the relationship between ASEAN-4’s disaggregates exports (i.e., manufactured and primary exports) and economic growth by utilising the time series data over the period from 1982 to 2017. The Johansen-Juselius multivariate procedure was performed to determine the existence of the long-run relationship between variables, while the Granger causality test within VECM was applied to analyse the long-run and short-run causal directions. Prior to that, the unit root test was conducted to examine the series properties of the variables. The empirical results from the Johansen and Juselius Multivariate Cointegration test revealed that there were long-run equilibrium relationships among variables, while the Granger causality test based on VECM found that the ELG hypothesis for manufactured exports was valid for Indonesia in the long-run and short-run, while in the Philippines this hypothesis was only valid for the short-run. On the other hand, in the case of Malaysia and Thailand, both ELG and GLE hypotheses were valid in both long-run and short-run. For each ASEAN-4 nation the results also revealed that physical capital indirectly caused economic growth via the manufactured exports. Nevertheless, in the case of Malaysia and Thailand, it seemed that the reserve effect was likely to happen whereby the economic growth caused the growth of manufactured exports through the increase of the national production. The growth of the manufactured exports due to the reverse effect in turn caused the demand for imports to increase, particularly the imports of intermediate products. As far as the primary exports were concerned, the ELG hypothesis was valid for Thailand in both long-run and short-run, while for Malaysia and Indonesia, this hypothesis was valid respectively in the long-run and short-run. For Thailand, Indonesia and Malaysia, it appeared that in the short run, human capital indirectly stimulated economic growth via primary exports.

Does transportation infrastructure impact economic growth in India?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sreenu Nenavath
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Positive Impact ◽  
Transport Infrastructure ◽  
Causality Test ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
Determinants Of Economic Growth

Purpose This paper aims to show a long run and causal association between economic growth and transport infrastructure. Design/methodology/approach In this study, the authors use ARDL models through the period 1990 – 2020 to investigate the relationship between transport infrastructure and economic growth in India. Findings The infrastructure has a positive impact on economic growth in India for the long run. Moreover, Granger causality test demonstrates a unidirectional relationship between transport infrastructure to economic development. Stimulatingly, the paper highlights the effect of air infrastructure statistically insignificant on economic growth in the long and short-run period. Originality/value The original outcome from the study delivers an inclusive depiction of determinants of economic growth from transport infrastructure in India, and these findings will help the policymakers to frame policies to improve the transport infrastructure. Hence, it is proposed that the government of Indian should focus more to upsurge the transport infrastructure for higher economic development.

Does Ban on Futures trading (de)stabilise spot volatility?

2019 ◽  
Vol 9 (2) ◽  
pp. 145-166 ◽  
Author(s):  
Neharika Sobti
Keyword(s):  
Granger Causality ◽  
Price Discovery ◽  
Futures Trading ◽  
Causality Test ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
The Impact ◽  
Spot Volatility ◽  
Non Parametric

Purpose The purpose of this paper is to ascertain the possible consequences of ban on futures trading of agriculture commodities in India by examining three critical issues: first, the author explores whether price discovery dominance changes between futures and spot in the pre-ban and post-relaunch phase both in the long run and short run. Second, the author examines the impact of ban and relaunch of futures trading on its underlying spot volatility for five sample cases of agriculture commodities (Wheat, Sugar, Soya Refined Oil, Rubber and Chana) using both parametric and non-parametric tests. Third, the author revisits the destabilization hypothesis in the light of ban on futures trading by examining the impact of unexpected component of liquidity of futures on spot volatility. Design/methodology/approach The author uses widely adopted methodology of co-integration to examine long-run relationship between spot and futures, while the short-run relationship is investigated using vector error correction model (VECM) and Granger causality to test price discovery in the pre-ban and post-relaunch phases. The second objective is explored using a combination of parametric and non-parametric tests such as Welch one-way ANOVA and Kruskal–Wallis test, respectively, to gauge the impact of ban on futures trading on spot volatility along with post hoc tests to investigate pairwise comparison of spot volatility among three phases (pre-ban, ban and post-relaunch) using Dunn Test. In addition, extensive robustness test is undertaken by adopting augmented E-GARCH model to ascertain the impact of ban and relaunch of futures trading on spot volatility. The third objective is investigated using Granger causality test between spot volatility and unexpected component of liquidity of futures estimated using Hodrick and Prescott (HP) filter to re-visit the destabilization hypothesis. Findings The author found extensive evidence for the dominance of futures market in the price discovery of agriculture commodities both in the pre-ban and post-relaunch phases in India. The ban on futures trading is found to have a destabilizing impact on spot volatility as evident from the findings of Wheat, Sugar and Rubber. In addition, it is observed that spot volatility was highest during the ban phase as compared to the pre-ban and post-relaunch phases for all four commodities barring Chana. The author found that destabilisation hypothesis holds true during the pre ban phase, while weakening of destabilization hypothesis is observed in the post-relaunch phase as unexpected futures liquidity has no role in driving the spot volatility. Originality/value This study is a novel attempt to empirically examine the potential impact of ban and relaunch of futures trading of agriculture commodities on two key market quality dimensions – price discovery and spot volatility. In addition, destabilization hypothesis is revisited to investigate the impact of futures trading on spot volatility during the pre-ban and post-relaunch period.

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