Foreign aid and growth nexus: empirical evidence from South Asian countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nihar Ranjan Jena ◽  
Narayan Sethi
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
South Asian ◽  
Least Square ◽  
Asian Countries ◽  
Content Type ◽  
Ordinary Least Square ◽  
Asian Region ◽  
Long Run ◽  
Short Run

PurposeThe purpose of this paper is to empirically examine the effectiveness of foreign aid in improving economic growth prospects in the South Asian region from 1996 to 2017.Design/methodology/approachA sample of eight South Asian countries for the period 1996–2017 is being considered for this study. This study uses various econometrics tools such as Pedroni and Johansen–Fisher panel cointegration test, panel fully modified ordinary least square and panel dynamic ordinary least square (PDOLS) to ascertain the long-run and short-run dynamics among the variables under consideration.FindingsThe empirical results found that long-run, as well as the short-run relationship, exist among foreign aid, economic growth, investment, financial deepening, price stability and trade openness of the South Asian economies. The authors also found unidirectional causality running from foreign aid to economic growth. Both the long-run relationship as well as short-run causality between foreign aid and economic growth is unequivocally positive.Originality/valueThis study uses a dynamic macroeconomic modeling framework to assess the impact of aid flows on economic growth in South Asian economies. Taking into account the diversity of level of growth experienced by the eight countries in the Asian region, this study uses an appropriate regression technique, i.e. PDOLS whose results are robust. Therefore, the policymakers in these countries are well-advised to implement suitable policy measures to ensure optimum utilization of foreign capital resources garnered by way of receipt of foreign aid and build on for stronger future economic growth.

The short-run and long-run dynamics among FDI, trade openness and economic growth: using a bootstrap ARDL test for co-integration in selected South Asian countries

2020 ◽  
Vol 9 (2) ◽  
pp. 279-295 ◽  
Author(s):  
Hummera Saleem ◽  
Malik Shahzad Shabbir ◽  
Muhammad Bilal khan
Keyword(s):  
Economic Growth ◽  
Sri Lanka ◽  
Causal Relationship ◽  
South Asian ◽  
Trade Openness ◽  
Asian Countries ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
Auto Regressive

PurposeThe purpose of this study is to analyze the dynamic causal relationship between foreign direct investment (FDI), gross domestic product (GDP) and trade openness (TO) on a set of five selected South Asian countries.Design/methodology/approachThis study used newly developed bootstrap auto regressive distributed lags (ARDL) cointegration test to examine the long-run relationship among FDI, GDP and TO for selected South Asian countries for 1975–2016.FindingsThe economic growth (EG) is significantly related to TO for Bangladesh, India and Sri Lanka and the expansion of TO is crucial for growth in these countries. The results show that all countries (except Bangladesh) found the existence of long-run cointegration between FDI, GDP and TO, whereas FDI is a dependent variable. These results concluded that FDI and TO are contributing to EG in these selected countries.Originality/valueThis study is one of the first attempts to investigate the causal relationship and address the short and long dynamic among FDI, GDP and TO regarding five south Asian countries such as Bangladesh, India, Nepal, Pakistan and Sri Lanka.

Does inward remittance lead to export performance in South Asian countries?

2019 ◽  
Vol 47 (2) ◽  
pp. 145-172 ◽  
Author(s):  
Nihar Ranjan Jena ◽  
Narayan Sethi
Keyword(s):  
Granger Causality ◽  
South Asian ◽  
Export Performance ◽  
Panel Cointegration ◽  
Asian Countries ◽  
Modeling Framework ◽  
Content Type ◽  
Asian Region ◽  
Long Run ◽  
Short Run

Purpose The purpose of this paper is to empirically investigate whether inward remittance leads to export performance in selected South Asian economies over the time period of 1993–2017. Design/methodology/approach The stationarity of the variables is checked by Levin, Lin and Chu t, Breitung t-stat., Im, Pesaran and Shin W-stat., ADF–Fisher and Philips–Perron–Fisher panel unit root tests. Panel Granger Causality is used to verify the short-run causality. Pedroni’s, Kao’s and Johansen–Fisher panel cointegration approaches are employed to examine the long-run relationship among the variables. Panel VECM is used to confirm the existence of a long-run relationship among the variables. Findings Panels FMOLS and DOLS show that remittance inflows have negatively impacted the export performance of the selected South Asian countries during the study period. Granger Causality and VECM test confirm the existence of short-run and long-run relationship among the variables. The authors conclude that inward remittance is affecting export performance negatively during the study period. Furthermore, inward remittances occupy a major source of development finance for selected South Asian countries. Originality/value The study uses a dynamic macroeconomic modeling framework to assess the inward remittance on export performance in South Asian countries. Taking into account the diversity of the level of growth experienced by the five countries in the Asian region, the study uses an appropriate regression technique, i.e. panel dynamic OLS whose results are robust. As exports are a proven way to further economic growth, this study fills a vital gap in the literature by ascertaining the degree of impact of remittances in influencing outbound exports from the South Asian region.

Role of demographic factors in economic growth of South Asian countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kashif Munir ◽  
Faqeer Syed Umaid Shahid
Keyword(s):  
Economic Growth ◽  
Life Expectancy ◽  
South Asian ◽  
Demographic Factors ◽  
Fertility Rate ◽  
Dependency Ratio ◽  
Asian Countries ◽  
Content Type ◽  
Long Run ◽  
Short Run

PurposeThis study examines the long-run and short-run impact of demographic factors, i.e. life expectancy, fertility rate and young dependency ratio in determining the economic growth of South Asian countries.Design/methodology/approachThe theoretical foundation of the study relies on demographic transition theory and incorporates life expectancy, fertility rate and young dependency ratio into the production function by means of human capital component. The study uses annual panel data of four South Asian courtiers, i.e. Bangladesh, India, Pakistan and Sri Lanka from 1980 to 2018 and utilizes panel ARDL model to analyze the long run and short run impact of demographic factors on economic growth.FindingsResults show that real stock of capital, fertility rate and life expectancy are positively related with economic growth, while an increase in young dependency ratio reduces economic growth in South Asian countries in the long run. Short-run dynamics show that real stock of capital and life expectancy have insignificant impact on economic growth, while young dependency ratio has negative and significant as well as life expectancy has positive and significant impact on economic growth in South Asian countries. Unidirectional causality exists from young dependency ratio and fertility rate to GDP per capita in the short run.Practical implicationsGovernment has to design policies for better health and education facilities to yield high economic growth as well as better infrastructure and macroeconomic stability to facilitate capital accumulation in the region to foster economic growth.Originality/valueThis study considerably adds into the existing literature by providing better understanding of various demographic aspects and their economic inference by highlighting the demographic changes that South Asia has endured. This study is also beneficial for policymakers and growth analysts in generating effective and sustainable policies regarding population dynamics and economic development of the region.

scholarly journals Banking Sector Development, Inflation and Economic Growth in Asian Countries: A Panel Causality and Co-Integration Approach

2018 ◽  
Vol 8 (4) ◽  
pp. 384
Author(s):  
Muhammad Imran Nazir ◽  
Rehana Tabassam ◽  
Ifran Khan ◽  
Muhammad Rizwan Nazir
Keyword(s):  
Economic Growth ◽  
Banking Sector ◽  
Vital Role ◽  
Least Square ◽  
Policy Implications ◽  
Asian Countries ◽  
Ordinary Least Square ◽  
Long Run ◽  
Banking Sector Development ◽  
Integration Test

This study investigates the causal relationship between banking sector development, inflation, and economic growth for six Asian countries (Bangladesh, China, India, Malaysia, Pakistan and Sri Lanka) over the period of 1970-2016. Using a Pedroni panel, Kao co-integration test, Panel Granger causality-based Error Correction Model, Dynamic ordinary least square (DOLS), and Fully modified ordinary least square (FMOLS), this study finds that the development of the banking sector generally has a positive relationship with economic growth in the long-run. This results show that in the long-run, monetary policy play a vital role in the economic growth. This study also confirmed the response causality between the indicators of banking sector development and economic growth. Based on the empirical findings, this research provides important policy implications to the banking sector and economic supervisory bodies in order to achieve the long run economic growth.

scholarly journals Impact of Exchange Rate Management on the Nigerian Economic Growth: Empirical Validation

2019 ◽  
Vol 1 (2) ◽  
pp. 28-35
Author(s):  
Friday Osaru Ovenseri Ogbomo ◽  
Precious Imuwahen Ajoonu
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Inflation Rate ◽  
Government Expenditure ◽  
Least Square ◽  
Ordinary Least Square ◽  
Exchange Rate Management ◽  
Long Run ◽  
Short Run ◽  
The Impact

This paper examined the impact of Exchange Rate Management on economic growth in Nigeria between 1980 and 2015. The study was set to gauge how the management of exchange rate in Nigeria has impacted the economy. The study employed the Ordinary Least Square (OLS) method in its analysis. Co-integration and Error Correction Techniques were used to establish the Short-run and Long-run relationships between economic growth and other relevant economic indicators. The result revealed that exchange rate management proxy by various exchange rates regimes in Nigeria was not germane to economic growth. Rather, government expenditure, inflation rate, money supply and foreign direct investment significantly impact on economic growth in Nigeria. It is against this backdrop that the Nigerian economy must diversify her export base to create room for more inflow of foreign exchange.  

Factors affecting level of unemployment in South Asia

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aiza Shabbir ◽  
Shazia kousar ◽  
Muhammad Zubair Alam
Keyword(s):  
South Asian ◽  
Unemployment Rate ◽  
Significant Relationship ◽  
Good Governance ◽  
Asian Countries ◽  
Economic Variables ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
The Government

PurposeThis study aims to investigate the short-run and long-run relationship between economic variables and the unemployment rate in South Asian countries.Design/methodology/approachA panel Vector Error Correction (VECM) model is used to establish the long-run and the short-run relationship between unemployment rate and selected economic variables. Data were collected from WDI, WGI and FDSD for the year's 1994–2016.FindingsThe finding of the study showed a negative and significant relationship at the 5% level of significance among governance, internet users, mobile cellular subscriptions, fixed broadband subscriptions and human capital with an unemployment rate of South Asian economies. On the other hand, financial activity (credit) and population growth have a positive and significant relationship with the unemployment rate.Research limitations/implicationsIn the light of our findings clear that employment problems can only be created if the government does not put in place adequate measures to control the population and allocate resources equitably, giving a sense of belonging to all citizens. Therefore, to provide the controlled population with the necessary employment opportunities, it is necessary to allocate resources efficiently and to launch projects aimed at creating jobs.Practical implicationsTransparency or merit is the basis of good governance and the very first step to achieving the goal of good governance is to fight against corruption. It provides a complete justification for providing good quality management records, financial controlling and managerial systems.Originality/valueThe connections between governance and unemployment are complex and need to be studied in a detailed manner. There is the absence of literature that strongly interfaces good governance to unemployment; the fundamental work in this regard is Farid (2015). They locate a solid relationship between good governance and improving external debt situation by in Pakistan a time series analysis. But there is no research in the context of South Asian countries between governance and unemployment.

scholarly journals Energy consumption and economic growth in Nigeria

2019 ◽  
Vol 1 (2) ◽  
pp. 01-09
Author(s):  
Emeka Nkoro ◽  
Nenubari Nenubari Ikue-John ◽  
God’sgrace I. Joshua
Keyword(s):  
Economic Growth ◽  
Renewable Energy ◽  
Energy Consumption ◽  
Least Square ◽  
Electricity Production ◽  
Ordinary Least Square ◽  
Long Run ◽  
Production And Distribution ◽  
Short Run ◽  
The Impact

This paper investigated this disparity in the literature using Nigeria data from 1980 to 2016. In doing this, energy consumption was disaggregated, and their impacts on economic growth investigated using a modified Ordinary Least Square technique which allows for time gaps in the model. It was observed that only renewable energy impacted on economic growth in the long-run whereas non-renewable energy component impacted on economic growth in the short-run. Therefore, the study sees the impact of energy consumption on economic growth to be indistinct in Nigeria within the period under review. This further buttresses the need for improvement in electricity production and distribution in Nigeria. Given the importance of energy consumption on productivity, the study, therefore, suggests policies/measures that will bring about increasing the supply or improvement of energy production in the country.

scholarly journals Does Monetary Policy Affect Economic Growth in Jordan? Evidence from Ordinary Least Square Models

2018 ◽  
Vol 12 (1) ◽  
pp. 27
Author(s):  
Mohamed Ibrahim Mugableh
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Positive Impact ◽  
Least Square ◽  
Vector Error Correction ◽  
Ordinary Least Square ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Short Run

The main objective of this paper is to analyze equilibrium and dynamic causality relationships between monetary policy tools and economic growth in Jordan for the period (1990-2017). For this purpose, it considers the autoregressive distributed lag (ARDL) and vector error correction (VEC) models estimations. The results of ARDL approach show that monetary policy variables (i.e., real interest rate and money supply) have positive impact on economic growth in long-run and short-run except inflation rate. In addition, the results of VECM indicate bidirectional causal relationships between economic growth and monetary policy variables in long-run and short-run.

Dynamic inter-linkage between foreign aid and economic growth in Sri Lanka

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahamed Lebbe Mohamed Aslam ◽  
Sabraz Nawaz Samsudeen
Keyword(s):  
Economic Growth ◽  
Data Analysis ◽  
Sri Lanka ◽  
Foreign Aid ◽  
Correction Term ◽  
Causality Test ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
Test Result

PurposeThe objective of this study is to explore the dynamic inter-linkage between foreign aid and economic growth in Sri Lanka over the period of 1960–2018.Design/methodology/approachBoth exploratory and inferential data analysis tools have been employed to examine the objective of this study. The exploratory data analysis covered the scatter plots, confidence ellipse with kernel fit. The inferential data analysis included the augmented Dickey–Fuller (ADF) and Phillips–Perron (PP) unit root tests, the autoregressive distributed lag (ARDL) Bounds co-integration technique and the Granger causality test.FindingsThe test result of exploratory data analysis indicates that there is a positive relationship between foreign aid and economic growth. The ADF and PP unit root tests results indicate that the variables used in this study are stationary at their 1st difference. The co-integration test result confirms the presence of long-run relationship between foreign aid and economic growth in Sri Lanka. The estimated coefficient of foreign aid in the long-run and the short-run shows that foreign aid has a positive relationship with economic growth in Sri Lanka. The estimated coefficient of error correction term indicates that approximately 26.6% of errors are adjusted each year and further shows that the response variable of economic growth moves towards the long-run equilibrium path. The Granger causality test result shows that foreign aid in short-run Granger causes economic growth in Sri Lanka which means that one-way causality from foreign aid to economic growth is confirmed. Further, the estimated coefficient of error correction term confirms that there is the long-run Granger causal relationship between foreign aid and economic growth in Sri Lanka.Practical implicationsThe findings of this study have some important policy implications for the design of efficient policy related to foreign aid and economic growth, the knowledge of which will help follow sustainable foreign aid and growth nexus.Originality/valueThis study contributes to the existing literature by using the newly introduced ARDL Bounds cointegration technique to investigate the dynamic inter-linkage between foreign aid and economic growth in Sri Lanka.

Foreign aid and economic growth in sub-Saharan Africa

2019 ◽  
Vol 11 (1) ◽  
pp. 147-168 ◽  
Author(s):  
Nihar Ranjan Jena ◽  
Narayan Sethi
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
Sub Saharan Africa ◽  
Cointegration Test ◽  
Modeling Framework ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
Sub Saharan ◽  
The Impact

Purpose The purpose of this paper is to empirically examine the effectiveness of foreign aid in improving economic growth prospects in the sub-Saharan Africa (SSA) region from 1993 to 2017. Design/methodology/approach A sample of 45 SSA countries for the period 1993–2017 is considered for this study. The study uses various econometrics tools such as Pedroni and Kao’s cointegration test, Johansen-Fisher Panel cointegration test, FMOLS and PDOLS in order to ascertain the long-run and short-run dynamics among the variables under consideration. Findings The empirical results find that long-run and short-run relationships exist among foreign aid, economic growth, investment, financial deepening, price stability and trade openness of the SSA economies. The authors also find unidirectional causality running from foreign aid to economic growth. The policymakers in these countries are well-advised to implement suitable policy measures to build on the growth momentum created by foreign aid inflows. Originality/value The study uses a dynamic macroeconomic modeling framework to assess the impact of aid flows on economic growth in the SSA region. Taking into account the diversity of level of growth experienced by the 45 countries in the region, the study uses an appropriate regression technique, i.e., panel dynamic OLS whose results are robust. The finding is also supported by the Granger-causality test and robust cointegration techniques.

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