scholarly journals Natural Resources and the Economic Growth of West Africa Economies

2021 ◽  
Vol 8 (2) ◽  
pp. 20
Author(s):  
Michael Asiedu ◽  
Ebenezer Nana Yeboah ◽  
David Owusu Boakye
Keyword(s):  
Economic Growth ◽  
West Africa ◽  
Natural Resources ◽  
Oil And Gas ◽  
Correction Term ◽  
Negative Relationship ◽  
Mineral Resources ◽  
Significance Level ◽  
Long Run ◽  
Short Run

In this study, we employed the pooled mean group (PMG) regression to examine the effect of natural resources economic rent (coal rent, gas rent, oil rent, forest rent, minerals rent) and foreign direct investment (FDI) on economic growth in West Africa for the period 1996 to 2017. We found strong evidence of a positive relationship between FDI, total natural resources (TNR), total natural gas (TNG), and economic growth in the long-run. However, the study recorded a negative relationship between mineral resources rent, oil rent and gas rent, and economic growth in the long run. The rent from coal also exhibited neutrality on economic growth. While all the short-run coefficients are not statistically significant, the error correction term (ECT) is significant and a negative value of -0.889, signifying cointegration at a 1% significance level. This also implies that the short-run estimates converge towards the long-run estimates to achieve equilibrium at the speed of 89% per annum. Our findings highlight the significance of FDI and total rent from natural resources in stimulating West African economies' growth in the industrialization drive and general welfare. In contrast, this study also highlights the need for policy direction to redesign and realign ownership in the oil and gas sector from multinational co-operations (MNCs) to the locals and the domestic economy to benefit directly from the prevailing environment.

scholarly journals Implications of Governance, Natural Resources, and Security Threats on Economic Development: Evidence from Sub-Saharan Africa

2021 ◽  
Vol 18 (12) ◽  
pp. 6236
Author(s):  
Husam Rjoub ◽  
Chuka Uzoma Ifediora ◽  
Jamiu Adetola Odugbesan ◽  
Benneth Chiemelie Iloka ◽  
João Xavier Rita ◽  
...  
Keyword(s):  
Economic Development ◽  
Natural Resources ◽  
Causal Effect ◽  
Sub Saharan Africa ◽  
Security Threats ◽  
African Countries ◽  
Significance Level ◽  
Long Run ◽  
Short Run ◽  
Sub Saharan

Sub-Saharan African countries are known to be bedeviled with some challenges hindering the economic development. Meanwhile, some of these issues have not been exhaustively investigated in the context of the region. Thus, this study aimed at investigating the implications of government effectiveness, availability of natural resources, and security threats on the regions’ economic development. Yearly data, spanning from 2007 to 2020, was converted from low frequency (yearly) to high frequency (quarterly) and utilized. Data analysis was conducted using Dynamic heterogeneous panel level estimators (PMG and CS-ARDL). Findings show that while PMG estimator confirms a long-run causal effect of governance, natural resources, and security threats on economic development, only natural resources show a short-run causal effect with economic development, while the CS-ARDL (model 2) confirms the significance of all the variables both in the long and short-run. Moreover, the ECT coefficients for both models were found to be statistically significant at less than 1% significance level, which indicates that the systems return back to equilibrium in case of a shock that causes disequilibrium, and in addition, reveals a stable long-run cointegration among the variables in the model. Finally, this study suggests that the policy makers in SSA countries should place more emphasis on improving governance, managing security challenges, and effectively utilizing rents from the natural resources, as all these have severe implications for the economic development of the region if not addressed.

Money Supply-Economic Growth Nexus: Evidence from a Landlocked Country

2020 ◽  
Vol 2 (1) ◽  
pp. 106-115
Author(s):  
Tilak Singh Mahara
Keyword(s):  
Economic Growth ◽  
Money Supply ◽  
Correction Term ◽  
Policy Instruments ◽  
Special Role ◽  
Real Gdp ◽  
Long Run ◽  
Ardl Approach ◽  
Short Run ◽  
The Impact

Background: There is special role of money in the economy due to its astonishing importance as change in the amount of it can have a significant effect on the major macroeconomic variables. Money supply is generally considered as policy-determined phenomenon. Like in all the nations, macroeconomic stability of Nepal also depends on the variation in the quantity of money. Objective: The principle objective of the study is to examine the impact of money supply on the economic growth of Nepal. Methodology: This study applies the ARDL approach to cointegration. Bounds test (F-version) has been carried out to determine the existence of long-run relationship between variables. Results: The empirical results pointed out that there is positive and significant long-term relationship between money supply and real economic growth in Nepal. Causality result reveals that there is unidirectional causality from money supply (M2) to Real GDP. The error correction term is found negative and statistically significant suggesting a correction of short-run disequilibrium within two and a half years. Conclusions: The study concludes that increase in the money supply helps to increase the real economic growth in Nepal. So, money supply and real GDP are associated in the long-run.  Implications: The implication of the study is that, real economic growth in Nepal can be achieved if Nepal Rastra Bank emphasized on monetary policy instruments which help to increase the flow of money supply both in the short and long run.

scholarly journals Public Debt and Economic Growth in Niger: An Autoregressive Distributed Lag Approach

2020 ◽  
Vol 1 (2) ◽  
pp. 56-65
Author(s):  
Issoufou Oumarou
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Unit Root Test ◽  
Annual Data ◽  
African Countries ◽  
Policy Makers ◽  
Significance Level ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run

Purpose: The aim of the paper is to examine the existence or not of a long run or a short run relationship between public debt and economic in Niger and investigate the significance of this relationship. Approach/Methodology/Design: The study first applied time series econometrics tests such as Augmented Dickey-Fuller (ADF) unit root test, Bound cointegration test and Auto Regressive Distributed Lag (ARDL) on annual data obtained from the International monetary fund (IMF) and the West African States Central Bank (BCEAO). The observations cover the period from 1970 to 2019. The study then performed some residual tests including serial correlation, normality and heteroskedasticity for the accuracy of the prediction of the model. Findings: The empirical results showed no long run relationship between public debt and economic growth in Niger. The short run analysis revealed that public debt and budget balance have short run causal effects on economic growth in Niger. The coefficients are significant at 10% significance level. Practical Implications: This article gives valuable information to Niger policy makers regarding the effects of public debt on Niger economic growth. The article highlights the effects that public debt has on economic growth in Niger in the short and long run. Therefore helping policy makers decide whether to increase or reduce the borrowing trend. Originality/value: The results of the paper give valuable information on the relationship that public debt may have with economic growth in Sub Saharan African countries with the similar macroeconomic indicators with Niger.

scholarly journals Does financial system development, capital formation and economic growth induces trade diversification?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sohail Amjed ◽  
Iqtidar Ali Shah
Keyword(s):  
Economic Growth ◽  
System Development ◽  
Negative Relationship ◽  
Financial System ◽  
Capital Formation ◽  
Sultanate Of Oman ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
Oil Sector

PurposeThe purpose of this study is to investigate long-run and short-run relationships between trade diversification, financial system development, capital formation and economic growth.Design/methodology/approachARDL estimation approach is applied to analyze long-run and short-run relationships between the financial system development, capital formation, economic growth and trade diversification in case of the Sultanate of Oman over the period 39 years starting from 1979 till 2017.FindingsThe results show that financial system development and economic growth has a positive impact on trade diversification in the short-run and long-run. However, capital formation has a negative impact on trade diversification in the short run and long run. The negative relationship between trade diversification and capital formation implies that over the period of study, the investment in capital goods was made to enhance the production capacity of the oil sector to maximize revenue.Research limitations/implicationsThis research is limited to analyze long-run and short-run relationship between the financial system development, capital formation and economic growth and trade diversification in case of Sultanate of Oman.Practical implicationsTo achieve the diversification goal, the policymakers need to formulate policies to strengthen the financial system and invest in infrastructure development to promote the non-oil sector. The research findings of this study will provide insights to the policymakers to formulate an effective diversification policy.Originality/valueThis research contributes to the existing literature by providing empirical evidence of the short-run and long-run analysis of the selected variables in the context of an oil-dependent country.

scholarly journals Effects of Corruption and the Black Economy on Economic Growth in the CFA Franc Zone Countries

2021 ◽  
pp. 33-45
Author(s):  
Raphaël Erick Assoa Essono ◽  
Ibrahim Nji Ngouhouo
Keyword(s):  
Economic Growth ◽  
Negative Relationship ◽  
Underground Economy ◽  
Group Method ◽  
Franc Zone ◽  
Pooled Mean Group ◽  
Long Run ◽  
Short Run ◽  
Cfa Franc Zone ◽  
Cfa Franc

We conducted this study to empirically analyse the effects of corruption and the underground economy on economic growth in the case of the CFA franc zone countries over the period 2000-2016. To do so, we have carried out econometric estimations using panel data. Our empirical results obtained by the PMG (Pooled Mean Group) method confirm a negative relationship between economic growth and the underground economy in the short and long term. However, the long-run effect of corruption on economic growth is positive, while this effect becomes negative in the short run. The results could provide insight into different ways of fighting corruption and the shadow economy.

scholarly journals Impact of Inflation Targeting Policy Framework of Countries between the Period of 2009-2019

2021 ◽  
Vol 7 (2) ◽  
Author(s):  
Ananda Rathnayake
Keyword(s):  
Economic Growth ◽  
Money Supply ◽  
Inflation Targeting ◽  
Karl Marx ◽  
Time Series Data ◽  
Negative Relationship ◽  
Policy Framework ◽  
Series Data ◽  
Long Run ◽  
Short Run

Today, many countries in the world tend to choose Inflation Targeting Monetary Policy Framework, in which context it has become a matter of debate whether inflation or economic growth is driven by monetary expansions. The common acceptance is that inflation is created by the continuous rise in the money supply which is strongly proved through the economic theories forwarded by Karl Marx, Irvin Fisher and Friedman. The main aim of the study is to examine the relationship between money supply and economic growth under a broad phenomenon by utilizing the countries with inflation targeting policies in action. The time-series data have been collected from different countries that exercise inflation targeting from 2009 to 2019 and the sample included 39 countries from all over the globe, both from developed and developing categories. The utilized Autoregressive Distribution Lag (ARDL) model forwarded the results suggesting that there is a significant negative relationship between the economic growth and money supply in the long run while no relationship has been observed in the short run.

Economic growth, inequality and trade in developing countries

2016 ◽  
Vol 15 (3) ◽  
pp. 240-253 ◽  
Author(s):  
Muhammad Tariq Majeed
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Open Economy ◽  
Developing Economies ◽  
Negative Relationship ◽  
Growth Effect ◽  
Data Set ◽  
Content Type ◽  
Long Run ◽  
Short Run

Purpose The purpose of this study is to analytically explore and empirically test the relationships between economic growth, inequality and trade using a panel data set of 65 developing economies from 1965 to 2010. Design/methodology/approach This study sets a theoretical framework to explain the growth-trade nexus differentials in the developing economies. The study uses different econometric methods such as General Method of Moments to address the relationship of trade with growth in the presence of high inequalities. Findings The study determines the positive effect of trade on growth both in the short-run and in the long-run. However, the growth effect of trade is substantially influenced by the domestic context in terms of the prevalence of high initial inequalities. The study identifies high initial inequalities in developing countries as the likely reason for a negative relationship between trade and economic growth. The trade-growth nexus is significantly negative for the unequal group but strongly significantly positive for the less unequal one. Practical implications Those developing economic which mange to ameliorate inequalities are in a better position to compete in an open economy. Originality/value The study contributes in the existing literature by answering the question why growth effects of trade are not definitely positive or negative. The findings of the studies may help the policy-makers of developing economies to take the advantage of increasing international trade.

scholarly journals Relative Impact of Domestic and Foreign Public Debt on Economic Growth in South Africa

2020 ◽  
pp. 193672442098041
Author(s):  
Talknice Saungweme ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Public Debt ◽  
Foreign Debt ◽  
Negative Relationship ◽  
Relative Impact ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
The Impact

This paper investigates the debt-growth nexus by testing both the impact of aggregate public debt on economic growth and the relative impact of domestic and foreign public debt on economic growth using South Africa as the case study—from 1970 to 2017. Based on the autoregressive distributed lag (ARDL) technique, the findings reveal that the impact of aggregated public debt on economic growth in South Africa is statistically significant and negative, both in the short run and in the long run. The results further reveal that domestic public debt and economic growth have a statistically significant and positive relationship in the short run only. Furthermore, foreign public debt has a statistically significant and negative relationship with economic growth but only in the long run. Therefore, the study recommends the government to manage effectively its debt and to finance long-term high-returning productive investments that should translate into economic growth. Finally, the study cautions the country against growing public debt, predominantly foreign debt, to finance its increasing recurrent expenditure needs.

scholarly journals Inflation and Economic Growth Paradox: A Co-integration Analysis in Nepal

2021 ◽  
Vol 2 (3) ◽  
pp. 1-12
Author(s):  
Uttam Lal Joshi
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Correction Term ◽  
Unit Roots ◽  
Threshold Level ◽  
Long Run ◽  
Augmented Dickey Fuller ◽  
Short Run ◽  
Lag Model ◽  
Monetary And Fiscal Policy

The empirical study investigates the relationship between economic growth, inflation and broad money supply in Nepal. Data since 1965 to 2020 are taken from World Bank and Autoregressive Distributive Lag Model is used to find cointegration between the variables to show long run and short run dynamics. Augmented Dickey- Fuller and Philips- Perron tests are conducted to find the unit roots in the model. Result shows the error correction term is negative (-0.75) and significant (0.0043) where bounds test supports the long run cointegration and error correction model suggest the speed of adjustment. The estimated regression equation is found robust and stable (serial correlation and heteroskedacity tests).  The research shows inflation has short run and long run impact on economic growth so inflation should be kept within its threshold level from sound monetary and fiscal policy mechanism.

scholarly journals MODES OF ISLAMIC FINANCING AND ECONOMIC GROWTH: EVIDENCE FROM INDONESIA

2021 ◽  
Vol 7 (3) ◽  
Author(s):  
Laily Dwi Arsyianti ◽  
Fadiyah Hasta Puspitasari ◽  
Marhamah Muthohharoh
Keyword(s):  
Economic Growth ◽  
Consumer Price Index ◽  
Government Expenditure ◽  
Negative Relationship ◽  
Household Expenditure ◽  
Dummy Variable ◽  
Long Run ◽  
Fixed Capital Formation ◽  
Short Run ◽  
Economy System

Financing is expected to positively support economic growth, especially using Islamic contracts, which are strictly obliged to link the monetary and real sectors. Crises can devastate the financial and economy sectors, and also shock the real sector. This study aims to analyse the effect of Islamic-based financing on economic growth in Indonesia using the ARDL method. Gross fixed capital formation, household expenditure, government expenditure, exports, imports and the consumer price index, together with Islamic financing, are analysed in terms of their effect on economic growth in Indonesia during the period 2003-2018, in which the 2008 crisis is set as a dummy variable. Musharaka financing, which is based on profit-loss sharing, has a relationship with economic growth in the short run, but not in the long run. Furthermore, mudaraba financing unpredictably shows a negative relationship with economic growth, while Murabaha does not have significant effect in either short- or long-run estimation. The results imply that the prevailing economy system, which accommodates household expenditure, leads to an increase in economic growth, so is recommended as a priority sector for development. This study supports the notion that the current traditional economic stance may not suit the measurement of Islamic finance implication towards economic growth. The Maqasid sharia inclusiveness measurement is considered as an alternative estimation of the effect of modes of financing on economic growth.

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