scholarly journals Does Institutional Quality Influence the Oil price-economic Growth Nexus: Evidence from African Oil Exporting Economies

2021 ◽  
Vol 6 (5) ◽  
pp. 56-69
Author(s):  
Lucky Tuzuka Musikavanhu ◽  
Jonah B. Tlhalefang ◽  
Mogale Ntsosa ◽  
Malebogo Bakwena
Keyword(s):  
Economic Growth ◽  
Institutional Quality ◽  
Growth Patterns ◽  
Oil Price ◽  
Policy Implications ◽  
African Countries ◽  
Price Changes ◽  
Study Results ◽  
Interaction Term ◽  
The Impact

The primary contribution of this study is to investigate how institutional quality affects the relationship between the oil price changes and economic growth on net oil exporters in African countries split into net oil exporters and net oil importers. Whether oil price changes are good for the growth patterns of African economies lies on the interaction between oil prices and institutional quality. Oil price increases for oil exporting economies result in increased revenue which will be distributed to economic boosters of the economy however, the net effect of such revenues to the economies solely depends on how institutions distribute the oil rents to the various sectors of the economy. In contrast to the traditional direct effect of oil price changes to economic growth, this study shows that the impact of oil price on economic growth is non-monotonic in institutional quality. Oil exporting economies can benefit from oil price increase if they have good institutions. This has been assessed by including an interaction term, oil price-institutional quality, in the Panel Auto-Regressive (PARDL) using the Pooled Mean Group (PMG) model. Such a methodological framework has an added advantage over other model as it allows for modelling of data with different orders of integration. The PMG estimator allows the intercepts, short-run coefficient, and the error variance to differ freely across groups while the long-run coefficients are the same. Using data from 1990 to 2016, it is revealed that the sign of the coefficient interaction is positive and significant as theoretically expected. Furthermore, the coefficient of the interaction term is greater than the coefficient of oil price as anticipated. This would mean that as long as institutional quality is good enough, oil price changes positively influence economic performance on oil exporting economies. As such, the findings of this thesis have important policy implications. Since implementation of quality institutions is an on-going process, the study results suggest that institutions should be strengthened towards economic activities rather than for political mileage.

scholarly journals Oil price fluctuations and economic growth: the case of MENA countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mamdouh Abdelmoula Mohamed Abdelsalam
Keyword(s):  
Economic Growth ◽  
Linear Models ◽  
Oil Prices ◽  
Oil Price ◽  
Price Changes ◽  
Content Type ◽  
Price Fluctuations ◽  
Mena Countries ◽  
Negative Effect ◽  
The Impact

Purpose This paper aims to explore the extreme effect of crude oil price fluctuations and its volatility on the economic growth of Middle East and North Africa (MENA) countries. It also investigates the asymmetric and dynamic relationship between oil price and economic growth. Further, a separate analysis for each MENA oil-export and oil-import countries is conducted. Furthermore, it studies to what extent the quality of institutions will change the effect of oil price fluctuations on economic growth. Design/methodology/approach As the effect of oil price fluctuations is not the same over different business cycles or oil price levels, the paper uses a panel quantile regression approach with other linear models such as fixed effects, random effects and panel generalized method of moments. The panel quantile methodology is an extension of traditional linear models and it has the advantage of exploring the relationship over the different quantiles of the whole distribution. Findings The paper can summarize results as following: changes in oil price and its volatility have an opposite effect for each oil-export and oil-import countries; for the former, changes in oil prices have a positive impact but the volatility a negative effect. While for the latter, changes in oil prices have a negative effect but volatility a positive effect. Further, the impact of oil price changes and their uncertainty are different across different quantiles. Furthermore, there is evidence about the asymmetric effect of the oil price changes on economic growth. Finally, accounting for institutional quality led to a reduction in the impact of oil price changes on economic growth. Originality/value The study concludes more detailed results on the impact of oil prices on gross domestic product growth. Thus, it can be used as a decision-support tool for policymakers.

scholarly journals Role of institutional quality in economic development: A case study of Asian countries

2021 ◽  
Vol 19 (2) ◽  
pp. 357-369
Author(s):  
Oanh Kim Thi Tran ◽  
Hac Dinh Le ◽  
Anh Hong Viet Nguyen
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Trade Openness ◽  
Institutional Quality ◽  
Policy Implications ◽  
Asian Countries ◽  
Regression Methods ◽  
Key Factor ◽  
The Impact

The paper investigates the impact of institutional quality on economic growth by taking 48 countries in Asia between 2005 and 2018. By using the quantile regression methods with panel data, institutional quality is found to be a key factor of economic development. However, in the lower-income Asian countries, the institution with better quality appears to promote the growth more effectively than in the higher-income ones. Moreover, the paper also finds out a nonlinear relationship between institutions and economic growth. The results show that there is an institutional threshold for economic growth to reach its highest level. If the institution indicator exceeds the threshold, it causes the reverse effect on the growth. Moreover, the economic growth of Asian countries is also affected by inflation (INF), labor force (LABO), trade openness (OPEN), and infrastructure (TELE). From that, the study suggests some policy implications for Asian countries and Vietnam, in particular, in order to improve institutions contributing to economic growth.

Knowledge Governance and Economic Growth in Arab Countries

2014 ◽  
pp. 364-393 ◽  
Author(s):  
Antonio Rodriguez Andrès
Keyword(s):  
Economic Growth ◽  
Arab Countries ◽  
Policy Implications ◽  
Medium Term ◽  
African Countries ◽  
Governance Indicators ◽  
The Status ◽  
Knowledge Economies ◽  
Knowledge Governance ◽  
The Impact

The present chapter deals with three interdependent components related to knowledge governance. The first one examines the effect of knowledge governance on medium term growth. Using the software industry as benchmark, the authors’ findings suggest that poor knowledge governance reduces economic growth over the medium term, but the relationship is non-linear. The second one analyzes the impact of formal institutions on economic knowledge and its related variables. In particular, the role of various governance indicators is examined. The results show that institutional quality plays an important role in the relative performance of MENA and African countries in building up the knowledge economy. The last aspect analyzed in this chapter is to establish the status of Arab economies in terms of their transformation to knowledge economies and empirically examine the impact of knowledge and its related variables on economic performance. Policy implications are also discussed.

scholarly journals A Step towards enhancement of Macroeconomic Performance of Pakistan: Do Oil Price, Public Expenditures and Financial Development Matter?

2021 ◽  
Vol 4 (1) ◽  
pp. 157-168
Author(s):  
Imran Sharif Chaudhry ◽  
Muhammad Faheem ◽  
Javaid Hussain ◽  
Rashid Ahmad
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Trade Balance ◽  
Oil Price ◽  
Macroeconomic Performance ◽  
Control Variables ◽  
Price Fluctuations ◽  
Real Gdp ◽  
Study Results ◽  
The Impact

Oil price fluctuations have vital importance in macroeconomic performance. Our study demonstrates the impact of oil price fluctuations on the trade balance and economic growth in Pakistan. We employ a linear autoregressive distributed lag model (ARDL) for the period 1970-2018. The results showed that oil price negatively affected the total trade balance in Pakistan other control variables like the real effective exchange rate, real GDP (Home country) and financial development also negatively affected. While real GDP (Foreign country) influenced trade balance positively. In the second model, the results showed that oil price negatively affected economic growth in Pakistan and other control variables like government expenditure, financial development and gross capital formation are positively affected. The study results are useful for policymakers and government officials for making the policies regarding long-run economic growth as well as trade balance improvement.

scholarly journals Does Terms of Trade Matter for Economic Growth? A Focus on Natural Resource-Rich Sub-Saharan African Countries

Economy ◽  
2021 ◽  
Vol 8 (2) ◽  
pp. 26-34
Author(s):  
Nzeh Innocent Chile ◽  
Benedict I Uzoechina ◽  
Millicent Adanne Eze ◽  
Chika P Imoag ◽  
Ozoh Joan Nwamaka
Keyword(s):  
Economic Growth ◽  
Natural Resources ◽  
Natural Resource ◽  
Fixed Effects ◽  
Positive Impact ◽  
Terms Of Trade ◽  
African Countries ◽  
Study Results ◽  
Sub Saharan ◽  
The Impact

The contention that deteriorating terms of trade exists in countries that rely heavily on the exploitation and export of natural resources motivated us in this study. We therefore sought to investigate the impact of terms of trade on economic growth in natural resource-rich sub-Saharan African countries. We carried out the study using annual series that span a period of 1990-2019 under the framework of panel Random and Fixed effects. Our findings indicate that a long run relationship exists between GDP and the explanatory variables used in the study. Results also show that, while cross-section random effects indicates that terms of trade positively impacts on GDP, period fixed effects shows that terms of trade negatively impacts on GDP even though it is not significant. Results of our study also show that in all the models, labour force total and FDI have positive impact on GDP, while trade openness impacts on GDP negatively. We therefore recommend that the SSA natural resource-rich countries should diversify their economies away from the traditional natural resources base. Also human capital should be improved through sound education and training, while all the bottlenecks that constrain the inflow of foreign direct investment should be dismantled.

Remittances, Economic Growth and Poverty: A Case of African OIC Member Countries

2018 ◽  
Vol 57 (2) ◽  
pp. 121-143
Author(s):  
Nasim Shah Shirazi ◽  
Sajid Amin Javed ◽  
Dawood Ashraf
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Poverty Reduction ◽  
Simultaneous Equation ◽  
Equation Model ◽  
Annual Data ◽  
Simultaneous Equation Model ◽  
African Countries ◽  
Alternative Source ◽  
The Impact

This paper investigates the impact of remittance inflows on economic growth and poverty reduction for seven African countries using annual data from 1992-2010. By using the depth of hunger as a proxy for poverty in a Simultaneous Equation Model (SEM), we find that remittances have statistically significant growth enhancing and poverty reducing impact. Drawing on our estimates, we conclude that financial development level significantly increases the remittances inflows and strengthens poverty alleviating impact of remittances. Results of our study further show a signficant interactive imapct of remittances and finacial develpment on economic growth, suggesting the substitutability between remittance inflows and financial development. We further find that 3 percentage point increase in credit provision to the private sector (financial development) can help eliminate the severe depth of hunger in the region. Remittances, serving an alternative source of private credit, can be effective in this regard. Keywords: Remittance Inflow, Poverty Alleviation, Financial Development, Simultaneous Equation Model

The Impact of Oil Price Fluctuations on Industry Stock Returns: Evidence from International Markets

2018 ◽  
Vol 5 (1) ◽  
pp. 1-12
Author(s):  
Elias Randjbaran ◽  
Reza Tahmoorespour ◽  
Marjan Rezvani ◽  
Meysam Safari
Keyword(s):  
Stock Returns ◽  
Oil And Gas ◽  
Negative Relationship ◽  
The United States ◽  
Oil Price ◽  
Price Variation ◽  
Price Changes ◽  
Price Fluctuations ◽  
Food And Beverage ◽  
The Impact

This study investigates the impact of oil price variation on 14 industries in six markets, including Canada, China, France, India, the United Kingdom, and the United States. Panel weekly data were collected from June 1998 to December 2011. The results indicate that price fluctuations primarily affect the Oil and Gas as well as the Mining industries and have the least influence on the Food and Beverage industry. Furthermore, in three out of six of these countries (Canada, France, and the U.K.), oil price changes negatively affect the Pharmaceutical and Biotechnology industry. One possible reason for the negative relationship between oil price changes and the Pharmaceutical and Biotechnology industries in the above-mentioned countries is that the governments of these countries fund their healthcare systems. Portfolio managers and investors will find the results of this study useful because it enables adjusting portfolios based on knowledge of the industries that are impacted the most or the least by oil price fluctuations.

DAMPAK VOLATILITAS HARGA MINYAK DI INDONESIA TERHADAP PENYESUAIAN KESEIMBANGAN FISKAL

2015 ◽  
Vol 15 (2) ◽  
pp. 37-52
Author(s):  
Mahpud Sujai
Keyword(s):  
Linear Trend ◽  
The State ◽  
Oil Price ◽  
Output Gap ◽  
State Budget ◽  
Price Changes ◽  
Potential Output ◽  
Budget Cycle ◽  
Actual Output ◽  
The Impact

This paper is intended to analyze the effect of oil price changes on potential output and actual output in the state budget cycle and identifies the output gap which is the difference between potential output and actual output. The research methodology uses a quantitative approach to analyze problems that occur related to the impact of oil price changes to the state budget cycle. Data analysis was carried out through the approach cyclically adjusted fiscal balance with a simplified approach. This research identified that the potential output is likely to continue increasing in line with Indonesia's oil price trends which is continue to rise following the world oil price movements. In calculating the output gap using a linear trend and HP filter, the result is fuctuating depend on the percentage changes in both potential output and actual output. This paper concludes that Indonesian oil price (ICP) has a significant impact on changes in the state budget cycle. If oil prices rise, the output gap between potential output and actual output is greater, and vice versa. This will make the budget vulnerable to shock that occurs as an external infuence.

The Effects of Oil Prices Changes on Output Growth and Inflation: Evidence from Turkey

2013 ◽  
Vol 5 (11) ◽  
pp. 730-739 ◽  
Author(s):  
Pelin ÖGE GÜNEY
Keyword(s):  
Time Series Data ◽  
Output Growth ◽  
Oil Price ◽  
Series Data ◽  
Negative Effects ◽  
Price Changes ◽  
Asymmetric Effects ◽  
Price Increases ◽  
Causality Tests ◽  
The Impact

This paper investigates the effects of oil price changes on output and inflation for the case of Turkey using monthly time series data for the period 1990:1–2012:3. Recent studies suggest that oil price changes may have asymmetric effects on the macroeconomic variables. To account for asymmetric effects, we decompose oil price changes into positive and negative parts following Hamilton (1996). Our results show that while oil price increases have clear negative effects on output growth, the impact of oil price decline is insignificant. Similarly, oil price increases have positive and significant effects on inflation. However, oil price declines have not a significant effect on inflation. The Granger causality tests also support these results.

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