Effect of Institutional Quality and Wealth from Oil Revenue on Economic Growth in Oil-Exporting Developing Countries

This article investigates the role of institutional quality in the oil wealth–economic growth nexus for 35 oil-exporting developing countries between 1984 and 2016. To achieve this objective, an empirical model was employed with linear interaction between oil wealth and institutional quality, and estimated by means of panel autoregressive distributed lag (ARDL) with a dynamic fixed effect estimator. From the results, a contingent effect of oil wealth on economic growth, both in the long run and in the short run, was established. Specifically, institutional quality was found to mitigate the negative effect of oil wealth on economic growth in the long run, while in the short run, institutional quality was found to enhance the positive effect of oil wealth on economic growth. Furthermore, the results provide the threshold levels of institutional quality, beyond which oil wealth enhances economic growth, both in the long run and in the short run, for the sampled countries. These results suggest that in order for oil-exporting developing countries to benefit from an increase in oil wealth, they must adopt appropriate policy measures to improve their levels of institutional quality and embed their entire oil wealth-generating mechanism in a sound institutional framework. Also of importance is that governments must ensure sustainable development through the benefits of wealth from oil.

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Oil, Volatility, and Institutions

Institutions and Macroeconomic Policies in Resource-Rich Arab Economies ◽

10.1093/oso/9780198822226.003.0003 ◽

2019 ◽

pp. 52-72

Author(s):

Amany El-Anshasy ◽

Kamiar Mohaddes ◽

Jeffrey B. Nugent

Keyword(s):

Economic Growth ◽

Resource Curse ◽

Output Growth ◽

Negative Effects ◽

Cross Sectional ◽

Distributed Lag ◽

Oil Revenue ◽

Long Run ◽

Negative Effect ◽

Revenue Volatility

This chapter examines the long-run effects of oil revenue and its volatility on economic growth, as well as the role of institutions in this relationship. We collect annual and monthly data on 17 major oil producers between 1961 and 2013, and use the panel autoregressive distributed lag (ARDL) approach as well as its cross-sectionally augmented version (CS-ARDL) for estimation. Therefore, in contrast to earlier literature on the resource curse, we take into account all three key features of the panel: dynamics, heterogeneity, and cross-sectional dependence. The results suggest that: (i) oil revenue volatility has a significant negative effect on output growth; (ii) a higher growth rate of oil revenue significantly raises economic growth; and (iii) better fiscal policy can offset some of the negative effects of oil revenue volatility. We therefore argue that volatility in oil revenues combined with poor governmental responses to this volatility drives the resource curse paradox.

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Finance-institution-growth trilogy: time-series insights from South Africa

International Journal of Emerging Markets ◽

10.1108/ijoem-05-2019-0370 ◽

2020 ◽

Vol ahead-of-print (ahead-of-print) ◽

Cited By ~ 1

Author(s):

Clement Olalekan Olaniyi ◽

Adebayo Adedokun

Keyword(s):

Economic Growth ◽

South Africa ◽

Positive Impact ◽

Institutional Quality ◽

Empirical Examination ◽

Content Type ◽

Distributed Lag ◽

Long Run ◽

Short Run ◽

The Impact

PurposeThis study examines the moderating effect of institutional quality on the finance-growth nexus in South Africa from 1986 to 2015.Design/methodology/approachThis study adopts unit root tests, cointegration test and autoregressive distributed lag (ARDL) model.FindingsThe findings reveal that institutional quality constitutes a drain to the growth benefits of financial development (FD) in South Africa in the short-run while FD and institutional quality converge to enhance growth process of the country in the long-run. Also, the threshold of institutional quality beyond which institution stimulates strong positive impact of finance on growth is estimated to be 6.42 on a 10-point scale.Practical implicationsThis study, therefore, suggests that institutional quality matters in the way FD influences economic growth in South Africa. Hence, stakeholders are encouraged to trace and block lapses and loopholes in the institutional framework guiding financial system in South Africa so as to maximize growth benefits of FD.Originality/valueThis study contributes to the extant studies by introducing a country-specific analysis into the empirical examination of how institutional quality influences the impact of FD on economic growth. Also, this study deviates from other studies by determining the threshold of institutional quality beyond which FD stimulates strong positive effect on economic growth in South Africa

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Military Expenditure, Economic Growth, and Foreign Policy Implications

Handbook of Research on Military Expenditure on Economic and Political Resources - Advances in Public Policy and Administration ◽

10.4018/978-1-5225-4778-5.ch002 ◽

2018 ◽

pp. 24-45

Author(s):

Bertha Z. Osie-Hwedie ◽

Napoleon Kurantin

Keyword(s):

Economic Growth ◽

Developing Countries ◽

Foreign Policy ◽

High Growth ◽

Economic Cost ◽

Military Expenditure ◽

Domestic Security ◽

Long Run ◽

Negative Effect ◽

Short Run

The chapter discusses the nature of the relationship between military expenditure, economic growth, and foreign policy commitments, and the consequences on economic growth of apportioning an increased part of the gross domestic product to the military in developing countries of Ghana and Nigeria within the Economic Community of West Africa during 1986-2016. Military expenditure has generated controversy, especially in developing countries of Africa, as it competes with demands for sustainable growth and development. Applying the Johansen co-integration test and Granger causality, the results show that high growth rates have enabled the two countries to increase military spending, ensure their own domestic security, and fulfill international security commitments in the West African sub-region and internationally, with negative effect in the long-run and positive effect in the short run on economic growth. The lack of defense and military expenditure linkage with the wider economy is the resultant socio-economic cost recorded over the period under study.

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Military Expenditure, Economic Growth, and Foreign Policy Implications

National Security ◽

10.4018/978-1-5225-7912-0.ch042 ◽

2019 ◽

pp. 836-857

Author(s):

Bertha Z. Osie-Hwedie ◽

Napoleon Kurantin

Keyword(s):

Economic Growth ◽

Developing Countries ◽

Foreign Policy ◽

High Growth ◽

Economic Cost ◽

Military Expenditure ◽

Domestic Security ◽

Long Run ◽

Negative Effect ◽

Short Run

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The impact of military spendings on economic growth of Pakistan

Journal of Applied Economics and Business Studies ◽

10.34260/jaebs.116 ◽

2017 ◽

Vol 1 (1) ◽

pp. 53-64

Author(s):

Sajjad ◽

Tariq ◽

Muhammad Tariq

Keyword(s):

Economic Growth ◽

Positive Impact ◽

Bounds Testing ◽

Distributed Lag ◽

Long Run ◽

Defence Spending ◽

Augmented Dickey Fuller ◽

Negative Effect ◽

Short Run ◽

The Impact

A sound national defence is extremely essential for a country’s sovereignty. The geostrategic position of Pakistan and its deterrence policy against neighbouring India have generally been the reasons for stringent military financing. Defence spending affects all sectors of the economy directly or indirectly. This study aims to investigate the influence of government military expenditures on the economic growth of Pakistan over the period 1987-2016. Augmented Dickey-Fuller test has been used for checking the unit root in the data. Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration has been applied to analyze the relationship between military spending and economic growth. The findings indicate that military expenditure has a positive impact on Pakistan's economic growth in the long-run, however it has negative effect on economic growth in the short-run.

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Do Government Revenues Matter for Economic Growth? Evidence from Nigeria

European Journal of Government and Economics ◽

10.17979/ejge.2018.7.1.4333 ◽

2018 ◽

Vol 7 (1) ◽

pp. 60 ◽

Cited By ~ 1

Author(s):

Isiaka Akande Raifu ◽

Abiodun Najeem Raheem

Keyword(s):

Economic Growth ◽

Economic Recession ◽

Business Environment ◽

Distributed Lag ◽

Oil Revenue ◽

Crude Oil Prices ◽

Long Run ◽

Short Run ◽

Oil Sector ◽

The Government

The bursting of crude oil prices in the international market since mid-2014 has resulted in dwindling oil revenue, which has led to economic recession in Nigeria. The recession has further exacerbated existing socioeconomic problems bedeviling the country. In the light of this, we examined the effect of government revenues (oil and non-oil revenues) on economic growth, both in the short-run and the long-run using autoregressive distributed lag method. Our findings show that government revenues are indispensable to economic growth in Nigeria. In addition, we found that economic growth is more responsive to oil revenue than non-oil revenue. Based on our findings, we advocate for effective and efficient use of government revenues. Furthermore, since oil revenue fluctuates more than non-oil revenue, we further advocate for creation of an enabling business environment geared towards improving the contribution of the non-oil sector to the government revenue base.

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Fish Exports and Economic Growth: The Pakistan’s Experience

Global Business Review ◽

10.1177/0972150918825422 ◽

2019 ◽

Vol 20 (2) ◽

pp. 279-296 ◽

Cited By ~ 1

Author(s):

Syed Tehseen Jawaid ◽

Mohammad Haris Siddiqui ◽

Zeeshan Atiq ◽

Usman Azhar

Keyword(s):

Economic Growth ◽

Time Series Data ◽

Positive Impact ◽

Impulse Response Function ◽

Policy Implications ◽

Sensitivity Analyses ◽

Series Data ◽

Distributed Lag ◽

Long Run ◽

Short Run

This study attempts to explore first time ever the relationship between fish exports and economic growth of Pakistan by employing annual time series data for the period 1974–2013. Autoregressive distributed lag and Johansen and Juselius cointegration results confirm the existence of a positive long-run relationship among the variables. Further, the error correction model reveals that no immediate or short-run relationship exists between fish exports and economic growth. Different sensitivity analyses indicate that initial results are robust. Rolling window analysis has been applied to identify the yearly behaviour of fish exports, and it remains negative from 1979 to 1982, 1984 to 1988, 1993 to 1999, 2004 and from 2010 to 2013, and it shows positive impact from 1989 to 1992, 2000 to 2003 and from 2005 to 2009. Furthermore, the variance decomposition method and impulse response function suggest the bidirectional causal relationship between fish exports and economic growth. The findings are beneficial for policymakers in the area of export planning. This study also provides some policy implications in the final section.

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

African Journal of Economic and Management Studies ◽

10.1108/ajems-06-2021-0291 ◽

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.

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Dynamic Causal Relationships among GDP, Exports, and Foreign Direct Investment (FDI) in the Developing Countries

International Letters of Social and Humanistic Sciences ◽

10.18052/www.scipress.com/ilshs.14.1 ◽

2013 ◽

Vol 14 ◽

pp. 1-19 ◽

Cited By ~ 3

Author(s):

Mohsen Mehrara ◽

Amin Haghnejad ◽

Jalal Dehnavi ◽

Fereshteh Jandaghi Meybodi

Keyword(s):

Economic Growth ◽

Developing Countries ◽

Foreign Direct Investment ◽

Strong Evidence ◽

Direct Investment ◽

The Other ◽

Fdi Inflows ◽

Long Run ◽

Short Run ◽

Growth Hypothesis

Using panel techniques, this paper estimates the causality among economic growth, exports, and Foreign Direct Investment (FDI) inflows for developing countries over the period of 1980 to 2008. The study indicates that; firstly, there is strong evidence of bidirectional causality between economic growth and FDI inflows. Secondly, the exports-led growth hypothesis is supported by the finding of unidirectional causality running from exports to economic growth in both the short-run and the long-run. Thirdly, export is not Granger caused by economic growth and FDI inflow in either the short run or the long run. On the basis of the obtained results, it is recommended that outward-oriented strategies and policies of attracting FDI be pursued by developing countries to achieve higher rates of economic growth. On the other hand, the countries can increase FDI inflows by stimulating their economic growth.

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INFLASI DARI SUDUT PANDANG MONETER DAN FISKAL (STUDI KASUS SUMATERA BARAT)

Jurnal Kajian Ekonomi dan Pembangunan ◽

10.24036/jkep.v1i1.5357 ◽

2019 ◽

Vol 1 (1) ◽

pp. 131

Author(s):

Zul Azhar ◽

Alpon Satrianto ◽

Nofitasari Nofitasari

Keyword(s):

Interest Rate ◽

Money Supply ◽

Government Spending ◽

Descriptive Research ◽

Distributed Lag ◽

Long Run ◽

Negative Effect ◽

Short Run ◽

The Interest Rate ◽

Positive Effect

This study aims to analyze the effect of money supply M2, interest rate, government spending and local tax on the inflation in West Sumatera. This type of research is descriptive research and secondary datain the form of time-series from quartely 1 2007 to 2017 quartely 4 using the method of Autoregresive Distributed Lag analysis. The results of this study indicate that money supply in the long run have a significant and positive effect on inflation West Sumatera. In the short run and long run the interest rate has a significant and positive effect on inflation in West Sumatera. Government spending in the Long run has a significant and negative effect on inflation in West Sumatera. Based on the result of this study can be concluded that there is inflation in West Sumatera is monetery of phenomenon in the long run.

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