scholarly journals The relationship between foreign direct investment and economic growth in South Africa: Vector error correction analysis

2018 ◽  
Vol 18 (1) ◽  
Author(s):  
Tshepo S. Masipa
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Foreign Direct Investment ◽  
Error Correction ◽  
Direct Investment ◽  
Vector Error Correction ◽  
Vector Error ◽  
The Relationship

scholarly journals Government Expenditure and Economic Growth in South Africa: A Vector Error Correction Modelling and Granger Causality Test

2017 ◽  
Vol 9 (4) ◽  
pp. 164
Author(s):  
Kagiso Molefe ◽  
Ireen Choga
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Error Correction ◽  
Granger Causality ◽  
Time Series Data ◽  
Government Expenditure ◽  
Series Data ◽  
Vector Error Correction ◽  
Vector Error ◽  
The Relationship

Previous studies generally find mixed empirical evidence on the relationship between government spending and economic growth. This study re-examine the relationship between government expenditure and economic growth in South Africa for the period of 1990 to 2015 using the Vector Error Correction Model and Granger Causality techniques. The time series data included in the model were gross domestic Product (GDP), government expenditure, national savings, government debt and consumer price index or inflation. Results obtained from the analysis showed a negative long-run relationship between government expenditure and economic growth in South Africa. Furthermore, the estimate of the speed of adjustment coefficient found in this study has revealed that 49 per cent of the variation in GDP from its equilibrium level is corrected within of a year. Furthermore, the study discovered that the causality relationship run from economic growth to government expenditure. This implied that the Wagner’s law is applicable to South Africa since government expenditure is an effect rather than a cause of economic growth. The results presented in this study are similar to those in the literature and are also sustained by preceding studies.

scholarly journals Government Expenditure and Economic Growth in South Africa: A Vector Error Correction Modelling and Granger Causality Test

2017 ◽  
Vol 9 (4(J)) ◽  
pp. 164-172
Author(s):  
Kagiso Molefe ◽  
Ireen Choga
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Error Correction ◽  
Granger Causality ◽  
Time Series Data ◽  
Government Expenditure ◽  
Series Data ◽  
Vector Error Correction ◽  
Vector Error ◽  
The Relationship

Previous studies generally find mixed empirical evidence on the relationship between government spending and economic growth. This study re-examine the relationship between government expenditure and economic growth in South Africa for the period of 1990 to 2015 using the Vector Error Correction Model and Granger Causality techniques. The time series data included in the model were gross domestic Product (GDP), government expenditure, national savings, government debt and consumer price index or inflation. Results obtained from the analysis showed a negative long-run relationship between government expenditure and economic growth in South Africa. Furthermore, the estimate of the speed of adjustment coefficient found in this study has revealed that 49 per cent of the variation in GDP from its equilibrium level is corrected within of a year. Furthermore, the study discovered that the causality relationship run from economic growth to government expenditure. This implied that the Wagner’s law is applicable to South Africa since government expenditure is an effect rather than a cause of economic growth. The results presented in this study are similar to those in the literature and are also sustained by preceding studies.

The Role of Urbanisation in the Economic Development Process: Evidence from Nigeria

2017 ◽  
Vol 11 (3) ◽  
pp. 223-255 ◽  
Author(s):  
Sakiru Adebola Solarin
Keyword(s):  
Economic Growth ◽  
Least Squares ◽  
Error Correction ◽  
Industrial Development ◽  
Ordinary Least Squares ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Determinants Of Economic Growth ◽  
The Relationship

The aim of this article is to investigate the relationship between urbanisation and economic growth, while controlling for the agricultural sector, industrial development and government expenditure in Nigeria. The autoregressive distributed lag (ARDL) approach to cointegration is applied to examine the long-run relationship between the variables over the period 1961–2012. In the process of estimating the long-run coefficients, the ARDL method is augmented with a fully modified ordinary least squares (FMOLS) estimator and a dynamic ordinary least squares (DOLS) estimator. The direction of causality between the variables is examined through the vector error correction method (VECM) Granger causality test. The results establish the existence of a long-run relationship in the variables. The results of the long-run regressions indicate the presence of long-run causality from urbanisation, agriculture and industrialisation to economic growth. Due to the deficiencies associated with the single-equation methods (including the ARDL model), we also use the structural vector error correction model (SVECM) to analyse the relationship between the variables. The impulse response and variance decomposition analyses derived from the SVECM method suggest that urbanisation, agriculture and industrialisation are important determinants of economic growth. The implications of the results are discussed. JEL Classification: Q43, O55, O18

scholarly journals Budget Deficits and Economic Growth: A Vector Error Correction Modelling of South Africa

2017 ◽  
Vol 9 (2(J)) ◽  
pp. 215-223
Author(s):  
Kagiso Molefe ◽  
Andrew Maredza
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Error Correction ◽  
Budget Deficit ◽  
Time Series Data ◽  
Series Data ◽  
Budget Deficits ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run

The primary motivation behind this study was to explore the consequential effects of budget deficit on South Africa`s economic growth. Six variables were used, namely: real GDP, budget deficit, real interest rate, labour, gross fixed capital formation and unemployment. The Vector Error Correction Model (VECM) was used to estimate the long-run equation and also measure the correction from disequilibrium of preceding periods. Using annual time series data spanning the period 1985 to 2015, empirical evidence from the study revealed that budget deficits and economic growth are inversely related. It was therefore concluded that high levels of budget deficit in South Africa have detrimental effects on the growth of the economy. The estimate of the speed of adjustment coefficient found in this study revealed that about 29 per cent of the variation in GDP from its equilibrium level is corrected within one year. The results obtained in this study are favourably similar to those in the literature and are also sustained by previous studies.

scholarly journals The Impacts of Bilateral Trade and Foreign Direct Investment on Malaysia’s Economic Growth: The Roles of Singapore

2021 ◽  
Vol 21 (1) ◽  
pp. 419-432
Author(s):  
Chee-Yie Wong ◽  
Hui-Shan Lee ◽  
Shyue-Chuan Chong
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Open Economy ◽  
Direct Investment ◽  
Bilateral Trade ◽  
High Income ◽  
Vector Error Correction ◽  
Vector Error ◽  
Sustainable Economic Growth ◽  
Trade And Investment

Open economy is essential for a country to achieve sustainable economic growth. There existsa bilateral tiebetween Malaysia and Singapore since 1965. Thisrelationship has made Singaporeachievedas a high-income nation that enjoys modern infrastructure and technology, skilled labour, and strong financial structure, but Malaysia is still trying to upgrade itself to become a high-income nation via open economy. Furthermore, Malaysia’s reliance on the external market has inevitablyleft the economy to be more exposed to external shock. This research analysesthe impacts of Malaysia’s bilateral trade and investment with Singapore on Malaysia’s economic growth from2008 to 2016. Vector error correction model (VECM) reveals that Malaysia’s exports to Singapore arepositive and significant on Malaysia’s economic growth and Malaysia’s OFDI in Singapore is significant but negative on Malaysia’s economic growth.However, Malaysia’s imports from Singapore and Malaysia’s inward foreign direct investment (IFDI) by Singapore have insignificant impacts on Malaysia’s economic growth. It concludes that only Malaysia’s exports to Singapore can help to increase Malaysia’s economic growth.Thus,Malaysia’sgovernment couldprovide incentives to encourage Malaysian local firms to boost the exportationsto Singapore.

PERKEMBANGAN NERACA PERDAGANGAN DAN FAKTOR-FAKTOR YANG MEMPENGARUHINYA

2014 ◽  
Vol 8 (1) ◽  
pp. 51-72
Author(s):  
Ari Mulianta Ginting
Keyword(s):  
Foreign Direct Investment ◽  
Error Correction ◽  
Trade Balance ◽  
Direct Investment ◽  
Error Correction Model ◽  
Vector Error Correction Model ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run

Penelitian ini menganalisis perkembangan neraca perdagangan Indonesia dan faktor yang mempengaruhinya selama periode Kuartal I tahun 2006 sampai dengan Kuartal II tahun 2013 menggunakan Vector Error Correction Model (VECM). Neraca perdagangan Indonesia menunjukkan perkembangan yang positif dalam kurun waktu 2006-2011, dan pertumbuhan negatif selama periode 2012-2013. Penelitian ini juga menemukan bahwa baik dalam jangka panjang maupun jangka pendek, konsumsi domestik dan nilai tukar riil berpengaruh negatif dan signifikan terhadap neraca perdagangan Indonesia, sedangkan variabel Investasi Asing Langsung dan PDB Negara lain berpengaruh positif. Nilai error correction model yang negatif dan signifikan menunjukkan adanya koreksi dari pergerakan variabel pada keseimbangan jangka panjang. Hal ini mengindikasikan pentingnya pemerintah untuk mengeluarkan kebijakan yang tepat untuk mengatasi defisit neraca perdagangan Indonesia, antara lain menjaga stabilitas nilai tukar, mengendalikan konsumsi masyarat terhadap barang impor, dan menarik Foreign Direct Investment. This paper examines the development of Indonesia’s trade balance and its determinant factors from the first quarter of 2006 to the second quarter of 2013 using a Vector Error Correction Model (VECM). The development of trade balance from the year 2006-2011 has shown a positive trend. However between the year 2012 and 2013, the trade balance has been negative.The analysis shows that both in the short run and the long run,the domestic consumption and Real Exchage Rate have negative and significant influence on Indonesia’s trade balance. Whilst Foreign Direct Investment and Foreign GDP have positive effect. The coefficient of Error Correction Model is negative and significant implying that there is correction movement from those variabels in the long run. This study suggests that the Government should make the right policy to overcome the deficit of trade balance by maintaining including exchange rate stability,and household consumption of imported goods as well as by attracting Foreign Direct Investment.

On the Determinants of Economic Openness in Nigeria

2020 ◽  
pp. 42-53
Author(s):  
Charles Okechukwu Aronu ◽  
Lucky Oghenechovwe Arhovwon ◽  
John Obatarhe Emunefe ◽  
Godspower Onyekachukwu Ekwueme ◽  
Nkechi Udochukwu Otty
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Error Correction ◽  
Unemployment Rate ◽  
Direct Investment ◽  
Urban Population ◽  
Economic Openness ◽  
Economic Determinants ◽  
Long Run ◽  
The Relationship

Aims: Economic openness has been identified as a tool that provides countries with an avenue to explore advances on technology, creation of exchanges through the reallocation of resources especially from less efficient to efficient producer, and economic growth. This study examined the short-run and long-run impact of economic determinants such as foreign direct investment, unemployment rate and percentage of the urban population on economic openness in Nigeria.  Place and Duration of Study: The study employed a secondary source of data collection obtained from the Central Bank of Nigeria (CBN), Statistical Bulletin and National Bureau of Statistics (NBS) Annual Publication. The data comprises of variables such as economic openness which is proxy by trade openness, foreign direct investment, unemployment rate and percentage of the urban population from 2006 - 2019. Methodology: The impacts of the economic determinants considered in this study were examined using the Autoregressive Distributed Lag (ARDL) co-integration technique and the error correction parameterization of the ARDL model. The R-3.6.3 programming package was used to perform the analysis. Results: The outcome of the study revealed that the appropriate ARDL model for estimating economic openness was the ARDL (1,1,1,1) selected based on the Schwarz Bayesian Criterion. Also, the error correction model identified the sizable speed of adjustment by 30.0% of disequilibrium correction yearly for reaching the long-run equilibrium steady-state position. It was found that the lag of the Unemployment Rate (UNER) and the percentage of the urban population have a significant short-term effect on economic openness. Also, the distribution of economic openness was found to be stable over the observed period. Also, it was found that the relationship amongst the variables was independent except for the relationship between the percentage of the Urban Population (PUP) and Foreign Direct Investment (FDI) which was found to be is unidirectional. Conclusion: The outcome of this study suggested the urgent need for policymakers to implement policies such as the "ease of doing business"  of the federal government of Nigeria which is anticipated to make foreign direct investment more attractive and in turn is expected to boost economic growth and thereby impact positively on urbanization in Nigeria.

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