Infrastructure Investment and Economic Growth: Evidence from India

2016 ◽  
Vol 17 (1) ◽  
pp. 90-111
Author(s):  
Naliniprava Tripathy ◽  
Maram Srikanth ◽  
Lagesh Aravalath
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Error Correction ◽  
Capital Formation ◽  
Domestic Product ◽  
Government Revenue ◽  
Indian Economy ◽  
Long Run ◽  
Domestic Capital ◽  
Short Run

This study examines the long-run and short-run relationship between investment in infrastructure and economic growth in the Indian economy by using Auto Regressive Distributed Lag Model, Error Correction Model, and Granger Causality Test. The study reports that there is no short-run relationship among gross domestic product, gross domestic capital formation, revenue of the governmentand exports. However, the study finds that unidirectional causality exists between employment and gross domestic product; gross domestic productandinflation. It implies that employmentlevel in organised sector and inflationinfluence the economic growth in India for a short period. The study finds that there is a long-run relation exists between economic growth, domestic investment, inflation and government revenue. Therefore, emphasis should be placed on capital formation, government income and inflation to accelerate growth and development in the Indian economy. The error correction term is indicating that long term relationship is stable and any disequilibrium created in short termwill be temporary and will correct over a period. However, it is suggested to maintain balance among inflation,gross domestic product, employment, exports, savings, investment and government revenue to keep an economy growing. These findings have important policy implications since an economy built on investment in infrastructural development.

scholarly journals The Service Sector-Led Growth Relationship: The Case of Nigeria

2021 ◽  
pp. 90-111
Author(s):  
Ubong Edem Effiong ◽  
Joel Isaac Okon
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Error Correction ◽  
Service Sector ◽  
Domestic Product ◽  
Long Run ◽  
Error Correction Mechanism ◽  
Short Run ◽  
Bounds Test ◽  
The Impact

This paper examined the impact of the service sector on economic growth of Nigeria. The study covers the period 1981 to 2019 and data were obtained from the Central Bank of Nigeria statistical bulletin. The Augmented Dickey-Fuller unit root, Granger Causality test, Vector Autoregressive (VAR) approach, Bounds test for cointegration, and vector error correction mechanism were utilized in analysing the data. Findings of the study revealed that a bidirectional causality exist between service sector and economic growth of Nigeria. Meanwhile, the VAR result presented an evidence of weak exogeneity of the service sector in predicting economic growth. However, both broad money supply and total government expenditure exerted a significant impact on economic growth. From the impulse response function, it was discovered that economic growth responded negatively to shocks in service sector output both in the short run and in the long run; while the variance decomposition indicated that gross domestic product (a proxy for economic growth) is strongly endogenous in predicting itself in the short run while such diminishes in the long run. The Bounds test for cointegration revealed evidence of long run equilibrium relationship and the error correction mechanism revealed that 88.30% of the short run disequilibrium in the gross domestic product are corrected annually. Meanwhile, it was discovered that professional, scientific and technical services is the major contributor to economic growth as captured by its short run and long run elasticity coefficients of 0.5936 and 0.9455 respectively. The paper recommended the need for stimulating industrialization as this is the major pathway through which the service sector can positively impact economic growth.

The Causal Links Between Foreign Direct Investment And Economic Growth In Pakistan

2012 ◽  
Vol 6 ◽  
Author(s):  
Najid Ahmad ◽  
Muhammad Farhat Hayat ◽  
Muhammad Luqman ◽  
Shafqat Ullah
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Gross Domestic Product ◽  
Direct Investment ◽  
Domestic Product ◽  
Correction Model ◽  
Economic Progress ◽  
Long Run ◽  
Domestic Capital ◽  
The Relationship

This paper investigates the relationship between foreign direct investment and economic growth in Pakistan. The co-integration and error correction model is used to show the relationship between foreign direct investment and gross domestic product in Pakistan. Gross domestic product is taken as dependent variable while foreign direct investment, labor force and domestic capital as independent variables. The results suggest that there is a positive relation between foreign direct investment and gross domestic product in short as well as long run. If we want to make economic progress then there is a need to invite foreign investors because foreign direct investment increases GDP that is economic growth.

scholarly journals Autoregressive Distributed Lag Modeling of the Effects of Some Macroeconomic Variables on Economic Growth in Nigeria

2019 ◽  
Author(s):  
Monday Osagie Adenomon ◽  
Rotimi Olalekan Ojo
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Gross Domestic Product ◽  
Unemployment Rate ◽  
Inflation Rate ◽  
Domestic Product ◽  
Real Gross Domestic Product ◽  
Long Run ◽  
Short Run ◽  
Per Capita

Research background: Relationship between inflation rate, unemployment rate, interest rate and real gross domestic product per capita in Nigeria. However, there seems to be a short-run or long-run relationship among the macroeconomic variables.Purpose: This study investigated the impact of the inflation rate, unemployment rate and interest rate on real gross domestic product per capita (RGDPPC) (proxy for economic growth) and proffered recommendations towards enhancing economic growth and to reduce the distasteful effects of inflation rate, unemployment rate and interest rate in Nigeria in this present time economic challenges.Research methodology: This study applied a linear dynamic model Autoregressive Distributed Lag (ARDL) modeling technique to analyze the short-run dynamics and long-run relationship of the economic growth in Nigeria over the sample period between 1984 and 2017 using annual secondary data extracted from World Bank Development Indicators Report (last updated January 2019).Results: The empirical results showed that there was long-run relationship between inflation rate, unemployment rate and interest rate on real gross domestic product per capita (proxy for economic growth) in Nigeria. The result further revealed that only unemployment rate had a significant positive impact on real gross domestic product per capita in the long-run and inflation rate had a significant negative impact on real gross domestic product per capita in the short-run.Novelty: Therefore, the study concluded that unemployment rate and inflation rate proved to have significant impacts on economic growth in the long-run and short-run respectively. Formulation of policies to reduce unemployment through the adoption of labour concentrated technique of production, entrepreneurship development and policy to keep the inflation rate at single digit.

scholarly journals Autoregressive Distributed Lag Modeling of the Effects of Some Macroeconomic Variables on Economic Growth in Nigeria

2020 ◽  
Vol 20 (2) ◽  
pp. 1-19
Author(s):  
Monday Osagie Adenomon ◽  
Rotimi Olalekan Ojo
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Gross Domestic Product ◽  
Unemployment Rate ◽  
Inflation Rate ◽  
Domestic Product ◽  
Real Gross Domestic Product ◽  
Long Run ◽  
Short Run ◽  
Per Capita

Abstract Research background: The relationship between inflation rate, unemployment rate, interest rate and real gross domestic product per capita in Nigeria. However, there seems to be a short-run or long-run relationship among the macroeconomic variables. Purpose: This study investigated the long and short run impacts of the inflation rate, unemployment rate and interest rate on real gross domestic product per capita (RGDPPC) (proxy for economic growth). Research methodology: This study applied a linear dynamic model Autoregressive Distributed Lag (ARDL) modeling technique to analyze the short-run dynamics and long-run relationship of economic growth in Nigeria over the sample period between 1984 and 2017 using annual secondary data extracted from the World Bank Development Indicators Report. Results: The empirical results showed that there was a long-run relationship between the inflation rate, unemployment rate and interest rate on real gross domestic product per capita (proxy for economic growth) in Nigeria. The results further revealed that only the unemployment rate had a significant positive impact on real gross domestic product per capita in the long-run and the inflation rate had a significant negative impact on real gross domestic product per capita in the short-run. Novelty: Therefore, the study concluded that the unemployment rate and inflation rate proved to have significant impacts on economic growth in the long-run and short-run respectively. The formulation of policies to reduce unemployment through the adoption of a labour concentrated technique of production, entrepreneurship development and policy to keep the inflation rate a single digit.

scholarly journals Agricultural Output, Government Expenditure and Economic Growth in Nigeria: A Gregory-Hansen Cointegration Test with Structural Breaks

2021 ◽  
Vol 17 (41) ◽  
pp. 38
Author(s):  
Ali Salisu ◽  
Haladu Adahama Ibrahim
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Gross Domestic Product ◽  
Government Expenditure ◽  
Domestic Product ◽  
Agricultural Output ◽  
Real Gross Domestic Product ◽  
Long Run ◽  
Short Run ◽  
Positive Effect

The agricultural sector at large plays a significant role in augmenting economic growth, serves as a source of income to the people, provides food to the teeming population, serves as a source of raw materials to the industries and provides foreign exchange to the country, etc. The current study investigates the short-run and long-run relationship among agricultural output, Government expenditure, and Economic growth in Nigeria using annual time series data from 1985 to 2019. The Zivot-Andrew unit root test indicates that gross domestic product, agricultural output, and exchange rate are stationary at first difference while government expenditure is stationary at level. The Gregory-Hansen test with structural break has confirmed the existence of a cointegration relationship among the variables employed. The Autoregressive Distributive Lag (ARDL) model with break indicates that, in the short-run agricultural output has a negative and statistically insignificant effect on real gross domestic product Nigeria, government expenditure has a positive and statistically significant effect on real gross domestic product in Nigeria, and the exchange rate has a positive and statistically significant effect on real gross domestic product in Nigeria. The break-point coefficient has positive and statistically significant. The long-run result shows that agricultural output has a positive effect on the real gross domestic product in Nigeria, government expenditure has a positive effect on real gross domestic product in Nigeria, and the exchange rate has positive effects on the real gross domestic product in Nigeria. The break coefficient shows positive and statistically significant. The study recommends that the Nigerian government should reduce the lending rate on agriculture and provide incentives to the farmers, this will encourage farmers to borrow and consequently, agricultural output will increase and the Nigerian government should increase its expenditure on agriculture to boost the sector and achieve higher economic growth.

scholarly journals Value Creation through Public Debt and Economic Growth of Nigeria

2019 ◽  
Vol 5 (7) ◽  
pp. 63
Author(s):  
Oshadare S.A. ◽  
Ashamu S.O. ◽  
Raheem A.N. ◽  
Ojeaga P. ◽  
Ajayi J.A.
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Value Creation ◽  
Public Debt ◽  
External Debt ◽  
Domestic Product ◽  
Real Gross Domestic Product ◽  
Long Run ◽  
Short Run ◽  
Internal Debt

<p>The study examined the effect of value creation through public debt on economic growth in Nigeria between 1986 and 2016 using Autoregressive Distributed Lag (ARDL). The variables used in the study are a real gross domestic product, internal debt, external debt and Total debt service of Nigeria. They were tested for stationarity using the Augmented Dickey-Fuller and Philip Perron test. The result showed that the variables are stationary at first differencing. Co-integration test was also performed and the result revealed the presence of co-integration between public debt and economic growth. The co-integration results show that public debt and economic growth have long run relationship. The findings of the ARDL model via short run model result and long-run model result between public debt and economic growth in Nigeria is that in the short run external debt and internal debt are negatively related to the real gross domestic product but has effect on the economic growth, external debt is negatively related but has no effect to the economic growth. Whereas in the long run model, internal debt and debt service are also negatively related to the real gross domestic product but significant to the economic growth, external debt is positively related but has no effect to the economic growth. The study concluded that public debt and economic growth have long-run relationship, and they are positively related if the government will create the value that citizens desired by being sincere with the loan obtained and use it for the development of the economy rather than channel the funds to their personal benefit.</p>

scholarly journals Econometric Perspective of the Oil Consumption and Economic Growth Relation in India

2020 ◽  
Vol 4 (4) ◽  
pp. 1-6
Author(s):  
Singh K
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Domestic Product ◽  
Oil Consumption ◽  
Causality Test ◽  
Vector Error Correction ◽  
Long Run ◽  
Policy Variable ◽  
Study Results ◽  
Short Run

This research aims to study the existence and direction of the short-run or long-run relationship between per capita oil consumption and gross domestic product in India. The data from 1965 to 2015 had analyzed by employing the vector error correction model. For the verification of the same result, a standard Granger causality test had performed. The study results have suggested the existence of a long-run relationship and show the direction of changes in gross domestic product cause changes in oil consumption. As a policy implication, economic growth can be considered a policy variable to improve India's oil resources.

scholarly journals Non-Oil Sector and Economic Growth in Nigeria: The National Accounts Perspective

2021 ◽  
Vol 10 (1) ◽  
pp. 185
Author(s):  
Abel Oghenevwoke Ideh ◽  
Ndu Marvis Okolo ◽  
Emeka Steve Emengini
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Domestic Product ◽  
National Accounts ◽  
Model Stability ◽  
Real Gross Domestic Product ◽  
Long Run ◽  
Short Run ◽  
Oil Sector ◽  
The Impact

This study examines the impact of expansion in non-oil sector on sustainable economic growth of Nigeria economy. The study sourced data from the Central bank of Nigeria (CBN) statistical bulletin covering the periods of 2000 – 2019. An economic growth model was formulated using the study variables and the model was estimated using vector auto-regression  (VAR) techniques, other diagnostic tests such as  Roots of Characteristic Polynomial for VAR model stability, Augmented Dickey-Fuller test for time series stationarity, and granger causality tests were conducted to ensure the reliability of the model estimates. The analysis revealed that the estimated model is stable while the VAR and variance decomposition results shows that real gross domestic product is strongly endogenous in the short run but weakly endogenous in the long run. Further findings suggest that in the long run non-oil sector is strongly endogenous to real gross domestic product (92% contribution). The study, therefore, recommends diversification of the Nigerian economy by focusing more attention on agriculture, solid minerals, and service sectors as they tend to influence economic growth in the long run. More so, improved frameworks of accounting in areas of non-oil revenues are desirable for the accountancy profession.

DETERMINANTS OF INFLATION IN PAKISTAN: AN ECONOMETRIC ANALYSIS USING JOHANSEN CO-INTEGRATION APPROACH

2011 ◽  
Vol 01 (05) ◽  
pp. 71-82
Author(s):  
Furrukh Bashir ◽  
Shahbaz Nawaz ◽  
Kalsoom Yasin ◽  
Usman Khursheed ◽  
Jahanzeb Khan ◽  
...  
Keyword(s):  
Gross Domestic Product ◽  
Price Index ◽  
Price Level ◽  
Consumer Price Index ◽  
Domestic Product ◽  
Government Expenditures ◽  
Government Revenue ◽  
Macroeconomic Variables ◽  
Long Run ◽  
Short Run

Inflation is regarded as regressive taxation against the poor. The most visible impact of inflation in recent times is its effect on real output, relative prices, taxes and interest rates. The study focuses to examine demand side and supply side determinants of inflation in Pakistan on economic and econometric criterion and also to investigate causal relationships among some macroeconomic variables. For that purpose, study has undertaken time series data for the period from 1972 to 2010. Long run and short run estimates have been investigated using Johansen Co-integration and Vector Error Correction approached. Causal relationships have been observed using Granger causality test. Data on macroeconomic variables have been selected from Handbook on Statistics of Pakistan 2010. The findings of the study reveal that in the long run consumer price index has found to be positively influenced by money supply, gross domestic product, imports and government expenditures on the other side government revenue is reducing overall price level in Pakistan. Long run elasticities of Price level with respect to money supply, gross domestic product, government expenditures, government revenue and imports are 0.61, 0.73, 0.32, -1.37 and 0.41 respectively. In the short run, last year consumer price index and two years before government revenue are directly involved in enhancing consumer price index of current year. Improvement in gross domestic product and government expenditures is necessary but it is suggested that there should be optimal level for all of them so that price level should be stable.

Financial Deepening, Financial Intermediation and Nigerian Economic Growth: Time Variant Analysis

2019 ◽  
pp. 60-73
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Gross Domestic Product ◽  
Private Sector ◽  
Money Supply ◽  
Domestic Product ◽  
Financial Deepening ◽  
Causality Test ◽  
Real Gross Domestic Product ◽  
Long Run

This study examines financial deepening, financial intermediation and Nigerian economic growth. The main purpose is to examine the relationship between financial deepening and Nigerian economic growth while the specific objectives are to examine the impact of interest rate, capital market development, rational savings, credit to private sector and broad money supply on the growth of Nigerian. Secondary data of the variables were sourced from the publications of Central Bank of Nigeria (CBN) from 1981-2017. Nigerian Real Gross Domestic Product (RGDP) was used as dependent variable while Broad money supply (M2), Credit to Private Sector (CPS), National Savings (NS), Capital Market Capitalization (CAMP) and Interest Rate (INTR) was used as independent variables. Multiple regressions with E-view statistical package were used as data analysis techniques. Cointegration test, Augmented Dickey Fuller Unit Root Test, Granger causality test was used to determine the relationship between the variable in the long-run and short-run. R2, F – statistics and β Coefficients were used to determine the extent to which the independent variable affects the dependent variable. It was found from the regression result that Broad Money Supply, credit to private sector have position effect on the growth of Nigerian Real Gross Domestic Product while National Savings, Capitalization and Interest Rate on Nigeria Real Gross Domestic Product. The co-integration test revealed presence of long-run relationship among the variables, the stationary test indicated stationarity of the variables at level. The Granger Causality Test found bi – variant relationship from the dependent to the independent and from the independent to the dependent variables. The regression summary found 99.0% explained variation, 560.5031, F – statistics and probability of 0.00000. From the above, the study concludes that financial deepening has significant relationships with Nigerian economic growth. We recommend that government and the financial sector operators should make policies that will further deepen the functions of the financial system to enhance Nigerian economic growth.

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