Impact of Tourism on Economic Growth of Nepal: Is Tourism-Led Growth Hypothesis Valid for Nepal?

A voluminous study is available on tourism-growth nexus as tourism industry received considerable attention as a potential source of economic growth. This paper empirically examines the impact of tourism on economic growth of Nepal by using time series data of 1976-2020 and applying autoregressive distributed lag (ARDL) approach. Real GDP was used as proxy measure of economic growth, which was the outcome variable whereas the variable of interest was tourism receipts. Foreign aid, total volume of trade and ratio of government consumption expenditure to GDP were taken as control variables. The result of ARDL model shows that tourism has no significant impact on economic growth of Nepal in both short-run and long-run. However, total volume of trade has positive and significant effect on economic growth in short-run whereas foreign aid, total volume of trade and ratio of government consumption expenditure to GDP have positive and significant effect on economic growth in the long-run. In such context of tourism and growth relationship, tourism-led growth hypothesis is rejected for Nepal.

Impact of the government size on economic growth in the Western Balkan countries

The Keynesian theory states that economic growth is positively affected by government spending, while Classical theory states that economic growth is negatively affected by government spending, as is stated by neoclassical public choice theorists (Nyasha & Odhiambo, 2019). Based on these theories, many authors have carried out research on the impact of economic freedom on economic growth by analyzing various empirical cases. Bergh and Karlsson (2010) with the findings from his paper confirmed that the countries with the highest government size have an elevated growth in the globalization index of KOF and the Fraser Institute’s economic freedom index. The main aim of this paper is to analyze the government size impact on the growth of the economy in the Western Balkan in the time period 2000–2017 according to Fraser Institute’s data, incorporating the following econometric models: fixed and random effects, pooled ordinary least squares (OLS), and Hausman-Taylor IV. With these models, this paper analyzes a government size and its components: government enterprises and investment, government consumption, transfers, and subsidies. The results illustrate a relationship between the size of the government and the growth of the economy in the Western Balkans that is positive. 1% increase in government size affects 0.29% gross domestic product (GDP) growth per capita. According to the Hausman-Taylor instrumental variable, 1% growth of government consumption is affected by 0.69% the decline in GDP per capita. The growth rate of transfers and subsidies affects 0.17% of GDP growth per capita and 1% of government enterprises and investment affects 0.54% GDP growth per capita.

Determinants of Economic Growth: An Empirical Evaluation of the Ugandan Economy

This paper investigated the determinants of economic growth in Uganda for the period 1982–2015 using the autoregressive distributed lag (ARDL) mode. The paper was motivated by the impressive economic performance of Uganda since 1986 that made her graduate from a “failed state” to a “mature reformer” in a short time. The paper established that while the initial level of GDP growth, government consumption and investment positively affected Uganda’s economic growth in the short run, inflation, foreign aid and a policy dummy variable representing structural adjustment programmes negatively impacted GDP growth. The results revealed that in the long run, trade openness, population growth, government consumption and investment positively influenced GDP growth in Uganda. The results failed to show a significant relationship between trade openness, population growth and human capital accumulation and economic growth in the short run. The study also failed to show a significant relationship between inflation, human capital and foreign aid and economic growth in the long run. The paper recommends policies that enhances sound macroeconomic fundamentals such as price stability, investment promotion, trade openness, increased government consumption, increased population growth and effective foreign aid.

Impact of Foreign Direct Investment on Economic Growth in Ethiopia

This article analyses the impact of foreign direct investment (FDI) on Ethiopia’s economic growth. For this purpose, it uses Vector Autoregressions (VARs) model for the period comprised by years 1981-2017. It finds that FDI had a significant positive impact on Ethiopia’s economic growth for both the short and long-run periods. Adequate human capital and stable macroeconomic envirornment have catalysed the contribution of FDI to economic growth. Gross fixed capital formation and government consumption exerted a negative and significant effects on economic growth during the period of interest. Moreover, the study reveals that there is no causal relationship between FDI and economic development. Ethiopia needs to open up the economy and restructure the financial sector to attract foreign multinational companies (MNC), especially in the manufacturing and agro-industry sectors. Human capital investment should be strength to absorb more foreign direct investment and transform the agricultural-based economy to a modern one. Effective budgeting system and prioritisation of government consumption will support a more rapidly growing economy.