This paper applies the Vector Autoregressive (VAR) technique to annual data from 1980 to 2013 to provide empirical evidence on the long-run relationship between export trade and economic growth in Malawi. The export trade in this study is disaggregated into services and goods exports. Thus, the paper estimated two models. The first model deals with the relationship between export of services and growth, and the other one determines the relationship between goods export and growth. While the paper finds no evidence for long-run relationship between export of services and goods on economic growth, the empirical results suggest existence of a short-run nexus between export of goods and economic growth in Malawi. The Granger causality test results have also confirmed existence of a unidirectional causality from goods exports to economic growth and another unidirectional causality from goods exports to service exports.
Trade Openness and Volatility of India’s Exports-an Analysisiosrjce
It is widely acknowledged that an economy’s vulnerability to exogenous economic shocks is largely
determined by its degree of exposure to the global economy—that is, by its degree of economic openness. In this
respect it is important to note that the size of impact depends on each country’s mix of exports and main trading
partners—that is, on its degree of export concentration. By all accounts, higher degrees of export concentration
are strongly correlated with greater volatility in export earnings. Present paper focuses on estimating the
degree of India’s openness and estimating the diversification of India’s exports calculating Herfindahl index.
The findings of the present study suggests increasing integration of Indian economy with world economy since
the initiation of reform process in 1991.It rose from 10.30 in 1987-88 to 40.58 in 2013-14. Further the findings
of the study are in line with theoretical arguments that economic openness explains the fact that an economy
may be vulnerable to external economic shocks as reflected by losses in export revenues and growth slowdowns
as the estimated correlation coefficients between variations in degree of openness and variations in earnings
from total exports and earnings from manufacturing exports (having largest share in total exports) are high and
positive. So far as product diversification of Indian exports is concerned, findings of the study suggest almost no
increase in it since 1990-91. Rather the concentration has slightly increased in recent past. Need for increasing
product diversification was also realised in Economic Survey 2012-13 after a drastic fall in exports in dollar
terms. The Economic Survey 2012-2013 presented by Finance Minister P Chidambaram in Parliament stated,
‘growth in exports can only be achieved with greater diversification of products’.
THE IMPACT OF TRADE LIBERALIZATION ON ECONOMIC GROWTH; THE CASE OF SUB-SAHARA...AkashSharma618775
The main aim of this research is to explore the effect of trade liberalization on economic growth in subSaharan Africa by analyzing certain macro-economic indicators using Ordinary Least Squares approach to
estimate regression equations. Many developing countries have substantially liberalized their trade regime over the
past three decades, either unilaterally or as part of multilateral initiatives. Nevertheless, trade barriers remain
high in many developing countries. One of the concerns that attributes to the reluctance of many of these countries
to liberalize their trade regime is the possible worsening of the trade balance.
This research paper is meant to give a recommendation on which macro-economic indicators sub-Saharan African
countries should pay particular attention to, implementing the necessary policies to ensure its effectiveness thereby
ensuring a step-up in those aspects of the economy in order to promote development. It considers 46 different
countries with different economic policies in sub-Saharan Africa for a 14-year period. Most papers considering
sub-Saharan African region consider a selected few countries based on certain economic reasons of their choice,
and those who consider most countries in the region have different macroeconomic indicators they employ for their
modeling. This paper considers if not all, almost all sub-Saharan African countries regardless of their economic
status.
External Trade Benefits and Poverty Reduction in English Speaking West Africa...iosrjce
This research examines the impact of external trade benefits on poverty reduction in five English
Speaking West African Countries (ESWACs) from 1980 to 2013. These countries include; The Gambia, Ghana,
Liberia, Nigeria and Sierra Leone). The study expressed external trade benefits (ETB) as increase in export
earnings (EXE), trade openness (TOP), total government expenditure (TGE) and reduction in foreign exchange
rate (FER), while poverty level is expressed as real gross domestic income (GNI) per capita current US Dollar.
Theoretically, the study relied on five trade theories, in practice; the study constructs a balanced panel data
structure (BPDS) and methodologically, departs from the classical OLS and 1st generation panel econometric
techniques to adopting recently developed 2nd generation panel data econometric methods. The results of the
study reveal that external trade benefits were not found to be significant enough to reduce the poverty level in
ESWACs from 1980 to 2013.This impliesthat external trade benefits did not significantly increase GNI per
capita in ESWACs within the period of study. Based on this result, the study therefore concluded that the impact
of external trade benefits on poverty level is a trivial matter because external trade benefits have not
comprehensively and significantly augmented the status of real gross domestic income (GNI) percapital
currentUSDollar of English speaking West African countries within the period of study. Following this
conclusion we recommended, among others, that policy implication on the result of co-integration of the panel
equation 2 is that more credible expansionary fiscal policy should be pursued as this will help to pump more
money into circulation with the aim of creating and expanding employment opportunities that would be able to
reduce poverty in the region and cut in public investment spending on agriculture and industrial sectors should
be avoided so that the countries will be encouraged to produce locally and also export.
Nigeria and Global Competitiveness: Imperative for International Trade a Comp...inventionjournals
This study is aimed at examining the level of Nigeria’s global competitiveness in relation to some selected economies in Africa and to establish the links between international trade and global competitiveness. In conducting the study secondary data were sourced from the Africa Competitiveness report 2015 and the Global Competitiveness report 2014- 2015 as point of reference and in providing the data necessary for the analysis. Descriptive statistics was used in analyzing the data provided by the insight reports while comparison was made with six African oil exporting countries. Findings showed that Nigeria is having a weak performance in almost all the factors considered with a very dismal performance in its institutions, health and primary education and infrastructure to change this position to a positive one, the Nigeria economy should be transformed by diversifying the economy from crude oil dependence to a multi sector driven economy.
Post Deregulation Evaluation of Non-Oil Export and Economic Growth Nexus in N...iosrjce
The impact of non-oil export on economic growth in Nigeria has been one of the most debated issues
in recent years. This study examines the role of non-oil export on economic growth since deregulation between
1986 when deregulation took effect and 2012 which previous studies might have ignored. In achieving the
objectives of the study, Ordinary Least Square Methods was employed. The study reveals that the impact of nonoil
export on the economic growth was significant and positive as a unit increase in non-oil export impacted
positively by 43% on the productive capacity of goods and services in Nigeria during the period. This is evident
in the study that the contribution of non-oil sector during the period in Nigeria has improved above the results
of other studies carried out from the pre-deregulation era. The study among other things encourages the
government to further reinforce the legislative and supervisory framework of the non-oil sectors in Nigeria and
diversify the economy to ensure utmost contributions from all faces of the non-sector to economic growth of Nigeria.
The Relation Between Exports of Main Products And Economic Growth of Key Econ...inventionjournals
This paper clarifies the literature of key product export growth and regional economic growth. The paper analyses impacts of key product export on regional economic growth and vice versa. The paper provides recent empirical evidence of the relation. Besides an evaluation of the recent relation between export growth and economic growth in Viet Nam, the paper assesses the relation between key product export and economic growth during 1996-2012 period based on quantitative and qualitative approaches. With constructed models, the paper examines the relation between key product export and economic growth and concludes that it is positive. The research findings show that key product export in every economic region contributes positively to regional economic growth although it varies in different regions. Based on existing literature and empirical analysis, the paper provides a number of strategies to improve key product export contribution to key economic regions in the most effective manner and vice versa. The paper creates a fundament for researchers and policy makers both regionally and nationally in order for developing effective orientations, policies and measures for promoting export and sustainable eoconomic development.
Trade Openness and Volatility of India’s Exports-an Analysisiosrjce
It is widely acknowledged that an economy’s vulnerability to exogenous economic shocks is largely
determined by its degree of exposure to the global economy—that is, by its degree of economic openness. In this
respect it is important to note that the size of impact depends on each country’s mix of exports and main trading
partners—that is, on its degree of export concentration. By all accounts, higher degrees of export concentration
are strongly correlated with greater volatility in export earnings. Present paper focuses on estimating the
degree of India’s openness and estimating the diversification of India’s exports calculating Herfindahl index.
The findings of the present study suggests increasing integration of Indian economy with world economy since
the initiation of reform process in 1991.It rose from 10.30 in 1987-88 to 40.58 in 2013-14. Further the findings
of the study are in line with theoretical arguments that economic openness explains the fact that an economy
may be vulnerable to external economic shocks as reflected by losses in export revenues and growth slowdowns
as the estimated correlation coefficients between variations in degree of openness and variations in earnings
from total exports and earnings from manufacturing exports (having largest share in total exports) are high and
positive. So far as product diversification of Indian exports is concerned, findings of the study suggest almost no
increase in it since 1990-91. Rather the concentration has slightly increased in recent past. Need for increasing
product diversification was also realised in Economic Survey 2012-13 after a drastic fall in exports in dollar
terms. The Economic Survey 2012-2013 presented by Finance Minister P Chidambaram in Parliament stated,
‘growth in exports can only be achieved with greater diversification of products’.
THE IMPACT OF TRADE LIBERALIZATION ON ECONOMIC GROWTH; THE CASE OF SUB-SAHARA...AkashSharma618775
The main aim of this research is to explore the effect of trade liberalization on economic growth in subSaharan Africa by analyzing certain macro-economic indicators using Ordinary Least Squares approach to
estimate regression equations. Many developing countries have substantially liberalized their trade regime over the
past three decades, either unilaterally or as part of multilateral initiatives. Nevertheless, trade barriers remain
high in many developing countries. One of the concerns that attributes to the reluctance of many of these countries
to liberalize their trade regime is the possible worsening of the trade balance.
This research paper is meant to give a recommendation on which macro-economic indicators sub-Saharan African
countries should pay particular attention to, implementing the necessary policies to ensure its effectiveness thereby
ensuring a step-up in those aspects of the economy in order to promote development. It considers 46 different
countries with different economic policies in sub-Saharan Africa for a 14-year period. Most papers considering
sub-Saharan African region consider a selected few countries based on certain economic reasons of their choice,
and those who consider most countries in the region have different macroeconomic indicators they employ for their
modeling. This paper considers if not all, almost all sub-Saharan African countries regardless of their economic
status.
External Trade Benefits and Poverty Reduction in English Speaking West Africa...iosrjce
This research examines the impact of external trade benefits on poverty reduction in five English
Speaking West African Countries (ESWACs) from 1980 to 2013. These countries include; The Gambia, Ghana,
Liberia, Nigeria and Sierra Leone). The study expressed external trade benefits (ETB) as increase in export
earnings (EXE), trade openness (TOP), total government expenditure (TGE) and reduction in foreign exchange
rate (FER), while poverty level is expressed as real gross domestic income (GNI) per capita current US Dollar.
Theoretically, the study relied on five trade theories, in practice; the study constructs a balanced panel data
structure (BPDS) and methodologically, departs from the classical OLS and 1st generation panel econometric
techniques to adopting recently developed 2nd generation panel data econometric methods. The results of the
study reveal that external trade benefits were not found to be significant enough to reduce the poverty level in
ESWACs from 1980 to 2013.This impliesthat external trade benefits did not significantly increase GNI per
capita in ESWACs within the period of study. Based on this result, the study therefore concluded that the impact
of external trade benefits on poverty level is a trivial matter because external trade benefits have not
comprehensively and significantly augmented the status of real gross domestic income (GNI) percapital
currentUSDollar of English speaking West African countries within the period of study. Following this
conclusion we recommended, among others, that policy implication on the result of co-integration of the panel
equation 2 is that more credible expansionary fiscal policy should be pursued as this will help to pump more
money into circulation with the aim of creating and expanding employment opportunities that would be able to
reduce poverty in the region and cut in public investment spending on agriculture and industrial sectors should
be avoided so that the countries will be encouraged to produce locally and also export.
Nigeria and Global Competitiveness: Imperative for International Trade a Comp...inventionjournals
This study is aimed at examining the level of Nigeria’s global competitiveness in relation to some selected economies in Africa and to establish the links between international trade and global competitiveness. In conducting the study secondary data were sourced from the Africa Competitiveness report 2015 and the Global Competitiveness report 2014- 2015 as point of reference and in providing the data necessary for the analysis. Descriptive statistics was used in analyzing the data provided by the insight reports while comparison was made with six African oil exporting countries. Findings showed that Nigeria is having a weak performance in almost all the factors considered with a very dismal performance in its institutions, health and primary education and infrastructure to change this position to a positive one, the Nigeria economy should be transformed by diversifying the economy from crude oil dependence to a multi sector driven economy.
Post Deregulation Evaluation of Non-Oil Export and Economic Growth Nexus in N...iosrjce
The impact of non-oil export on economic growth in Nigeria has been one of the most debated issues
in recent years. This study examines the role of non-oil export on economic growth since deregulation between
1986 when deregulation took effect and 2012 which previous studies might have ignored. In achieving the
objectives of the study, Ordinary Least Square Methods was employed. The study reveals that the impact of nonoil
export on the economic growth was significant and positive as a unit increase in non-oil export impacted
positively by 43% on the productive capacity of goods and services in Nigeria during the period. This is evident
in the study that the contribution of non-oil sector during the period in Nigeria has improved above the results
of other studies carried out from the pre-deregulation era. The study among other things encourages the
government to further reinforce the legislative and supervisory framework of the non-oil sectors in Nigeria and
diversify the economy to ensure utmost contributions from all faces of the non-sector to economic growth of Nigeria.
The Relation Between Exports of Main Products And Economic Growth of Key Econ...inventionjournals
This paper clarifies the literature of key product export growth and regional economic growth. The paper analyses impacts of key product export on regional economic growth and vice versa. The paper provides recent empirical evidence of the relation. Besides an evaluation of the recent relation between export growth and economic growth in Viet Nam, the paper assesses the relation between key product export and economic growth during 1996-2012 period based on quantitative and qualitative approaches. With constructed models, the paper examines the relation between key product export and economic growth and concludes that it is positive. The research findings show that key product export in every economic region contributes positively to regional economic growth although it varies in different regions. Based on existing literature and empirical analysis, the paper provides a number of strategies to improve key product export contribution to key economic regions in the most effective manner and vice versa. The paper creates a fundament for researchers and policy makers both regionally and nationally in order for developing effective orientations, policies and measures for promoting export and sustainable eoconomic development.
The purpose of this paper is to investigate how firm age and size affect the small and medium firm to move from the local to international market. Literature has strongly suggested that the firm age and firm size some of the key factors that influence internationalization of medium sized firms for many developing economies though little research has been done regarding the same for developing economies. An in depth survey was conducted with 73 Kenya Top 100 medium companies targeting the CEOs and/or key executives by the use of a questionnaire instrument. The data was analyzed by the use of Statistical Package for Social Scientists (SPSS) Version 21. Both descriptive and inferential statistics were used to present data. The study found that if Kenyan medium sized firms would sustainably increase the size of their operation, as they age, this would increase theirreadiness to internationalize their operations. They would therefore achieve superior capability to maximize on any opportunity that might arise for doing business in foreign market.The study recommends that the Government of Kenya should provide a supportive environment that would enable medium firmsto grow and overcome the challenges of smallness which is a precursor to internationalization.
The theoretical and empirical relationship between foreign trade and economic growth has extensively been discussed in economics in recent years. There has been a long held belief about the positive correlation between these two variables. In spite of this countless study, the link has been proven to be empirically weak. In view of this, the aim of this dissertation is to empirically examine the relationship between trade and growth. Using trade openness and ordinary least sequence was employed to estimate the impact of foreign trade on Gross domestic product.
Globalisation has become associated with difficulties for less-skilled workers, inequality and a general sense that it is not working for large sections of society, in both advanced and emerging economies. There is much to be done with domestic policy to improve outcomes, but there is also a strong need for better alignment of domestic and international policies and a more level playing field in the cross-border activities of businesses.
This booklet reproduces highlights from the 2017 edition of the OECD Business and Finance Outlook which focuses on ways to enhance “fairness”, in the sense of strengthening global governance, to ensure a level playing field in trade, investment and corporate behaviour, through the setting and better enforcement of global standards.
Find out more here http://www.oecd.org/daf/oecd-business-and-finance-outlook-2017-9789264274891-en.htm
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Effect of Foreign Exchange Rate Volatility on Industrial Productivity in Nige...ijtsrd
Effect of exchange rate volatility on industrial productivity has been a controversial debate among academia and experts. This study examines effect of exchange rate volatility on industrial productivity, many studies have mixed results on the direction of exchange rate volatility and the scope of the thesis covers 35years 1981 2015 , the pre and post Structural Adjustment Programme while primary and secondary data gathered from the Nigeria industrial sector by questionnaire and time series obtained from the Central Bank of Nigeria statistical bulletin, 2014 2016 were used. The data were estimated using descriptive statistical methods chi square and mean scores and Phillip Perron and Augmented Dickey Fuller used to determine the unit roots and non stationarity among the variables. ARDL and Bound test was applied to determine short and long run co integration among independent and dependent variables. Diagnostic and Normality test applied to test for stability. The F statistics is 159.3 and the R squared is 99.7 shown that variables are jointly significant and model a good fit. The Durbin Watson of 3.04 showed no serial correlation. The results shown that foreign exchange rate has a positive relationship with industrial performance, however, the exchange rate volatility crumbled industrial production as machinery and raw materials are imported for the industry productions, while bank lending rates, FDT, Inflation and PCI have negative coefficient. The ADRL and Bound test revealed a long run relationship among the variables at 5 significance level. The government should pursue currency appreciation as exporter of mono product and encourages non oil exports and discourage Nigerian cosmopolitan pattern of consumptions. Olaleye John Olatunde | Ojomolade Dele Jacob ""Effect of Foreign Exchange Rate Volatility on Industrial Productivity in Nigeria, 1981- 2015"" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-3 , April 2019, URL: https://www.ijtsrd.com/papers/ijtsrd22910.pdf
Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/22910/effect-of-foreign-exchange-rate-volatility-on-industrial-productivity-in-nigeria-1981--2015/olaleye-john-olatunde
This paper investigates the evolution and determinants of manufactured exports and FDI in MED-11 countries over the period 1985-2009 as well as the prospects of their evolution under different scenarios pertaining to the evolution of the determinants. The econometric analysis confirmed the role of exchange rate depreciation, the openness of the economy and the quality of institution and infrastructure in fostering manufactured exports and FDI inflows in the Region. The prospects' assessment suggested that a scenario of deeper integration with the EU entails superior performance regarding manufactured exports and FDI than status quo or less integration with the EU but greater regional integration.
Authored by: Khalid Sekkat
Published in 2012
Abstract: Fortune telling may not be so difficult for someone who understands current global trends. This paper attempts to predict the future of management by considering the context of leadership, organizational trends, and its effects on the domestic labour market. The paper assumes an increase in government interventions across the globe to protect the domestic markets, emphasizing the circumstances of China and the United States of America. The paper further discusses two futuristic leadership models; the global leadership model and evolutionary-based management models then sets out two possible scenarios of future organizations and concludes by highlighting the necessary characteristics of the future manager.
Macroeconomic Variables and Manufacturing Sector Output in Nigeriaijtsrd
Management of macroencomic variables has been noted as instrumental to a well performing manufacturing sector. This study thus examined the effect of macroencomic variables on the manufacturing sector in Nigeria within a liberalised economic era of 1986 to 2018. The Autoregressive Distributive Lag model was employed for data analysis. The results revealed that macroeconomic variables has 93 significant short run policy effect but no significant long run effects on manufacturing sector output in Nigeria. The endogenous dynamics of manufacturing sector previous year outputs exerted a significance influence on the macroeconomic variables long run relationship effect on current year. The explanatory variables suggested that money supply M2 , interest rate INTR and credit to private sector CPS exerted positive effects on manufacturing sector output at short term trends. The study thus posits that macroeconomic variables have varying levels of effects on the manufacturing sectors of Nigerian economy. The monetary authority should employ the monetary policy stance in a pattern that increases money supply in order to boost investment in manufacturing sector which would eventual bring about improved output to Nigeria. Dr. Loretta Anayo Ozuah "Macroeconomic Variables and Manufacturing Sector Output in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-2 , February 2021, URL: https://www.ijtsrd.com/papers/ijtsrd38420.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/38420/macroeconomic-variables-and-manufacturing-sector-output-in-nigeria/dr-loretta-anayo-ozuah
Agricultural Export, Oil Export and Economic Growth in Nigeria: Multivariate ...Agriculture Journal IJOEAR
Abstract—Sustaining of nation’s economic growth for better footing and outlook is very crucial for the globe of recent, most especially for developing countries like Nigeria. The country as a vivid example of a developing nation is oil based economy, which adopts export promotion policy as the essentialtactic for growth. Yet the nation has not maximized her abundance of resources to aids growth, despite notable economic growth being experienced. In this view, there is an attempt to examine the relationship among agricultural export, oil export and output growth in Nigeria. The causal relationship among the variables was investigated by using times series data for the period between 1981 and 2014. All the macroeconomic variables were found to be stationary. The study revealed that there is significant relationship between economic growth and the agricultural export and oil export. Based on the findings, government of the country is being advised to initiate new and re-defined old policies that will diversify the export base. Likewise, policies that will improveand aid the nation’s domestic production is being encouraged, since long run relationship has been established among the macroeconomic variables.
The purpose of this paper is to investigate how firm age and size affect the small and medium firm to move from the local to international market. Literature has strongly suggested that the firm age and firm size some of the key factors that influence internationalization of medium sized firms for many developing economies though little research has been done regarding the same for developing economies. An in depth survey was conducted with 73 Kenya Top 100 medium companies targeting the CEOs and/or key executives by the use of a questionnaire instrument. The data was analyzed by the use of Statistical Package for Social Scientists (SPSS) Version 21. Both descriptive and inferential statistics were used to present data. The study found that if Kenyan medium sized firms would sustainably increase the size of their operation, as they age, this would increase theirreadiness to internationalize their operations. They would therefore achieve superior capability to maximize on any opportunity that might arise for doing business in foreign market.The study recommends that the Government of Kenya should provide a supportive environment that would enable medium firmsto grow and overcome the challenges of smallness which is a precursor to internationalization.
The theoretical and empirical relationship between foreign trade and economic growth has extensively been discussed in economics in recent years. There has been a long held belief about the positive correlation between these two variables. In spite of this countless study, the link has been proven to be empirically weak. In view of this, the aim of this dissertation is to empirically examine the relationship between trade and growth. Using trade openness and ordinary least sequence was employed to estimate the impact of foreign trade on Gross domestic product.
Globalisation has become associated with difficulties for less-skilled workers, inequality and a general sense that it is not working for large sections of society, in both advanced and emerging economies. There is much to be done with domestic policy to improve outcomes, but there is also a strong need for better alignment of domestic and international policies and a more level playing field in the cross-border activities of businesses.
This booklet reproduces highlights from the 2017 edition of the OECD Business and Finance Outlook which focuses on ways to enhance “fairness”, in the sense of strengthening global governance, to ensure a level playing field in trade, investment and corporate behaviour, through the setting and better enforcement of global standards.
Find out more here http://www.oecd.org/daf/oecd-business-and-finance-outlook-2017-9789264274891-en.htm
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Effect of Foreign Exchange Rate Volatility on Industrial Productivity in Nige...ijtsrd
Effect of exchange rate volatility on industrial productivity has been a controversial debate among academia and experts. This study examines effect of exchange rate volatility on industrial productivity, many studies have mixed results on the direction of exchange rate volatility and the scope of the thesis covers 35years 1981 2015 , the pre and post Structural Adjustment Programme while primary and secondary data gathered from the Nigeria industrial sector by questionnaire and time series obtained from the Central Bank of Nigeria statistical bulletin, 2014 2016 were used. The data were estimated using descriptive statistical methods chi square and mean scores and Phillip Perron and Augmented Dickey Fuller used to determine the unit roots and non stationarity among the variables. ARDL and Bound test was applied to determine short and long run co integration among independent and dependent variables. Diagnostic and Normality test applied to test for stability. The F statistics is 159.3 and the R squared is 99.7 shown that variables are jointly significant and model a good fit. The Durbin Watson of 3.04 showed no serial correlation. The results shown that foreign exchange rate has a positive relationship with industrial performance, however, the exchange rate volatility crumbled industrial production as machinery and raw materials are imported for the industry productions, while bank lending rates, FDT, Inflation and PCI have negative coefficient. The ADRL and Bound test revealed a long run relationship among the variables at 5 significance level. The government should pursue currency appreciation as exporter of mono product and encourages non oil exports and discourage Nigerian cosmopolitan pattern of consumptions. Olaleye John Olatunde | Ojomolade Dele Jacob ""Effect of Foreign Exchange Rate Volatility on Industrial Productivity in Nigeria, 1981- 2015"" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-3 , April 2019, URL: https://www.ijtsrd.com/papers/ijtsrd22910.pdf
Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/22910/effect-of-foreign-exchange-rate-volatility-on-industrial-productivity-in-nigeria-1981--2015/olaleye-john-olatunde
This paper investigates the evolution and determinants of manufactured exports and FDI in MED-11 countries over the period 1985-2009 as well as the prospects of their evolution under different scenarios pertaining to the evolution of the determinants. The econometric analysis confirmed the role of exchange rate depreciation, the openness of the economy and the quality of institution and infrastructure in fostering manufactured exports and FDI inflows in the Region. The prospects' assessment suggested that a scenario of deeper integration with the EU entails superior performance regarding manufactured exports and FDI than status quo or less integration with the EU but greater regional integration.
Authored by: Khalid Sekkat
Published in 2012
Abstract: Fortune telling may not be so difficult for someone who understands current global trends. This paper attempts to predict the future of management by considering the context of leadership, organizational trends, and its effects on the domestic labour market. The paper assumes an increase in government interventions across the globe to protect the domestic markets, emphasizing the circumstances of China and the United States of America. The paper further discusses two futuristic leadership models; the global leadership model and evolutionary-based management models then sets out two possible scenarios of future organizations and concludes by highlighting the necessary characteristics of the future manager.
Macroeconomic Variables and Manufacturing Sector Output in Nigeriaijtsrd
Management of macroencomic variables has been noted as instrumental to a well performing manufacturing sector. This study thus examined the effect of macroencomic variables on the manufacturing sector in Nigeria within a liberalised economic era of 1986 to 2018. The Autoregressive Distributive Lag model was employed for data analysis. The results revealed that macroeconomic variables has 93 significant short run policy effect but no significant long run effects on manufacturing sector output in Nigeria. The endogenous dynamics of manufacturing sector previous year outputs exerted a significance influence on the macroeconomic variables long run relationship effect on current year. The explanatory variables suggested that money supply M2 , interest rate INTR and credit to private sector CPS exerted positive effects on manufacturing sector output at short term trends. The study thus posits that macroeconomic variables have varying levels of effects on the manufacturing sectors of Nigerian economy. The monetary authority should employ the monetary policy stance in a pattern that increases money supply in order to boost investment in manufacturing sector which would eventual bring about improved output to Nigeria. Dr. Loretta Anayo Ozuah "Macroeconomic Variables and Manufacturing Sector Output in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-2 , February 2021, URL: https://www.ijtsrd.com/papers/ijtsrd38420.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/38420/macroeconomic-variables-and-manufacturing-sector-output-in-nigeria/dr-loretta-anayo-ozuah
Agricultural Export, Oil Export and Economic Growth in Nigeria: Multivariate ...Agriculture Journal IJOEAR
Abstract—Sustaining of nation’s economic growth for better footing and outlook is very crucial for the globe of recent, most especially for developing countries like Nigeria. The country as a vivid example of a developing nation is oil based economy, which adopts export promotion policy as the essentialtactic for growth. Yet the nation has not maximized her abundance of resources to aids growth, despite notable economic growth being experienced. In this view, there is an attempt to examine the relationship among agricultural export, oil export and output growth in Nigeria. The causal relationship among the variables was investigated by using times series data for the period between 1981 and 2014. All the macroeconomic variables were found to be stationary. The study revealed that there is significant relationship between economic growth and the agricultural export and oil export. Based on the findings, government of the country is being advised to initiate new and re-defined old policies that will diversify the export base. Likewise, policies that will improveand aid the nation’s domestic production is being encouraged, since long run relationship has been established among the macroeconomic variables.
Remittance inflow and economic growth the case of georgiaAzer Dilanchiev
Abstract:
Remittance inflow become one of the main source of capital flows in the world. It is noted that remittance is
very effective in promoting household welfare and as an alternative source of capital inflow. However in it
uncertain whether or not it leads to economic growth. This article examines the effects of remittances inflow
on economic growth in Georgian republic. The impact of remittance inflow on GDP growth was analyzed and
tested by Unit Root Test, Johansen Co-integration and VAR Granger Causality/Block Exogeneity Wald Tests.
In the paper the quarterly data interval from the first quarter of 1999 to third quarter of 2015 was used. As a
result it was found out that that there is a nexus between remittance and GDP and it is concluded that
remittance leads to increase in GDP growth.
Trade Liberalization and Trade Flows in Nigeria An Aggregated Analysisijtsrd
This study examines the impact of trade liberalization and trade flows in Nigeria using an econometric regression model of the Ordinary Least Square OLS . From the result of the OLS, it is observed that trade flows and export subsidies have a positive relationship with economic growth. This means that when trade flows and export subsidies are increasing, it will bring about more growth in Nigerian economy. On the other hand, import tariffs, import quotas and export taxes have a negative impact on economic growth in Nigeria. This means that if import tariffs, import quotas and export taxes are falling, there will be increase in economic growth. From the empirical work reviewed, some authors argued that trade liberalization and trade flows is positively related to economic growth while some authors argued that it is negatively related. The findings of the study also show that trade flows, import tariffs, import quotas and export taxes are statistically significant in explaining the Nigerian economy while export subsidy is statistically insignificant. The study therefore recommends that government should encourage import liberalization through reduction in tariff rates, gradual removal of Non-Tariff Barriers NTB , outright banning of certain goods which will ensure that our imports, following trade liberalization, is directed mainly on intermediate and capital goods. Imports of consumables would be brought to nil and therefore there would be a corresponding increase in the production of competitive import. Finally, the government should vigorously seek to improve the international stand of the economy with other economies of the world so as to enlarge the market for Nigerian exports. It should also re-orient its policy towards the external sector and ensure that the sector contribute optimally to output growth. Anionwu, Carol "Trade Liberalization and Trade Flows in Nigeria: An Aggregated Analysis" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-2 | Issue-6 , October 2018, URL: http://www.ijtsrd.com/papers/ijtsrd18911.pdf
Examining the Impact of Export-Led Growth Strategy: Evidences From Nigeria (1...inventionjournals
The Nigerian economy had for decades been dependent on the fragile leg of crude oil exports. An emerging trend however suggests that in the last ten years the economy was growing without job creation and poverty reduction consequent upon fall in the international oil markets. Expectedly, attention of scholars had shifted towards the development of non-oil exports as a substitute for this quagmire. This study analyses Export-Led Growth Strategy in Nigeria using Annual Data between 1960 and 2015. The study adopted the Autoregressive Distributed Lag (ARDL) Approach on a modified Cobb Douglass Production Function in the analysis. The choice of ARDL is informed by many considerations: it can be used irrespective of whether the regressors are I(1) or I(0) or a mixture of both. Results of the findings revealed that oil exports are directly related to GDP while non-oil exports are not, and implacably non-oil exports do not impact on GDP. The study also revealed that there is a long run relationship between GDP and both components of exports (oil and nonoil) which can be used to determine the possible direction of GDP. And in case of distortion in the economy, equilibrium can be restored at 12 per cent growth rate per annum as one of the study revelations. The study among others recommends that government should diversify the economy to ensure maximum contributions from all facets of the same to enhance economic growth of the country.
Pattern and Determinants of Export Diversification in BangladeshMd. Moulude Hossain
This paper analyzes the pattern and the main determinants of
export diversification in Bangladesh. A large data set of Bangladesh export during the period of 1980-81 to 2006-07 has been used for this purpose. Three main indexes have been used to explore the trend of export concentration and these three indicators of export diversification were calculated to determine the trend of export from Bangladesh. The
Hirschman Index, the Ogive Index and the Entropy Coefficient were used to analyze the diversification pattern of export from Bangladesh. From the analyses, robust evidence has been found across the specifications and indicators that the export basket of Bangladesh has continued to remain relatively undiversified and the country has not been able to translate its
comparative advantage into competitive advantage. Further, this study reveals that the export growth and overall economic growth are highly correlated and a robust restructuring in trade policy is needed for gaining momentum in diversification of export in Bangladesh. The analyses show that exports at the intensive margin account for the most important share of
overall trade growth. At the extensive margin, geographic diversification is more important than product diversification, especially for developing countries. Taking part in free trade agreements, thereby reducing trade barrier and costs, development of infrastructure and communication, extensive financing for export and policies emphasizing the development of human capital is now the need of time for improving diversification of export.
International Trade and Economic Growth: A Cointegration Analysis for UgandaPremier Publishers
The focus of the study was to establish whether there exists a long run relationship between various trade and other macro economic variables for Uganda for the period 1982 to 2018. The Autoregressive distributed lag (ARDL) model was used to establish the existence of a long run relationship between economic growth and trade variables. The empirical results suggest that in the short run, imports reduced development by -0.11 in second lag as P=0.025<0.005, while the exports increased development by 0.08 in the first lag as the p=0.015<0.005. But this was not true for the second lag. Lastly at all lags for the short run, inflation had positive run relationship on development (GDP). However, in the long run inflation reduced development by 0.61 ceteris-paribus at 5% level of significance.
This paper investigates the extent of macroeconomic volatility caused by the transfer pricing behavior of multinational corporations. The study examined two possible transmission channels through which transfer pricing causes macroeconomic volatility, namely, terms of trade and budget policy channels. Using the EGARCH model with annual data on selected variables from 1980 to 2017, the paper found evidence of macroeconomic volatility caused by transfer pricing. The size of the shock from transfer pricing is high and statistically significant in the terms of trade and budget policy channels. Negative shock from multinational corporations shifting taxable income between high and low tax regimes had a larger effect than a positive shock on the country’s budget policy. The volatility caused by transfer pricing was short-lived in the terms of trade channel. However, in the budget policy channel, past volatility of transfer pricing persisted for a longer period to explain current volatility.
The study provides an empirical assessment of how institutions and trade liberalization affect Malawi’s economic expansion. It tackles the absence of empirical research into how institutions affect economic growth and how trade liberalization policy affects institutions’ influence on growth (interaction effect). The study also seeks to find out if economic growth, however, affects institutions as theories differ on causality. The study uses a time series analysis and autoregressive distribution lag (ARDL) technique to obtain short-run and long-run results. The study was conducted from 1988, the official inception year of trade liberalization in Malawi, to 2014. The empirical results show that political and economic institutions, as well as trade liberalization, affect Malawi’s economic growth in both the short term and the long term. Trade liberalization and political institutions negatively affect economic growth in the short run and long run, whereas economic institutions positively affect economic growth in the short run and long run. The findings also show that when strong economic institutions rather than strong political institutions are present, the effect of trade liberalization on economic development is more prominent (positive). Finally, the study also finds that it is institutions that affect economic growth in Malawi and not the other way around.
In order to maximise the benefits of regional integration and look for new opportunities for competitiveness, policymakers, the private sector and development partners need access to accurate and comprehensive data on intra and inter-regional trade in Africa with respect to agricultural goods. It is in this context that CTA and the International Food Policy Research Institute (IFPRI) are launching the “African Agricultural Trade Status Report”, which examines the current status, trends and outlook in African trade performance, making an important contribution towards data and analysis of developments both at regional and at continental levels. The Report, which is released in conjunction with the Briefing, builds on the work by the Regional Strategic Analysis and Knowledge Support System (ReSAKSS) of CAADP and the African Growth and Development Policy Modeling Consortium (AGRODEP) trade and also reflects the CTA’s commitment to advancing knowledge and sharing of best practices relating to agricultural trade.
The Brussels Development Briefing n.47 on the subject of “Regional Trade in Africa: Drivers, Trends and Opportunities” took place on 3rd February 2017 in Brussels at the ACP Secretariat (Avenue Georges Henri 451, 1200 Brussels) from 09:00 to 13:00. This Briefing was organised by the ACP-EU Technical Centre for Agricultural and Rural Cooperation (CTA), in collaboration with IFPRI, the European Commission / DEVCO, the ACP Secretariat, and CONCORD .
This study is about the impact of selected macroeconomic variables on economic growth of Bangladesh. Economic growth of Bangladesh is measured in terms of annual nominal GDP growth rate. Least squared regression model has been employed considering exchange rate, export, import and inflation rate as independent variables and gross domestic product as the dependent variable in this study. The results reveal that export and import have significant positive impact on GDP growth rate. The other variables (exchange rate and inflation) are not significant, indicating that there exists no significant relationship among the variables. The findings will help the policy makers to make policies concerning the country’s economic growth to remain robust in the near future.
Similar to Export Trade and Economic Growth in Malawi: A Disaggregated Approach (20)
Purpose: Considering the mixed results of previous empirical studies with regard to how the real
exchange rates affect bilateral trade balance, this study intends to test the presence of not only the nonlinear
relationship but also the J-curve effect and Korea data from January 1985 through December 2013 is adopted.
The findings are helpful for emerging countries to evaluate their exchange policy. Methodology: Unit root test,
cointegration analysis and Vector Autoregressive Error Correction Model are adopted in this study. Findings: The
results indicate that there is a co-integration relationship between real exchange rates and bilateral trade balance
in both linear and nonlinear models and Korea-U.S. bilateral trade balance exhibited no J-curve effect when the
Korean won depreciated against U.S. dollar. A performance evaluation proves nonlinear model is better than
linear model. Recommendation: The findings help us to realize that depreciation has a limited effect on
promoting trade balance. Sharp currency depreciation will hurt country’s trade balance.
It is evident that financial services industry has been undergoing a profound transformation in Nigeria. Rapid changes in the banking environment, increased competition by new players from non-banking sector, product innovations, globalization and technological advancement-all these have led to a market situation in which the battle for consumers is intense. We look at the prospect and challenges of mobile banking services in Nigeria using four selected' banks as case study, reviewed prior literatures on mobile banking, analyze the different factors that impact the market, and give direction for future research on this emerging field. A framework of four contingency and five competitive factors were proposed to facilitate the analysis. Factors affecting mobile services in Nigeria such interoperability, unstable power supply, network problems etc. were identified. Finally, we recommended that non–bank led model of mobile banking be adopted by Nigeria banks to make the services transformational instead of additives as is currently being practiced.
Abstract: The paper examines the impact of public sectoral expenditure on economic growth in Nigeria for the period 1981-2013. It was observed that the growth of government expenditure has not fully felt by the economy. The econometric methodology employed is the ARDL model and results show that while the impact of government expenditure on administration and debt servicing were positive on economic growth in the long and short run, expenditure on economic and social sectors has negative impact. We argue that this may not be unconnected with the high level of corruption prevalent in the public sector where funds that are meant for provision or maintenance of social-economic activities like agriculture, roads, transportations, schools and hospitals are diverted for personal use. The CUSUM and CUSUMSQ test show the model is stable as neither of them cross the 5% boundary. The paper recommended that government should increase expenditure to the social and economic sectors while debts or debt servicing should be reduced. Also, corruption so prevalent in the public sector must be minimized if cannot be eradicated.
Abstract: The study investigated the nature and direction of causality among road transport infrastructure development, economic growth and poverty level in Nigeria. These were with the view to providing information on the extent to which road infrastructure development influence economic growth and poverty reduction in Nigeria. The study used secondary source of data collection of annual time series data from 1980 to 2012 and VECM techniques was adopted. The findings showed that, road transport infrastructure development and economic growth were the sources of poverty reduction in the long run (F = 5.7, p>0.05) and that poverty reduction and economic growth could influence one another in the short run (F= 3.0, p>10). Therefore, the study concluded that road transport infrastructure development and economic growth could be seen as useful policy as it has the potential to contribute to the pace of poverty alleviation and vice-versa in the Nigerian economy.
Abstract: Marketing of crops in Tanzania has been undergoing change. Direct sales from farmers to traders
and delivery to the Primary Cooperative Societies (PCS) were in practice at different points of time. Since 2007,
the warehouse receipt system was introduced in Tanzania. The warehouse operators accept the deposit of crops
in the warehouses and provide a receipt to the farmers through PCS and the farmers receive a part of the
payments through bank financing based on these receipts. This study was conducted to assess whether
Warehouse Receipt System has made any contribution in improving smallholder farmers ‘access to financial
services. The study used cross sectional design where 100 smallholder farmers in Singida Rural district in
Singida region were covered. Quantitative and qualitative techniques were used to analyze the data. The results
showed that the motives that were used to influence smallholder farmers to join WRS included price, access to
credit and access to market, although, most of the farmers participate into WRS to access credit for agricultural
activities. Moreover, level of farming technologies adopted found to have increased significantly after joining
the WRS. Based on these findings, it is recommended to increase sensitization efforts among the smallholder
farmers in order to enable the larger spectrum of the community members becoming aware of the WRS practice.
Also, policy maker should deliberately intervene to strengthen the capacity of WRS.
Abstract: The theoretical relationship of the long-run equilibrium between real exchange rates and interest rate differentials is essentially derived from the Purchasing Power Parity (PPP) and the uncovered interest parity. However, empirical evidence on this long-run relationship has rather been inconclusive. While several authors are able to establish the long-run relationship between real exchange rates and interest rate differentials other could not found this relationship. The reason for lack of relationship in some of the studies is as a result of omitted variables (Meese and Rogoff, 1988). Therefore, attempt is made in this study to evaluate this relationship between real exchange rate and interest rate differential for the case of Nigeria by controlling for foreign exchange reserves. The paper uses monthly data for the period 1993:1-2012:12 and applies Autoregressive Distributed Lags (ARDL) model. The estimates suggest the existence of long-run relationship between real exchange rate, interest rate differential and foreign exchange reserves. In the long run, the exchange rate coefficient has a positive effect on the foreign reserves. However, the effect of interest rate differential is negative and statistically significant. On the short run dynamics, the finding indicates a non-monotonic relationship between real exchange rate, interest rate differential and foreign exchange reserves. The out-of-sample forecast indicates a better forecast using ARMA model as all Theil coefficients are close zero for all the horizons used in the model.
Abstract: Financial is the result of an organized process that is commonly referred to as money management
or financial planning and control. Financial planning is the process of managing money to achieve economic
satisfaction. This planning process allows for controlling financial situation. Every organisation has a unique
financial position, and any financial activity therefore must also be carefully planned to meet specific needs and
goals. A comprehensive financial plan can enhance the quality of organisational life and increase future needs
and resources. The specific advantages of personal financial planning include Increased effectiveness in
obtaining, using, and protecting your financial resources throughout your lifetime The objective of the present
study was to study the financial planning and to analyze the financial control. The tools applied for this study
are Additional Fund Needed, Breakeven Analysis, Index analysis etc, findings reveals that the additional fund
needed was increased during the study period. The company has to reduce the additional fund needed, dividend
payout ratio, plant capacity and in order to increase the retained earnings and profit margin. For most
companies, planning and controlling is a necessary but painful process. Unfortunately, it is often a prolonged
exercise that takes so long that the starting assumptions are virtually meaningless by the time the process is
complete. Add to that the rapidly increasing need for reporting and controls, both from investors and to meet
regulatory requirements. As per the above observations and analysis the company will have to improve its
financial planning and control for the upcoming years.
Abstract: Novel hybrid intelligent framework is introduces by integration of GMDH neural networks with Webbased
Text Mining (WTM) and GA and Rule-based Exert System (RES) in this paper for forecast iron price. Our
research reveals that by employing hybrid intelligent framework for iron price forecasting, there is better
forecasting results respect to the GMDH neural networks. Therefore significance of this study is to survey a hybrid
intelligent framework for iron price forecasting.
Abstract: In this paper, we examine the existence of the size effect in the Tunisian stock exchange (TSE) over
the period January 2008 to December 2013 and we test the relationship between size and January effects. The
findings reveal that there is a size effect in the TSE. However, we report that size and January effects are separate
anomalies. More specifically, we document that average returns are found to increase with decreases in size.
However, we find that small firms don’t significantly outperform large firms in January.
More from International Journal of Economics and Financial Research (9)
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
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Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
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Export Trade and Economic Growth in Malawi: A Disaggregated Approach
1. International Journal of Economics
and Financial Research
ISSN: 2411-9407
Vol. 1, No.7, pp: 97-105, 2015
URL: http://arpgweb.com/?ic=journal&journal=5&info=aims
97
Academic Research Publishing Group
Export Trade and Economic Growth in Malawi: A Disaggregated
Approach
Fanwell Kenala Bokosi African Forum and Network on Debt and Development, Economic Governance, 31 Atkinson Drive,
Hillside, Harare, Zimbabwe
1. Introduction
Export trade has a positive impact on economic growth of a country. Export trade brings in foreign exchange
which reduces the balance of payments pressure and creates employment opportunities. Another benefit of export
trade is its ability to facilitate technology transfer between countries. Furthermore, exports provide the opportunity
for domestic producers to expand their productive capacity in order to compete with foreign producers (Glies and
Williams, 2000; Yaghmaian, 1994).
Over the years there have been intense discussions on the impact of export trade on economic growth based on
both empirical and theoretical studies. There are proponents of the framework of export-led growth hypothesis.
Several authors (Esfahani, 2001; Helpman and Krugman, 1985; Lawrence and Weinstein, 1999) have argued that
exports promote economic growth by stimulating external demand for domestic products which in turn leads to
increases in total factor productivity of domestic firms. The other proponents of this hypothesis include Yu (1998)
who argues that export-oriented strategy is extremely important in promoting economic growth and that imports
have the potential to harm domestic firms and can therefore distort the overall economic performance. Indeed it has
been observed that in developing countries the exporters in the manufacturing sectors grew faster than non-exporters
(Bernard and Jensen, 1999). It is believed that their growth was through reallocation of resources from their less
efficient to more efficient productive activities. While the general consensus in economics is that export trade
increases the total factor productivity (TFP) in developing countries like Malawi, some economists (Coe and
Helpman, 1995) have argued that the impact of export trade on TFP is not automatic but it depends on R&D capital
stock and R&D stock of the trading partners. On the extreme, there are several studies that have argued that in fact
international trade flows are among the factors that contribute to poor economic performance in developing countries
due to the fact that it tends to kill the domestic infant firms which are unable to compete with international producers
in the world markets and have therefore suggested the adoption of import substitution strategies to counter this
problem (Krugman and Anthony, 1995; Rodrigues, 2010).
It is important to mention that most of these studies on the empirical linkage between export trade and economic
growth use total exports and have not applied the disaggregated approach to study the relationship between exports
and growth. In this study, total exports are disaggregated into services and goods export to determine their potential
role in stimulating economic growth of Malawi.
In Malawi, average per capita incomes have increased only slowly over the last 30 years. One reason for this is
that over the decades, the rate of increase in the volume of Malawi‟s trade has barely kept up with population
growth.
Over the past three decades, the average annual volume of exports from Malawi has grown by only 2.9 percent;
not nearly enough to keep pace with population growth, let alone to facilitate increases in per capita incomes (Hoppe
and Newfarmer, 2014). More significantly, export performance has been highly volatile, as has the economy in
Abstract: This paper applies the Vector Autoregressive (VAR) technique to annual data from 1980 to 2013 to
provide empirical evidence on the long-run relationship between export trade and economic growth in Malawi.
The export trade in this study is disaggregated into services and goods exports. Thus, the paper estimated two
models. The first model deals with the relationship between export of services and growth, and the other one
determines the relationship between goods export and growth. While the paper finds no evidence for long-run
relationship between export of services and goods on economic growth, the empirical results suggest existence of
a short-run nexus between export of goods and economic growth in Malawi. The Granger causality test results
have also confirmed existence of a unidirectional causality from goods exports to economic growth and another
unidirectional causality from goods exports to service exports.
Keywords: Export trade; Economic growth; Vector autoregressive regression (VAR); Granger causality.
2. International Journal of Economics and Financial Research, 2015, 1(7): 97-105
98
general. While global economic growth and the emergence of global supply chains have enabled many African
countries to reduce poverty, Malawi‟s exports grew less rapidly than those of nearly all of its neighbours during the
period from 1990 to 2012. Even compared to other land locked, resource poor countries, such as Uganda, Rwanda,
or Burkina Faso, Malawi‟s export performance is poor.
Therefore, securing this balance is essential if the growth in exports is to deliver true economic empowerment of
the poor, youth, women and vulnerable groups and help close the trade balance for our economy.
It is for this reason that the Government has developed the Malawi National Export Strategy (NES) to serve as a
critical component of the Malawi Growth and Development Strategy II (MGDSII) and hence of the Economic
Recovery Plan by providing a framework and focus on how Malawi may build its productive capacity. It provides a
clearly prioritised and realistic roadmap that Malawi needs in order to develop the productive base of the economy.
The NES is fully aligned to the priorities set out in the MGDS II and the Economic Recovery Plan.
However, it is uncertain whether expanding exports ultimately contribute to all Malawi‟s economic growth.
Since to our best knowledge, the export-led growth of Malawi hasn‟t been investigated for many years. The last
study on this topic was carried out by Sinoha-Lopete (2006). To fill this gap, the aim of our paper is to examine the
validity of the export-led growth hypothesis for Malawi. The results of this analysis are expected to be relevant to
Malawi‟s policy makers, economists, and interest groups because promoting growth through export expansion can
contribute to poverty reduction.
This paper therefore, applies the Vector Autoregressive (VAR) approach to annual data from 1980 to 2013 to
provide empirical evidence on the long run relationship export and economic growth in Malawi. The results suggest
the existence of long-run relationship between export of goods and economic growth. The results also indicate the
absence of any long-run relationship between export of services and growth. Moreover, the granger causality test
reveals the evidence for unidirectional causality from goods exports to economic growth and goods exports to
service exports.
The rest of the paper is organized as follows. Section two contains review on the export-growth literature;
section three presents the econometric model and methodology; section four presents the empirical findings of the
study; and section five presents the summary and conclusion.
2. Review of Literature
Adam Smith and David Ricardo were the pioneers of the theoretical relationship between export trade and
economic growth. The classical theory postulates that international trade plays important role in promoting economic
growth of the nations. The theory argues that export trade is important for generating foreign exchanges that are in
turn used to import goods and services that cannot be domestically produced. This export-growth relationship is
described in the framework of export-led growth hypothesis. The paradigm gained more attention after success story
of East Asian export-led growth strategies adopted during the period of 1970s and 1980s. The poor performance of
the import substitution strategy implemented largely in Africa and Latin America gave rise to the popularity of the
export-led growth hypothesis.
The export-led growth hypothesis asserts that export trade is an important engine of growth because it increases
the TFP of local firms. Supporters of this theory like Rivera-Batiz and Romer (1991); Grossman and Helpman
(1990) further argue that export trade plays crucial role in transfer of technology, improving managerial skills and
skills of workers, and increasing the productive capacity of domestic economy. Research focusing on cross country
as well as individual countries found that his enables economic agents to allocate economic resources in their most
efficient sectors reflecting the true idea of opportunity cost.
The cross-country studies include that of Edwards (1992); Lopez (1991); Ngoc et al. (2003); Ram (1985). In a
study of 30 developing economies for the period 1960-1988 Sharma S. C. and Dhakal (1994) found mixed impact of
exports on economic growth in these developing countries. While there was a positive relationship in some
countries, they found no causal relationship in others.
The positive relationship between exports and economic growth is attributed to several factors. According to
Khalifa Al-Youssif (1997); Levin and Raut (1997), one of these factors is its positive; impact on economies of scale,
capacity utilisation, productivity gains, and enhancing the greater variety of products. The other factor is that export
trade provides an opportunity for local firms to enhance their technology and managerial skills through technology
transfer to compete in the world markets Gunter et al. (2005) arguing that any gain from the liberalised trade is often
associated with external effects that are dynamic in nature.
A similar study covering eight Asian countries by Ekanayake (1999) using annual time series data of 1960-1997
found validity of export led growth hypothesis for all countries except one. However, Safdari et al. (2011) found a
unidirectional reverse causality running from economic growth to exports in 13 developing countries for the period
of 1988-2008 using panel VECM.
The results from the individual countries studies also reveal a mixture of results. Thornton (1996) examines
validity of export led growth for six European countries, from mid-19th
century to 1913, using cointegration and
granger causality and found mixed behaviour: Unidirectional running from export to GDP in three countries,
causality running from GNP to Exports in one, while bidirectional causality was observed in two countries.
Similar results have also been found in Asia and the Middle East, for example, in China, Tsen (2010) found a bi
directional relationship between exports and economic growth using time series data for the period of 1978-2002. Li
3. International Journal of Economics and Financial Research, 2015, 1(7): 97-105
99
et al. (2010) limiting their study to East China added weight to the hypothesis using data from 1981-2008 noted that
there is a long run as well as short run bidirectional causality between foreign trade and economic growth.
Studies of the relationship between exports and economic growth in India have come up with mixed results.
Mishra (2011) denied the export led growth model using data for the period 1970 to 2009 and concluded that export-
led growth hypothesis for not true for India. In contrast, Sahni and Atri (2012) confirmed the export-led growth
hypothesis in India.
Iqbal et al. (2012) analyzed the relationship between exports and economic growth in Pakistan. The analysis
was based on the time series data for the period of 1970 to 2009. Granger causality method is being used in this
study. The analysis showed that, there exists a unidirectional causation from GDP to exports called growth-led
exports.
Kalaitzi (2013) examined the relationship between exports and economic growth in the United Arab Emirates.
Time series data of exports and economic growth for the period of 1980-2010 is used for assessment.
In Africa, others who have found a positive relationship have included Chemeda (2001) in Ethiopia using data
for the period from 1950-1986 who found that growth of real exports had a positive effect on economic growth in the
short run and not in the long run. About-Stait (2005) found that the export led growth phenomenon was true in
Egypt where exports, imports and GDP growth were cointegrated and concluded that exports causes economic
growth. Alimi and Muse (2013) have supported the growth-led export hypothesis in case of Nigeria using data for
the period of 1970 to 2009. In South Africa using data from 1964-1993, Ukpolo (1998) using Granger causality test
failed to validate export led growth but found a reverse causality, while Ramos (2001) in a study of Portugal for the
period of 1865-1998, using Johansen cointegration and Granger causality test found no causality in any run.
Using Mexican data for the period 1960-2003, Lorde (2011) investigated validity of export led growth
hypothesis for Mexico and found only short run causality from export to growth and a long run inverse causality
running from economic growth to exports.
The studies cited above used different statistical approaches in their analysis. The methods applied can be
divided into several categories. Studies that were based on correlation between exports and growth; using the
aggregate production framework to export as an independent variable; and the analyses based on finding the
existence of threshold effects (Sharma A. and Panagiotidis, 2005). The econometric methods applied by most studies
are time series dominated by Granger (1988), Engle and Granger (1987), Johansen (1988), Johansen and Juselius
(1990). Studies based on cross-country analysis have extensively applied the panel data techniques such as pooled
OLS, random effects, fixed effects estimation methods. However, most of these studies have used the aggregated
approach to evaluate the role of export trade on economic growth. In this study, the attempt has been made to
disaggregate exports into export of goods and export of services to compare the relative importance of each category
in promoting growth. Thus, the study employs the VAR approach accompanied by impulse response function and
variance decomposition techniques to test the robustness of the VAR and Granger causality results.
3. Econometric Model and Methodology
The export led growth model can be expressed in the form of bivariate linear model following the modelling of
Thornton (1996), and Ukpolo (1998). The linear model is then expressed as follows:
(1)
Where RGDPCt represents the level of real per capita GDP at time t and REXt measures, the level of exports at
time t. is the error term at time t which is assumed to fulfil the assumption classical linear regression model.
The total exports are disaggregated into service exports and goods exports in the analysis in order to determine
the relative importance of each category in accelerating economic growth in Malawi. The study further used the
impulse response function (IRF) and variance decomposition to test the impact of each category of exports on
economic growth. These techniques do also assist in the determining the relative importance of each category of
exports in simulating economic growth of Malawi. Based on the model in equation 1, REXSert and REXGdt, replaced
REXt, where REXSert is service exports and REXGdt is good exports.
Since the total exports were disaggregated into goods exports and service exports it was important to examine
the separate impact of each on economic growth and hence developed two new models that estimated the
relationship between economic growth and REXSert, and REXGdt in two separate models. The models are presented
as follows:
(2)
(3)
where and is error term.
The study employs the Vector Autoregressive (VAR) technique to annual data from 1980 to 2013 in order to
investigate the empirical link between economic growth and export trade in Malawi. The main reason for applying
the VAR model is because it is a useful technique since it enables the researcher to examine the possible “causal
relationship” (using Granger Causality test) between the variables (Van Den Berg, 1997).
The VAR was developed by Sims (1980) as an ad hoc dynamic multivariate model, treating simultaneous set of
variables equally, in which each endogenous variable is regressed on its own lags and the lags of all other variables
in a finite-order system. The objective of the approach is to examine the dynamic response of the system to the
shocks without having to depend on "incredible identification restrictions" inherent in structural models. In this study
the VAR model will be represented by the following regression equation:
4. International Journal of Economics and Financial Research, 2015, 1(7): 97-105
100
Model 1: Service Exports
∑ ∑ (4)
∑ ∑ (5)
Model 2: Goods Exports
∑ ∑ (6)
∑ ∑ (7)
where all series are in the first difference, , , , represent the error terms
3.1. Data
The variable RGDPCt represents the annual real per capita GDP. REXSert is the value of exports of services, and
REXGdt is the value of exports of goods. Measures of all these variables are taken from United Nations Conference
for Trade and Development (UNCTAD) statistical database. The sample period under investigate begins from 1980
to 2013. All data are transformed into natural log to facilitate analysis.
3.2. Unit - Root Tests
Time series data are often assumed to be non-stationary; thus the first step in this analysis is to establish the
stationary relationship between the variables to avoid spurious regression. Also, since Granger causality holds only
for stationary variables, unit root tests have to be performed on all the variables involved in order to ensure the
validity of the usual test statistic (F-statistic t-statistic and R-square). For the purpose, Augmented Dickey Fuller
tests (ADF) (Dickey and Fuller, 1981) of stationary are used in the study. Once the testing for stationarity of each
series was complete, it was necessary to test for the presence of co-integration between the series. The Augmented
Dickey-Fuller (ADF) tests were performed to examine the degree of integration of the series. It has been shown that
many macroeconomic series are non-stationary at level and this can lead to spurious results if OLS technique is
applied. Once the series are made stationary by appropriately differencing them, they can be used for regression
analysis.
The results of Augmented Dickey-Fuller unit root tests are presented Table 1 and 2. As it is seen in Table 1, the null-
hypothesis is not rejected at the beginning levels of variables.
Table-1. Augmented Dickey-Fuller unit root tests in levels
Test with constant Test with constant and trend
Variable t-statistic Result Lag length t-statistic Result Lag length
lnRGDPC -2.0022 Non stationary 1 -1.8810 Non stationary 1
lnREXSer 0.4319 Non stationary 1 -1.9238 Non stationary 1
lnREXGd -0.0470 Non stationary 1 -2.3953 Non stationary 1
*Significant at 10%, ** significant at 5% and *** significant at 1%.
3.3. Cointegration Test
The drawback of the method above is the possibility of losing the long-run information that may present in
variables. This problem can be overcome by applying the co- integration technique, which shows the long-run
relationship between the non-stationary series Mallik (2008). We then determine the existence of long-run co-
integration in the series by applying the Johansen test for co-integration. Johansen (1988); Johansen and Juselius
(1990) had proposed two likelihood tests for data involving two distinct series. The variables are only co-integrated
if and only if a single co-integrating equation exists1
. The purpose of Johansen test is to determine the number of co-
integrating vectors that exist in is the system. Cointegration means that despite being individually non stationary, a
linear combination of two or more time series can be stationary. Cointegration of two or more time series suggests
that there is a long run or equilibrium relationship between them (Gujrati and Sangeetha, 2010).
3.4. Granger Causality Test
The Granger no-causality test used in time series analysis to examine the direction of causality between two
economic series has been one of the main subjects of many econometrics studies for the past three decades. The
Granger procedure is selected because it consists the more powerful and simpler way of testing causal relationship
(Granger, 1988). According to the Granger (1969) causality approach, a variable „Y‟ is granger caused by „X‟ if „Y‟
can predicts better from past values of „Y‟ and „X‟ than from past values of „Y‟ alone.
4. Empirical Results
Before doing VAR estimation and then finding causality between variables of the model there is need to do
unit root test for observing stationarity of time series. Accordingly, the Augmented Dickey-Fuller unit root test was
1 According to Granger (1988), if the variable in a system are co-integrated, then the causal analysis needs to incorporate the error correction term for the adjustments
of deviation from its long run equilibrium and avoid misspecification of model.
5. International Journal of Economics and Financial Research, 2015, 1(7): 97-105
101
used. This will help to determine whether the variables of model needed to be differenced in first order or not. That
is, this step shows whether the variables have unit root or not. The unit root test results are presented in Table 1. The
ADF tests confirmed that all variables are non-stationary at level. However, after taking their first difference, the
results show that the series became stationary. In other words, all series under the study, are integrated at order one,
i.e. I(1).
Since the test results from the ADF indicates that the series exhibit unit root processes in levels. The detection
of unit roots in the series indicates that shocks to the series will have permanent effects and not transitory effects.
The next step is to take first differences of variables lnRGDPC, lnREXSer and lnREXGd and test whether they
are stationary or not at first difference level. The tests reveal that the null-hypothesis is rejected at the first
differences. The results that are presented Table 2 indicate that all series are stationary.
Table-2. Augmented Dickey-Fuller unit root tests in first difference
Test with constant Test with constant and trend
Variable t-statistic Result Lag length t-statistic Result Lag length
dlnRGDPC -4.3094*** Stationary 1 -4.4243*** Stationary 1
dlnREXSer -2.9157** Stationary 2 -3.2510* Stationary 2
dlnREXGd -4.5843*** Stationary 1 -4.6112*** Stationary 1
*Significant at 10%, ** significant at 5% and *** significant at 1%.
This means that the analysed series dlnRGDPC, dlnREXSer and dlnREXGd are integrated series of first grade
I(1) and for further analysis we will use first differences of series due to their stationarity. In addition the results
might indicate there is cointegration between the series. The results of the cointegration test (appendix 1) indicate no
cointegration suggesting that there does not exist long-run stable relationship between exports and economic growth.
Table-3. Defining the number of lags for VAR Model
Lags Loglik p(LR) AIC BIC HQC
1 63.2806 -3.662904* -3.091959* -3.488361*
2 69.2343 0.2186 -3.445309 -2.446156 -3.139858
3 73.6828 0.4468 -3.120205 -1.692843 -2.683846
4 77.1630 0.6413 -2.725931 -0.870360 -2.158664
*Significant at 10%, ** significant at 5% and *** significant at 1%.
The asterisks below indicate the best (that is, minimized) values of the respective information criteria, AIC = Akaike criterion,BIC =
Schwarz Bayesian criterion and HQC = Hannan-Quinn criterion.
Since the variables were not cointegrated a vector error correction model (VECM) could not be used an
unrestricted vector autoregressive regression (VAR) model constructed using stationary variables and with each
variable entering the model according to its order of integration. For a VAR to be estimated there is need to
determine the appropriate lag length. An appropriate optimal lag length was found to be one and the results are
shown in Table 3.
Table-4. VAR Model estimation results
Coefficient Std. Error t-ratio p-value
dlnRGDPC dlnRGDPC_1 -0.278 0.150 -1.846 0.076 *
dlnREXser_1 -0.033 0.042 -0.780 0.442
dlnREXGd_1 0.118 0.051 2.295 0.030 **
dlnREXser dlnRGDPC_1 0.573 0.557 1.027 0.313
dlnREXser_1 -0.476 0.157 -3.038 0.005 ***
dlnREXGd_1 0.477 0.191 2.505 0.018 **
dlnREXGd dlnRGDPC_1 0.372 0.575 0.647 0.523
dlnREXser_1 -0.027 0.161 -0.168 0.868
dlnREXGd_1 0.017 0.197 0.088 0.931
*Significant at 10%, ** significant at 5% and *** significant at 1%.
From Table 4, it is evident that in the short-run while GDP per capita growth rate depends significantly on the
growth rate of GDP per capita and growth rate of exports of goods in previous period. The table also shows that
GDP per capita growth is not significantly dependent on export of services growth in the previous period.
While on the other hand the growth rate of service exports is dependent on its own values in the previous period.
The growth rate of service exports is also significantly dependent on the growth rate of goods exports in previous
periods. The results from the data in Malawi does not show any evidence that growth rate and exports of services
have any significant effect on the rate of growth of exports of goods. This leads one to conclude that Malawi has
experienced export led growth and not growth driven export. In addition it is the exports of goods and not exports
that drive economic growth.
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102
To assess the causal relationship between economic growth, exports of goods and exports of services Granger
causality test was performed. The results of the Granger causality tests are presented in Table 5 below:
Table-5. (Pair wise Granger Causality Tests)
Null hypothesis Observations F-statistic Probability
RGDPC does NOT Granger Cause REXGd
REXGd does NOT Granger cause RGDPC
28 0.41818
5.2654
0.5231
0.0295 **
RGDPC does NOT Granger Cause REXser
REXser does NOT Granger cause RGDPC
28 1.0555
0.60818
0.3130
0.4420
REXser does NOT Granger Cause REXGd
REXGd does NOT Granger cause REXser
28 0.028075
6.2746
0.8681
0.0183 **
*Significant at 10%, ** significant at 5% and *** significant at 1%.
The test of granger causality is performed so that the direction of influence of these variables can be confirmed.
The results of the hypothesis that exports of goods does not granger cause economic growth, and that exports of
goods does not granger cause exports of services is rejected on the basis of probability values.
5. Conclusion
This study makes an effort to examine the relationship between economic growth and export trade in Malawi.
The study employs the VAR technique to the annual data covering the period of 1980 to 2013. The disaggregated
approach is used to study the role of export trade on economic growth. This led to formulation of two regression
models; the service exports model, and the goods export model. Impulse response function or innovation accounting
techniques are also used to examine the manner through which the shock in one variable affects the others in both
models.
The results find no evidence of long-run relationship between export in goods and economic growth but find a
short run positive impact of exports on economic growth. However, there is no evidence of causality running from
service exports to economic growth. Therefore, the results support the export-led growth hypothesis for the case of
Malawi in the case of exports of goods. For the case of relationship between service exports and economic growth,
the results rejected the hypothesis for existence of long term relationship. Thus, we can conclude that, for the case of
Malawi, export of goods and services do not share any long-run relationship with economic growth. Another
significant result is the fact that there is a unidirectional causality from exports of good to economic growth and
services in the short run. This makes sense for the Malawian economy as exports increase income; this will in turn
lead to an increased demand of various services.
These findings suggest that Malawi should enhance its export orientation and facilitation of international trade
in order to spur economic growth. The econometric results above make it clear that exports are important for
economic growth as such Malawi needs to increase the value of exports. This can be done in several ways which
among others include value addition and reduction of post-harvest loses.
In conclusion, the Malawi economy will benefit from an export-led growth strategy. The results confirm further
the advantages of an export-led growth strategy for Malawi. Malawi can expand its limited domestic market by
exporting products and not services to the international markets. Policies focusing on export promotion of goods
should be used effectively to build export capacity in order to increase economic growth.
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Appendix 1
Table-A1. Cointegrating regression - OLS, using observations 1980-2012 Dependent variable: l_RGDPC
coefficient std. error t-ratio p-value
Constant 5.4884 0.1592 34.4800 1.08e-025 ***
l_EXser 0.0384 0.0621 0.6191 0.5405
l_EXgds −0.0057 0.0518 −0.1094 0.9136
Mean dependent variable 5.597053 S.D. dependent var 0.072661
Sum squared resid 0.162378 S.E. of regression 0.073570
R-squared 0.038896 Adjusted R-squared -0.025178
Log-likelihood 40.86154 Akaike criterion −75.72308
Schwarz criterion −71.23356 Hannan-Quinn −74.21250
rho 0.526004 Durbin-Watson 0.696384
*Significant at 10%, ** significant at 5% and *** significant at 1%.
Testing for a unit root in uhat
Augmented Dickey-Fuller test for uhat including one lag of (1-L)uhat
sample size 31
unit-root null hypothesis: a = 1
model: (1-L)y = (a-1)*y(-1) + ... + e
1st-order autocorrelation coeff. for e: 0.035
estimated value of (a - 1): -0.322645
test statistic: tau_c(3) = -2.15351
asymptotic p-value 0.663
There is evidence for a cointegrating relationship if:
(a) The unit-root hypothesis is not rejected for the individual variables, and
(b) the unit-root hypothesis is rejected for the residuals (uhat) from the cointegrating regression.
Appendix 2: VAR system, lag order 1
OLS estimates, observations 1982-2012 (T = 31)
Log-likelihood = 69.93802
Determinant of covariance matrix = 2.2028436e-006
AIC = -3.9315
BIC = -3.5152
HQC = -3.7958
Portmanteau test: LB(7) = 59.4026, df = 54 [0.2853]
Table-A2.1. Equation 1: d_l_RGDPC
Coefficient Std Error t-ratio p-value
d_l_RGDPC_1 −0.277527 0.150363 −1.846 0.0755 *
d_l_EXser_1 −0.0329302 0.0422257 −0.779 0.4420
d_l_EXgds_1 0.117956 0.0514051 2.295 0.0295 **
Mean dependent variable 0.000643 S.D. dependent var 0.055244
Sum squared residuals 0.070311 S.E. of regression 0.050111
R-squared 0.232163 Adjusted R-squared 0.177318
F(3, 28) 2.822028 P-value(F) 0.056939
Rho −0.149121 Durbin-Watson 2.260639
F-tests of zero restrictions:
All lags of d_l_RGDPC F(1, 28) 3.4067 [0.0755]*
All lags of d_l_EXser F(1, 28) 0.6081 [0.4420]
All lags of d_l_EXgds F(1, 28) 5.2654 [0.0295]**
*Significant at 10%, ** significant at 5% and *** significant at 1%.
9. International Journal of Economics and Financial Research, 2015, 1(7): 97-105
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Table-A2.2. Equation 2: d_l_EXser
Coefficient Std Error t-ratio p-value
d_l_RGDPC_1 0.572707 0.557445 1.027 0.3130
d_l_EXser_1 −0.475506 0.156545 −3.038 0.0051 ***
d_l_EXgds_1 0.477378 0.190576 2.505 0.0183 **
Mean dependent variable 0.029601 S.D. dependent var 0.216715
Sum squared residuals 0.966381 S.E. of regression 0.185778
R-squared 0.327092 Adjusted R-squared 0.279027
F(3, 28) 4.536807 P-value(F) 0.010301
Rho 0.038130 Durbin-Watson 1.876335
F-tests of zero restrictions:
All lags of d_l_RGDPC F(1, 28) 1.0555 [0.3130]
All lags of d_l_EXser F(1, 28) 9.2265 [0.0051]***
All lags of d_l_EXgds F(1, 28) 6.2746 [0.0183]**
*Significant at 10%, ** significant at 5% and *** significant at 1%.
Table-A2.3. Equation 3: d_l_EXgds
Coefficient Std Error t-ratio p-value
d_l_RGDPC_1 0.371870 0.575054 0.6467 0.5231
d_l_EXser_1 −0.0270587 0.161490 −0.1676 0.8681
d_l_EXgds_1 0.0172640 0.196596 0.08781 0.9306
Mean dependent variable 0.050015 S.D. dependent var 0.179565
Sum squared residuals 1.028401 S.E. of regression 0.191647
R-squared 0.015746 Adjusted R-squared -0.054558
F(3, 28) 0.149314 P-value(F) 0.929259
Rho 0.001678 Durbin-Watson 1.954322
F-tests of zero restrictions:
All lags of d_l_RGDPC F(1, 28) 0.41818 [0.5231]
All lags of d_l_EXser F(1, 28) 0.02807 [0.8681]
All lags of d_l_EXgds F(1, 28) 0.00771 [0.9306]
*Significant at 10%, ** significant at 5% and *** significant at 1%.