economic growth

Financial Sector Development and Economic Growth in Nigeria (1990-2020) (Published)

In order to establish whether there is a causal relationship between the financial sector development and economic growth during the sample period of 1990–2020, the article investigates the relationship between the development of the financial sector and economic growth in Nigeria.The Autoregressive Distributive Lag (ARDL) Model is used in this work to measure and a useful tool for determining whether there is long-term relationship between economic data series. The ARDL model can be used to predict and distinguish between short-term dynamics and long-term relationships. Tests like the long-run relationship are used to determine the data’s stationarity characteristics and their long-term relationship & short-run tests, bounds tests, heteroskedasticity tests, serial correlation, and co-integration tests were used. Financial intermediaries(FINIM), financial depth(FINDEPT), and market stock(MKTSTCK) all have a causal relationship with the real gross domestic product(RGDP), according to the study.  Economic growth is significantly impacted by the growth of the financial industry. The public and private sectors must be informed about operations in the financial industry. The World Bank’s World Development Indicators (2020) database, which covered the years 1990 to 2020, and the Central Bank of Nigeria’s Statistical Bulletin were the sources for all data.

 

Keywords: Development, Financial Depth, Financial Sector, economic growth, financial intermediaries, real gross domestic product and stock market

Economic Growth Effects of the Interaction of Natural Resources and Institutional Quality by Source: Empirical Evidence from Africa (Published)

The purpose of this study was to investigate the relationship between natural resources by source, institutional quality by source, and economic growth in Africa using multiple co-integration analysis, the ARDL technique, and VECM granger causality. The findings show that various resources contribute to economic growth in different ways. Mineral rents (MR) have a negative impact on growth, while forest rents (FR) have a beneficial impact. The findings also show that forest rents contribute more to growth in the rule-of-law (ROL) model than in the market openness (MO) model. Among the institutional quality (IQ) variables, the rule of law has the most significant impact on the continent’s economic growth. Furthermore, when IQ was added as an interaction variable in the models, both resources (MR and FR) ended up contributing favourably to development. The study recommends that resource-rich countries must specifically concentrate on improving the rule of law since robust outcomes are generated when interacted with natural resources.

Citation: Chernor Momodu Bah and Unisa Dumbuya (2022) Economic Growth Effects of the Interaction of Natural Resources and Institutional Quality by Source: Empirical Evidence from Africa, International Journal of Developing and Emerging Economies, Vol.10, No.2, pp.1-33

Keywords: Rule Of Law, economic growth, forest rents, interaction, market openness, mineral rents

Government Expenditure and Economic Growth in Nigeria: Aggregate Level Analysis using the Bound Test Approach (Published)

Economists have divergent views on the relationship between public expenditure and economic growth. The pro-market viewpoint argues that large government expenditure is a source of economic instability and has negative effect on economic growth. The anti-market view, on the other hand, stresses positive effect of government spending on economic growth. Stimulated by unresolved debates on the precise relationship between government spending and economic growth, and continuous growth in government spending, this study employed modified and extended aggregate production model to examine the effects of government expenditure at its’ aggregate level on economic growth in Nigeria for the period (1981-2018) using bound test (ARDL) approach. The co-integration result indicates the existence of long-run relationship between total government expenditure (LTGE) and economic growth in Nigeria. ARDL results show that total government expenditure (LTGE) impacted positively on economic growth in Nigeria in line with Keynesian theory. The granger causality test result indicates the existence of uni-directional causal relationship from LGDP to LTGE for the observed period, in line with Wagner’s theory. It is recommended that there should be proper utilization of public fund in the provision of security and critical infrastructure especially electricity supply and road infrastructure which are precursors to effective economic performance. Public fund should be properly managed to ensure accountability, transparency and fiscal responsibility in carrying out public assignment. It is believed that if corruption is tackled in the country, more public fund will be freed for development and public expenditure would impact more on the economic performance, hence, the fight against corruption in the country should be frontally confronted. Public institutions charged with the responsibility of handling corruption matters in the country should be overhauled and strengthen to ensure timely and proper handling of corruption matters.

Citation: Udo N. Ekpo , Ekere J. Daniel and Inibeghe M. Okon (2022) Government Expenditure and Economic Growth in Nigeria: Aggregate Level Analysis using the Bound Test Approach, International Journal of Developing and Emerging Economies, Vol.10, No.1, pp.1-20

 

Keywords: Bound Test Approach, Government Expenditure, Keynesian economic theory, Peacock and Wiseman Displacement theory, Wagner’s theory, economic growth

Financial Sector Development, Economic Growth and Individual Welfare in Nigeria (Published)

Over the years, the Nigerian financial sector has been characterized by relative fragility and instability with intermittent incidences of liquidity challenges, bank distress, bail out, declining all share index and eroding investors’ confidence. Although several efforts have been made by policy makers and financial sector regulators towards stabilizing and strengthening the financial sector, available evidence suggest that the real sector is yet to reflect the gains of financial sector development. Consequently, researchers have made substantial effort to understand the implication of financial sector development for economic growth and economic welfare. It is against this backdrop that this study investigated the impact of financial sector development on economic and economic welfare. The study used time series data spanning between 1970 and 2015. Four major variables were used to proxy financial sector development namely; bank private sector credit, number of banks branch network, liquidity ratio and lending-deposits ratio. Economic growth was measured by growth of real GDP; discomfort index which measures macroeconomic welfare of citizenry as defined by Okun (1962) was computed by summation of inflation and unemployment rate. Vector autoregressive (VAR) model was used for estimations. The findings indicate that not all the financial sector development indicators under study have significant effect on macroeconomic performance in Nigeria. The results show that financial sector development indicators have positive impact on real GDP growth in Nigeria. However, contrary to expectations, private sector credit and lending – deposit spread had negative effects on economic growth. Similarly, apart from access to financial service, all other financial sector development indicators under study exerted negative effects on discomfort index, which implied that financial sector development was capable of improving economic welfare. The study therefore concluded that financial sector development that guarantees increased liquidity and stability of the financial sector is crucial for sustainable economic growth and increased welfare. The study also recommends that the Central Bank of Nigeria and other financial sector regulators should strive to strengthen the financial sector and ensure increased private sector access to financial services such as bank credit through policy formulation and implementation as a means of improving macroeconomic performance of the nation.

Keywords: VAR, discomfort index, economic growth, financial sector development

Analysis of the Effect of Exchange Rate Fluctuation on the Manufacturing performance in Nigeria (1981 – 2018) (Published)

Theoretically, and indeed empirically it has been postulated that Exchange Rate fluctuations has had a significant effect on manufacturing performance in terms of output growth and contribution to the Gross Domestic Product (GDP). This study aimed to examine the Exchange Rate fluctuations on manufacturing performance in Nigeria over a period of 37 years (from 1981-2018), using annual data obtained from collected from CBN, NBS and Index Mundi Nigeria. An ARDL approach was used for the analysis. The empirical results of the study shows that an exchange rate volatility has negatively affect the performance of the Nigerian manufacturing sector as can be seen from the from the respective coefficients of the estimated variables, , the long run relationship analysis and the causal relationship between the dependent and the independent variables. The study recommends encouraging and improving exchange rate stability in Nigeria as this may help improve the capacity of the country’s manufacturing sector, hence expand its contribution to GDP growth.

Keywords: Nigeria, ardl model, economic growth, exchange rate fluctuations, manufacturing performance

The Relationship between Government Expenditure, Economic Growth and Poverty Reduction in Nigeria (Published)

This study examines the relationship between government expenditure, economic growth and poverty reduction in Nigeria using time series data over the period 1980-2013. Employing modern time series econometric techniques such as unit root tests, bound test co-integration approach and error correction techniques within an ARDL framework which yields more robust estimates.It is found that government spending affect  economic growth positively and significantly by increasing real  private investment and fixed capital accumulation  which increase capital accumulation,  reduction  in current  account  deficit,  external  debt  burden  and  improve  education/skills of  the households by improving human capital. Findings emerge from this study that government expenditure has significant short run impact on poverty reductions in its lag form in which it might be examined by the role of fiscal policy in alleviating poverty of current year in Nigeria.The study suggested policies the role of government should be extended to ensure the magnitude and the quality of private investment as high as possible.

Keywords: ARDL Analysis, Government Expenditure, Poverty Reduction, economic growth

Does The Export-Led Growth Hypothesis Hold For Nigeria? Empirics from Toda-Yamamoto Granger-Causality Framework (Published)

This study empirically analyzed the relationship between export and economic growth. Specifically, the study examined the validity of the Export-Led Growth Hypothesis in Nigeria employing the Toda-Yamamoto Granger Causality framework. The result shows that there is unidirectional causality running from export to economic growth. This implies that the causality running from export to economic growth is the strongest, revealing that export-led growth hypothesis holds for Nigeria. This suggests that encouraging export is necessary in stimulating growth. It is therefore imperative for government to put policies in place to stimulate the production in the non-oil sectors of the economy. This would assist in encouraging exports and discourage imports.

Keywords: Export, Export-led growth hypothesis, Toda-Yamamoto Granger Causality Framework, economic growth, import

Economic Integration, Incentives and Non-Oil Export Dynamics in Nigeria: An Empirical Evidence (Published)

This study is a response to the under-performing trend in the non-oil sector of Nigeria which is supposedly a catalyst for massive industrialization and rapid development concerns in a less developed country such as Nigeria. Arguments bordering on the perceived plausibility of trade liberalization and government incentives vis-à-vis non-oil export performance were empirically tested using contemporary econometric techniques of unit root test, co-integration test and error-correction mechanism. Results from the tests conducted revealed a one year positive lag relationship between variables such as foreign private investment, exchange rate, gross domestic product and non-oil export growth. Contrary to theoretical expectation, an inverse relationship was found to exist between a one year lag in agricultural credit guarantee scheme fund and non-oil export performance while, world gross domestic product exerted no significant relationship with non-oil export growth in Nigeria. However, the error correction model revealed a slow speed of dynamic adjustment from short-run to long-run equilibrium and as such, the study recommended among others, a re-examination of the agricultural credit guarantee scheme fund to ensure a positive contribution to non-oil sector development, increasing incentives that stimulate non-oil investment and also maintaining a favourable exchange rate. These policies, if implemented, will assist in unlocking the existing potentials in the Nigerian non-oil sector.

Keywords: Incentives, Non-Oil Exports, economic growth, openness

Does Money Market Spur Economic Growth in Nigeria? Granger Causality Approach (Published)

This study examined the relationship between money market and economic growth in Nigeria. The study adopted money market instruments such as treasury bills (TBs), commercial papers (CPs) and bankers’ acceptances (BAs) as proxy for money market (independent variables), and gross domestic product (GDP) as proxy for economic growth (the dependent variable). Secondary time series data for the variables were collected from CBN Statistical Bulletin and the National Bureau of Statistics for the period 1989-2014. The study employed econometric techniques such as ADF, Unit Root Test, OLS, multiple regression and Granger Causality Test to analysed the study data; and found strong evidence that TBs, and CPs had positive and significant influence on GDP, while BAs had positive but insignificant influence on GDP in Nigeria. The granger causality test result revealed no directional causality relationship between TBs and GDP, meaning that TBs does not granger cause GDP and vice-versa. There was also no directional causality relationship between CPs and GDP, BAs and GDP. However, there exists bi-directional relationship running from CPs to TBs and BAs as it was established at 5 per cent level of significance. The study recommended among others that for the money market to influence meaningful economic growth and development in Nigeria, appropriate policies should be employed to strengthen and deepen the market.

Keywords: Bankers’ Acceptances, Commercial Papers, Gross Domestic Product, Money Market, Treasury Bills, economic growth

Inflation, Unemployment and Economic Growth: Evidence from the VAR Model Approach for the Economy of Iraq. (Published)

This study investigates the impact of inflation and unemployment on the economic growth of Iraq. Considering the fact that the majority of the studies on the Phillips Curve have been done in the context of developed economies and on an aggregate level, this study focuses on Iraq, a single developing economy (a disaggregated level) and aims to empirically analyse the impact of Unemployment and inflation on economic growth in the economy of Iraq. The research results indicate that there exist an equilibrium impact between unemployment and inflation in Iraq thereby supporting the validity of the Phillips Curve hypothesis

Keywords: Inflation, Iraq, Philips Curve, Unemployment, VAR Approach, economic growth