Articles

Economic Growth and Government Expenditure in ASEAN Countries: A Threshold Approach

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This study examines the effect of government spending on the economic growth of ASEAN countries between 2000 and 2020, using estimates for panel data. The results show that government spending responds positively to the economic growth of ASEAN countries. Intriguingly, this study finds a threshold level for government spending that reduces economic growth if governments let it exceeds 26.82 percent of GDP. Therefore, this study recommends that ASEAN governments need to pursue targeted and rational spending policies.

Privatization of SOEs a Shift from Protectionism and a Factor of Economic Growth

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: In the framework of economic development, we argue that privatization of State Owned Enterprises (SOEs) is unarguably one of the gateways to succeeding in economic growth. It provides the basis for perfect market competition, promoting employment, reducing government expenditure burden on its budget, promoting employment growth and provides efficient services, boost innovation and the technological revolution of especially developing countries which is an undisputable evidence for economic growth seen for example in Asia and China to be specific. China and a good number of countries with perfect market structures, early economic successes can be largely accredited to privatization of their underperforming SOEs model of promoting economic growth.  In this article, we will attempt to draw the attention of readers on the conjectural background of privatization of SOEs, its effects in promoting economic growth and strategies of its implementation drawing from the experiences of other countries. We used descriptive analysis approach to describe the facts and effects about the significance of privatization of SOEs in economies that are opening up or still moving up the economic development ladder. The paper also draws lessons from developed economies like the US where privatization is a symbol of a capitalist and free market society, although focusing on developing countries with specific reference to Sierra Leone, bench marking the case of China. We discovered that privatization helps government save more and improve efficiency largely through competition that motivates development as well as innovation.

Investigating the Relationship between Unemployment and Inflation in Nigeria

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This study considered the impact of inflation on unemployment in Nigeria viz avis selected macroeconomic variables. The researcher adopted co integration, vector error correction model and VEC Granger causality test econometric procedure in the analysis of the data employed. The specific objectives of the study are; (i) to determine the extent to which inflation impact on unemployment in Nigeria within the period of study, (ii) to examine if government expenditure have any significant impact on unemployment in Nigeria within the period of study, (iii) to estimate the significant impact of foreign direct investment on unemployment in Nigeria within the period of study; (iv) to investigate the extent of direction of causality between unemployment and inflation in Nigeria within the period of study. The results of the research revealed long run relationship among estimated variables, VECM result showed a positive significant relationship between inflation and unemployment in the short run and long run, government expenditure and foreign direct investment maintained negative relationship with unemployment both in the short and long run. The VEC Granger causality test indicated causality among UNEM, INF and TGEX. The research recommended that (i) government should focus on policy and strategy that can attract foreign direct investment into the country, (ii) government should try to maintain low inflation rate through suitable monetary policy; (iii) government should encourage investment platforms and enabling environment for effective and efficient national output; and (iv) Government should consciously increase fiscal space for capital activities and projects that are capable of generating income, increase domestic and public spending, improve economic status and reduce unemployment. This paper concluded that the Philip’s curve hypothesis does not apply in Nigeria within the period of study as the result failed to establish an inverse relationship as postulated by A.W. Philips.

Islamic Financial Development between Investment and Economic Growth in the MENA Region and East Asia and the Pacific

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The purpose of this paper is to study, in the first place, the theoretical relationship between Islamic financial development, investment and economic growth. Second, we empirically try to discover the interaction between “Islamic financial development, investment and economic growth”. Our empirical study highlights the direct effects of Islamic financial development on growth and investment. Finally, we also clarify the indirect effects of Islamic financial development on growth through Investment and vice versa, also on other socio-economic indicators over the period from 1990 to 2018, while using the model with simultaneous equations for the MENA region and East Asia and the Pacific.

External Debt and Economic Growth in CFA Countries: Political Institutions Matter?

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The aim of this paper is to analyse the relation between quality of institutions, external debt and economic growth in the CFA zone. The main contribution of this paper is the endogenous determination of the threshold for quality of institutions beyond and above which external debt affect economic growth differently. The methodology focuses on the estimation of a Panel Smooth Transition Regression (PSTR) model inspired by González et al. (2005). The sample includes 10 countries on the period 1985-2015 on annual frequency. From the empirical analysis, we derive the following conclusions: in countries with lower corruption and a high level of democracy, the level of debt for which the effect of debt on growth becomes negative is higher. This implies that poor institutional quality prevents a country from taking full advantage of its credit opportunities. As a result, only countries with good institutions can fully benefit from the advantages of external debt for economic growth.