The role of the manufacturing sector for the economic growth and structural change is very low in Ethiopia and performing less compering with that of the other sectors in the economy. So, this research tried to look at how different macroeconomic variables affect the manufacturing sector value added by using annual time series data from 1982 to 2018 estimated by Autoregressive-Distributed Lag (ARDL). The result from the Bound test shows manufacturing sector value added has a long-run relationship with macroeconomic variables in the model. In the long-run, general inflation rate, exchange rate, and trade openness have a significant negative effect on the manufacturing sector value-added. In contrast, general government expenditure has a significant positive effect. Also, the Error Correction model shows an adjustment towards the long-run equilibrium of the manufacturing sector value-added. So, the government has to control the general inflation level, promote demand for domestic manufacturing products and competitiveness of domestic firms, and strengthen the backward link of the sector to decrease its import-input dependency to reduce the effect of exchange rate depressions. Lastly, effective and efficient government expenditure will have to be used to increase the manufacturing sector value-added.
This research tried to look effect of macroeconomic, demographic, and governance factors on income inequality in 34 sub-Saharan Africa countries by using unbalanced panel data spanning from 2010 to 2017. Two-step System GMM estimation is used for the econometrics analysis of the Dynamic Panel Data model. The finding revealed income inequality has a dynamic nature. Also, Kuznets' hypothesis is worked in these countries: where economic growth is found to have a significant increasing effect on income inequality in short-run while in the long run, its' effect is significant and decreasing. Population growth is the other variable that is found to have an increasing impact on income inequality. Differently, FDI and low perception of corruption decrease income inequality. Therefore, much focus will have to be given to achieve sustainable development objectives, promoting FDI, and controlling corruption. Also, managing the population growth is important.
Finance-growth nexus is among the main debatable issue in economics and policymaking. So, this research tried to look at the effect of financial sector development on the economic growth of 25 sub-Saharan Africa countries by using panel data for time 2010-2017. Precisely, three dynamic panel data models which look the effect of financial sector depth, access and efficiency on economic growth were estimated by two-step system GMM estimation. In this research, credit extended to the private sector per GDP, commercial bank branch per 100,000 adult population, and Return to assets were used as a proxy for financial sector depth, access, and efficiency, respectively. Accordingly, the results revealed financial sector depth, access, and efficiency have a positive and statistically significant effect on the economic growth of these countries. It is therefore recommended for the concerned bodies that broadening the depth of financial institutions by giving more credit for the private sector is essential. Besides, the financial institutions will have to be expanded to increase their accessibility to the mass and have to take some measures which promote their efficiency.
Total factor productivity (TFP) as a source of economic growth, has been recognized in economic theory for a long period of time. In this research we tried to examine the effect of some macroeconomic factors, which include trade openness, inflation, government expenditure, credit extended and foreign direct investment, and natural disaster drought on total factor productivity and its trend in Ethiopia by using Time series data spanning from 1991 to 2018. The TFP was computed by using the growth accounting method from Cobb–Douglas production function. ARDL was used for estimation of the short and long run econometric model. Accordingly, the trend analysis shows the growth in TFP has been fluctuating over the study period. The result from ARDL indicated that; in long run foreign direct investment, government expenditure and drought negatively and significantly affect TFP. Credit extended is found to affect TFP positively and significantly, while inflation and trade openness are insignificant. Therefore, policies such as; subsidizing domestic firms, effective government spending and making the agriculture sector drought resistant need to be stimulated.
The rise in atmospheric carbon dioxide (CO2) concentrations has become one of the world’s major environmental concerns nowadays. It has prompted many scholars to investigate the factors that influence CO2 emissions. Many researchers, but overlook the role of economic freedom and income inequality in analyzing the EKC in Sub-Saharan African (SSA) countries. Taking 16 countries based on data availability, this study examines the effect of economic freedom and income disparity on CO2 emissions under the environmental Kuznets curve hypothesis, using balanced quarterly data straddling from 2000 to 2015. To undertake pre-estimation tests, we applied the second-generation panel cross-sectional dependence, slope homogeneity, and unit root tests. By applying cointegration and Granger tests that take heterogeneity into account, the study examined the cointegration status and direction of causality between the variables under scrutiny. PMG/ARDL estimation technique was applied to estimate the long-run coefficients. Results from the PMG/ARDL reveal that economic freedom has no statistically significant effect on CO2 emissions. The result supports the EKC hypothesis. Income inequality, industrialization, and non-renewable energy consumption have statistically significant positive effects on CO2 emissions in the long run. Economic freedom does not affect the environmental quality in the panel of countries studied. The results from the Granger causality analysis indicate that economic freedom, income inequality, renewable energy consumption, non-renewable energy consumption, industrialization, urbanization, and economic growth Granger cause CO2 emissions with a feedback effect except for economic freedom and industrialization. Policies intended to lessen income inequality can enhance environmental quality.
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