This paper focuses on the impact of investment in education on economic growth in Mauritius. It is an attempt to explore the extent to which education level of the Mauritian labour force affects its economic growth that is its output level. We have used the Cobb-Douglas production function with constant returns to scale where human capital is treated as an independent factor of production in the human capital augmented growth model. We expect to contribute to the existing literature by bringing evidence from a data set for the period 1990 to 2006 obtained from the central statistical office and Bank of Mauritius reports. The results reveal that human capital plays an important role in economic growth mainly as an engine for improvement of the output level. There is compelling evidence that human capital increases productivity, suggesting that education really is productivity-enhancing rather than just a device that individuals use to signal their level of ability to the employer.
Governments of developing countries have been targeting poverty alleviation and deprivation as their main goal and thus have been working for pro poor growth. It is observed that African countries need considerable amount of investment in order to help their economies to prosper. African countries can benefit from growth through foreign investment which is seen as an important source of capital flows. However, even if growth is important for an economy, it is not a good indicator of social development. Welfare can be worsen if growth attained by a country is not pro poor and can also result in an increase in inequality gap. In this regards, this study is based on the investigation on FDI and poverty alleviation or welfare maximization in selected Sub Saharan African countries. The present paper takes a different approach in analyzing the impact of FDI on poverty reduction. In the context of selected Sub Saharan African countries and over the period 1990-2010, a dynamic Panel vector error correction model is adopted. In effect the Vector autoregressive model or the vector error correction model is of great importance in showing the dynamic behavior of economic time series and for forecasting. Also, it often provides better forecasts and describes theory-based simultaneous equations models. Thus, given the endogeneity and causality issues, using such a model can prove to be highly beneficial. The main variables used are FDI net inflows and poverty headcount index. Other variables used in this study include the unemployment rate, inflation, openness, government debt and government expenditure, education level and GDP per capita. The results suggest that indeed FDI is an efficient tool in fighting poverty both in the short run and long run with the sample of countries considered. Moreover, the results favor a uni directional relationship between FDI and social welfare (poverty reduction) and a bi directional causality between FDI and economic welfare (Economic growth). According to this study, foreign investment is an important ingredient for both economic and social development for Sub Saharan African countries. Hence, the government should devise appropriate policies to attract such capital flows. These can be in terms of an improvement in institutional capacity and easier administrative procedures which would surely favor the entrance of foreign firms in the host countries.
The present study attempts to address the important question of whether foreign direct investment (FDI) flowing into the tourism sector has served to enhance economic growth in Mauritius for the period 1984–2014. Using a dynamic vector error correction model, and catering for dynamism, the results show that tourism FDI has indeed contributed to fostering economic growth; albeit the magnitude of the coefficient being relatively smaller than FDI in the non-tourism sector. A plausible explanation for such a finding may reside in the fact that the bulk of FDI flows in the non-tourism sectors while domestic investment predominates in the tourism sector in Mauritius. The findings also demonstrate a positive relationship between tourism development and economic growth, thus supporting the tourism-led growth hypothesis.
Purpose Although it is a widely accepted fact that climate change can negatively impact on tourism demand and affect the economies at the socio-economic level, empirical studies on the climate change tourism development nexus has been quite scant, especially for the case of island economies that are heavily dependent on tourism. This study aims to supplement the literature on climate change and tourism by empirically assessing the relationship between climate change and tourist arrivals for the case of 18 small island developing states over the period from 1989 to 2016. Design/methodology/approach This paper uses dynamic panel data techniques, namely, a panel vector autoregressive framework, which accounts for dynamic and endogeneity issues. Findings The results from the analysis confirm the existence of a significant relationship between climate change and tourism demand in both the long-run and short run. Further analysis shows a bi-directional causality between climatic change and tourism demand while the study also confirms the tourism led growth hypothesis. Research limitations/implications This research supplements the literature on the tourism-environment link, especially for tourism dependent island economies. Practical implications Results from this study are important to policymakers who should spare no effort to mitigate the effect of adverse climatic change in the context of tourism development. Originality/value This study is built on a unique data set for a sample of island economies and interestingly adopts dynamic panel data analysis to account for dynamics and endogenity in the climate change-tourism development nexus.
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