The purpose of this study investigates the validity of the Balassa-Samuelson effect in selected African countries. The kernel of the Balassa-Samuelson (BS) effect is the relationship between productivity and real exchange rate. The study therefore, estimates the equilibrium real exchange with total factor productivity as the main explanatory variable. The results revealed that Balassa-Samuelson effect holds in the selected African countries. The results show a positive relationship between real exchange rate and productivity. An increase in total factor productivity causes real exchange rate appreciation. An improvement in productivity can cause countries to experience an increase in prices of their products relative to trading partners. The study recommends that the selected African countries should pursue policies that maintain competitive real exchange rate.
A B S T R A C TThe study investigates the macroeconomic determinants of unemployment in Swaziland. The Engle-Granger two steps econometric technique was used to investigate the effect of macroeconomic variables on unemployment in Swaziland. This econometric technique was used to also test the existence of long-run relationship between unemployment and its macroeconomic determinants. The investigation found evidence of long-run relationship between unemployment and its macroeconomic determinants. The results indicate that the ratio of actual to potential Gross Domestic Product (GDP), inflation, government spending, dummy variable for democratization of South Africa in 1994 and global economic crisis of 2007-2009 are determinants of unemployment in Swaziland. The Engle-Granger procedure was used to estimate the empirical model. The results indicate that unemployment in Swaziland can be reduced by accelerating GDP at the expense of high inflation. It can also be reduced by allocating a greater proportion of government spending on activities that increase investment and GDP. The simulated model results indicate that the model is good as the estimated of forecasted unemployment tracks the actual unemployment.
Different regions are linked through different factors such as climate, and border sharing. Apart from this, African countries have developed significant links as a result of globalization, economic integration, and trade liberalization. Since any country's economic growth is influenced by the performance of its neighbours, these ties have resulted in spatial dependence among these countries.On this basis, the significance of spatial interactions between countries cannot be overemphasised. It is for this reason that the study investigated spatial dependence between African countries. The study employed non-spatial (FE, GMM) and spatial (SDM, SAM, and SEM) econometrics techniques and data ranging from 1996 to 2019 to examine the impact of ODA on Economic growth in Africa and its spillover effects. Based on the graphs and the Moran I test, the findings reveal that i) there is spatial dependence among African countries ii) The GMM results indicate that the ODA impact was positive and statistically significant but smaller in magnitude compared to the magnitude of the spatial models' coefficients. This suggests that not controlling for space heterogeneity will possibly underestimate the real impact of ODA on GDP. Secondly, the study found that the weighted GDP was positive and statistically significant, which indicates that an increase in the GDP of a certain country has a positive and statistically significant impact on their neighbour's economic growth. Based on the findings of the study, it is suggested that countries should improve their relationships and partnerships if they want ODA to provide the desired benefits across Africa.
Different regions are linked through different factors such as climate, and border sharing. Apart from this, African countries have developed significant links as a result of globalization, economic integration, and trade liberalization. Since any country's economic growth is influenced by the performance of its neighbours, these ties have resulted in spatial dependence among these countries. On this basis, the significance of spatial interactions between countries cannot be overemphasised. It is for this reason that the study investigated spatial dependence between African countries. The study employed non-spatial (FE, GMM) and spatial (SDM, SAM, and SEM) econometrics techniques and data ranging from 1996 to 2019 to examine the impact of ODA on Economic growth in Africa and its spillover effects. Based on the graphs and the Moran I test, the findings reveal that i) there is spatial dependence among African countries ii) The GMM results indicate that the ODA impact was positive and statistically significant but smaller in magnitude compared to the magnitude of the spatial models’ coefficients. This suggests that not controlling for space heterogeneity will possibly underestimate the real impact of ODA on GDP. Secondly, the study found that the weighted GDP was positive and statistically significant, which indicates that an increase in the GDP of a certain country has a positive and statistically significant impact on their neighbour’s economic growth. Based on the findings of the study, it is suggested that countries should improve their relationships and partnerships if they want ODA to provide the desired benefits across Africa.
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