Top PDF The Impact of Remittance on Economic Growth of Ethiopia

The Impact of Remittance on Economic Growth of Ethiopia

The Impact of Remittance on Economic Growth of Ethiopia

The purpose of this study was to investigate whether or not international remittances enhance economic growth in Ethiopia. Data for the period 1984-2017 from World Development Indicator and Ethiopia Ministry of Education annual statistical Bulletin was used. To investigate the impact international inflow remittances, foreign direct investment net inflow, inflation, general government final consumption expenditure, gross fixed capital formation, openness to international trade, human capital and population growth were also included. The study employed an aggregate Cobb-Douglas production function. Augmented Dickey Fuller tests were used to test for non Stationarity of the variables. It was found that all variables were integrated of order one. In addition, Johansen Cointegration test was employed to determine whether or not the variables were cointegrated. Error correction model was employed to estimate short – run and long run relationship using ordinary least square technique. The study found that in the long run General government final consumption expenditure, openness to international trade, human capital and Population growth where as in short run foreign direct investment net inflow had both positive and significant impact on economic growth. Additionally in the long run Inflow remittances, Inflation and foreign direct investment net inflows and in the short run inflation, Openness to international trade and Human capital (secondary school enrolment) had both negative and significant. This was in contrast with the expected result of positive and significance impact on economic growth rate. Gross fixed capital formation in long run where as remittance inflow, general government final consumption expenditure and human capital (secondary school enrolment) were found to be insignificant and no impact economic growth.
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The Impact of Foreign Direct Investment on Economic Growth. The case of Ethiopia

The Impact of Foreign Direct Investment on Economic Growth. The case of Ethiopia

This study examines the impact of foreign direct investment on economic growth of Ethiopia using yearly time- series data for 1974 through 2013. Economic growth is proxies by real per capita gross domestic product and foreign direct investment proxies by the inflow of foreign direct investment. Other control variables such as gross domestic saving, trade, government consumption and inflation have been incorporated. In order to fully account for feedbacks, a vector autoregressive model is utilized. The results show that there is a stable, long-run relationship between foreign direct investment and economic growth. The variance decomposition results show that the main sources of Ethiopia economic growth variations are due largely own shocks. The pair-wise Granger causality result show that there is a unidirectional causality that run from FDI to economic growth of Ethiopia. Hence, the researcher therefore recommend that, FDI facilitate economic growth, so the government has to exert much effort in order to attract more FDI into the country.
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Privatization Impact on Economic Growth in Ethiopia: ARDL Approach

Privatization Impact on Economic Growth in Ethiopia: ARDL Approach

The objective of this paper is as to check whether privatization has long run or short run significant impact on economic growth of Ethiopia by considering real GDP growth as a proxy for economic growth and privatization proceeds as to the measure of the magnitude of privatization. A time series data starting form 1994/95S1 up to 2016/17S2 using some explanatory and response variables. Autoregressive Distributed Lag (ARDL) method to characterize long run and the short run relationship between real GDP growth and independent variables was used. The empirical results reveal that both privatization and foreign direct investment due to privatization are found to have a positive impact on economic growth and statically significant at 1 & 5 percent respectively in the long run as well as in the short run. While, inflation and government consumption proxy to corruption affects economic growth negatively in the long run. The unexpected result of private domestic investment had a negative sing and insignificant in the long run. This study has an important policy implication. The findings of this study imply that economic growth can be improved significantly when the privatization police accompanied with other structural change was implemented. Hence policy makers and /or the government should strive to strengthen privatization policies together with other policies. In addition to this effort, there should be a close monitoring and consistent government consumption and budget monitoring strategies, which is used to avoid misallocation and mismanagement of consumption.
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The Impact of Public External Debt on Economic Growth in Ethiopia: The ARDL Approach to Co-integration

The Impact of Public External Debt on Economic Growth in Ethiopia: The ARDL Approach to Co-integration

Governments need extensive amount of capital funding to achieve the sustainable economic growth. And due to lack of adequate capital, most developing countries such as Ethiopia rely on borrowings from external sources to bridge the resource gap. This study aims to analyze the impacts of public external debt on economic growth in Ethiopia by ARDL approach using a time series annual data from 1983-2018. The model considers annual GDP growth rate as a dependent variable. The debt variables including public external debt stock to GDP (PEDSGD), the ratio of debt service stock to GDP (DSSGD) and debt service stock to export (DSSEXP) and other macroeconomic variables such as trade openness(TRD), rate of inflation(INFL) and public expenditure to GDP ratio(NEXPGD) are explanatory variables. The study used bound testing for co-integration in the long-run and ECM for short-run dynamics. The study showed long-run co-integration, while the speed with which the disequilibrium caused by lack of proper management external fund in earlier years returns to long-term equilibrium is 60.96% in the current year as indicated by coefficient of error correction term. The result of this study revealed that the variables PEDSGD and DSSGD are significant debt variables and have the negative impact on economic growth of Ethiopia in long run and short run. The other debt variable, DSSEXP negatively affects economic growth and is significant but only in the short run. This shows that there is the evidence of crowding out effect of public external debt in the short run. Also, the negative sign and statistical significance of the variable DSSGD shows that there is debt overhung effect of public external debt in the country. The negative impact is probably due to lack of proper management and/or investments of the funds borrowed from external sources into unproductive activities and projects. As a result government should properly allocate its external debt for the productive investment and maintain proper and efficient debt management policy.
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The Impact of Public Expenditure Components on Economic Growth in Ethiopia; Vector Autoregressive Approach

The Impact of Public Expenditure Components on Economic Growth in Ethiopia; Vector Autoregressive Approach

Abstract: The study analyzes the impact of public expenditure components on economic growth in the Ethiopian economy using annual time series data for the period 1982-2016. The study uses public expenditure variables from economic infrastructures (agriculture, road and energy), social infrastructure (education) and recurrent and capital expenditure components. With the help of co-integration and vector error correction analysis, the impact of various areas of public expenditures was assessed in the long-run as well as in the short-run. The study found that public expenditure components at all have a significant positive effect on economic growth in the long-run but they have insignificant impact in the short-run except education and road. Expenditure on education and road has both short-run and long run effects on economic growth. The impact of educational expenditure on economic growth is highly significant and positive which have powerful role in promoting the country’s economic growth compared to other variables. In the short run the impact of education on economic growth is negative and significant whereas that of road expenditure is significant and positive. Based on the results of the co- integrated and vector error correction model, this study found that, it is better and advisable to have an excessive expenditure on education and road construction than other areas of public expenditure, so as to accelerate economic growth in Ethiopia.
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The impact of remittance on economic growth and poverty reduction in Ethiopia

The impact of remittance on economic growth and poverty reduction in Ethiopia

In present studies examines that remittance has significant impact on economic growth by reducing income inequalities and has also significant contribution in poverty alleviation by redu[r]

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The Impact of Population Growth on Economic Growth: Evidence from Ethiopia using ARDL Approach

The Impact of Population Growth on Economic Growth: Evidence from Ethiopia using ARDL Approach

The empirical results revealed that population growth has significant positive relationship with economic growth both in the short run and long run. More specially, at citrus paribus, one percent increase in Ethiopian population will lead to 1.1294411percent (that is, more than proportionate) increase on economic growth in the long run. Again, all other things being equal, one percentage increase in Ethiopian population will increase its real GDP by 0.55 percentages, on average, in the short run. The results of impulse response function supported these results by showing that impact of population on economic growth is permanent. Moreover, the results of YTDL causality testing approach suggest that there exists bi-directional causality when causality is assumed to run from population to economic growth or from economic growth to population growth. Overall, the relationship between population and economic growth is strong and positive in Ethiopia over the periods of the study.
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IMPACT OF REMITTANCE ON LEBANON ECONOMIC GROWTH

IMPACT OF REMITTANCE ON LEBANON ECONOMIC GROWTH

Lebanon is among the remittance-dependent economy. Statistic shows that in 2018 remittance contributes about 14% to its GDP. In view of these, this paper examined the impact of remittance on the economic growth of Lebanon. A yearly data from 2003 to 2017 for both remittance and GDP for Lebanon was obtained from World Bank Development indicators, and analyzed using ordinary least square regression (OLS). The findings from the study reveals that remittance flow to Lebanon has a positive and significant impact on economic growth of Lebanon. The result further shows that, a percentage increase in the remittance will increase the economic growth by about 2% at less than 1 percent significance level. The study suggest that Lebanese in diaspora should be encouraged by the government. The government should pursue a favorable and attractive policy for investment. This will enable the country to harness the full potential benefit of remittance.
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Impact Of External Public Debt On Economic Growth A Study With Reference To Ethiopia Using Granger Causality

Impact Of External Public Debt On Economic Growth A Study With Reference To Ethiopia Using Granger Causality

The focus of this research is to show the extent and to critically assess and explore the causality relationship of public external debt that impede the ongoing growth and development of Ethiopia.It also aimed tofind out the debt servicing management experience and the impact of debt servicing and external debt on the Ethiopian economic growth. And to ascertain the long-term correlation between the external debt burden on future generation of Ethiopia. Such study is important to answer the question such as; what are the effects and trends of external debt on economic growth of Ethiopia?This question aimed at checking the effect that emerged in the debt program and debt servicing management as a whole to economic contribution.The Researcher used time series data starting from 1970 to 2016 and construct based on yearly data to retain information on the time dimension of the yearly change in external debt and other variables. However, the results are checked by using time serious regressions of 47 years almost including 2016 to eliminate any residuals which cause effects.). The finding of the analysis showed that, the economic growth equation shows that external debt is found not to significantly support economic growth in Ethiopia. External debt requires adequate management as it impede on the level of economic growth in Ethiopia.
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The Impact of Foreign Aid on Economic Growth of Ethiopia (Through Transmission Channels)

The Impact of Foreign Aid on Economic Growth of Ethiopia (Through Transmission Channels)

almost half of the GDP is generated from agriculture, it is imperative to incorporate climatic shocks (most importantly rainfall shocks) into the growth equation. And shocks in fact may have an important implication for aid effectiveness as shocks (rainfall) has the power to offset any positive contribution made by foreign aid. What is more, drought years are mostly followed by resurgence in the volume of aid flow to the country. Rainfall shock /variability (the annual deviation of rainfall from the normal pattern) influences the performance of the economy through its effect on the production and performance of the agricultural sector. In line with this argument, Alemayehu and Befekadu (2005) claimed that the high dependency of economic growth on timely and adequate rainfall is among the structural constraints facing the Ethiopian economy. Rainfall variability/shock is measured by the annual deviation of rainfall from the long term mean average rainfall i.e. rainfall variability (RFV) t =RFVt− RF’, RF t - annual rainfall at period t, and RF’ - the mean average rainfall. This helps us to identify the consequences of dependence on rain fed agriculture on the performance of the overall economy.
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Impact of Foreign Capital inflows on Economic Growth and Self-employment in Ethiopia

Impact of Foreign Capital inflows on Economic Growth and Self-employment in Ethiopia

administrators to provide basic education and build motorways, railways and communication to facilitate their business operations (Kohli, 2004:18). But the extent to which colonial infrastructure served the interest of the local population is doubtful. Although, wherever the infrastructure existed became the major cities for business and government administration. Thus, for DAC, physical infrastructure is considered as the foundation of economic development. In fact, Ascher and Krupp (2010: 225) argue that if networks of roads, railways, water supply and electricity connect major cities, towns and rural areas, a great number of the population directly or indirectly will benefit from foreign capital, but if industries are cited in an export processing zone and no direct infrastructure connections to rural areas, a few will be employed, there might be economic growth but the majority will live in poverty. For instance, if the networks of road that China is building in Ethiopia connect locations outside its sources of raw materials and industries, we would assume in theory that economic activities that involve the majority will blossom. Linking rural cities and towns to road and rail networks will influence the manner people travel to other locations to pursue economic activities and seek other opportunities. Similarly, if electricity is extended to rural cities and towns outside the main coastal cities, mining and factory locations, the population will have the opportunity to diversify their business activities and that would contribute to self-employment, economic growth and poverty reduction.
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The Impact of Human Capital on Economic Growth in Ethiopia

The Impact of Human Capital on Economic Growth in Ethiopia

Health and education are two closely related human (resource) capital components that work together to make the individual more effective in production (International Institute for Applied Systems Analysis 2008). Improvement in health of workers increases productivity. In turn increase in productivity results in economic growth either through reducing work off days or through increasing production in work place. Healthier workers are more energetic and strong. Health has wider concept than merely absence of sickness. It is the ability of people to develop to their potential during their entire lives. In that sense, health is an important asset individuals possess, which has intrinsic value (being healthy is a very important source of well-being) as well as instrumental value (Bloom,Canning &Sevilla 2004).In addition, vigorous investment on education can be considered as a platform for progress in economic growth subject to appropriate policy environment. Therefore, Accumulation of human capital consist investments on abilities, human skills, creative knowledge and health of people. So, allocating more resources to human capital will have positive effect on production (Romer 1996) and further improve economic growth by converting resources to mankind’s use and value (Adelakun 2011).
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Impact of Financial Development and Globalization on Inflation: The Role of Remittance and Economic Growth in Bangladesh

Impact of Financial Development and Globalization on Inflation: The Role of Remittance and Economic Growth in Bangladesh

Haslag and Koo, (1999) show that inflation represses financial development and negative relationship between both variables disappears after a threshold level of inflation. Rousseau and Wachtel, (2001) report the negative relationship between inflation and economic growth which further indirectly or directly puts negative impact on financial development. They mention that the direct impacts of inflation are normally disappeared when the inflation is at moderate level and the indirect effects of inflation are unable to cover via economic growth. Boyd et al. (2001) also confirm that after the threshold level, inflation affects financial development positively and threshold level is 15 percent per year. Khan et al. (2006) uncover that threshold level of inflation is 3 to 6 percent and after that level, an increase in inflation has negative impact on financial development. Smith, (2003) highlights that rising inflation not only impacts financial systems but it also damages the financial markets or disturb its operations. Boyd and Champ, (2003) report that in the period of high inflation, the risk of bank crises is also at higher level, because high inflation stops financial development to work which affects the real economy in short run. Kim et al. (2010) investigate the long run and short run relationship of financial development and inflation. Their results show that inflation retards financial development in long run but in short run, the relationship between both variables is positive and significant. In case of Bangladesh, Wahid et al. (2011) investigated the impact of inflation on financial development by applying the ARDL bounds testing approach to cointegration. They found that the variables have cointegration relation with each other. Their empirical analysis indicated that inflation retards financial development.
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Money Demand and Economic Growth in Ethiopia

Money Demand and Economic Growth in Ethiopia

The impact of real effective exchange rate on the real money demand is negative in the long run and shot run. But it is found that it has insignificant effect in our short run broad money demand. This similar to the finding Gemech (1993) and Arise et al (2000), but contrast to that of Civeir (2003). The negative sign of real effective exchange rate shows deprecation of the real exchange rate and real money demand balance through its negative impact of current account to the open economy in the long run which contradicts one of her IMF prescription of LDCs for balance of payment improvement by encouraging export and discouraging import after devaluation.
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Unemployment and Economic Growth in Ethiopia

Unemployment and Economic Growth in Ethiopia

Osinubi (2005) as well examined the impact of economic growth on unemployment and poverty in Nigeria using annual time series data (1970- 2000) and using a three stages least square (3SLS) estimation. The variables selected for the study were unemployment, inflation, and index of agricultural production, index of petroleum production, money supply, exchange rate, and changes in real GDP, savings, work stoppages and trade disputes. The result reveled that growth is negatively related to poverty and positively related to unemployment against to “Okun’s Law”. The study recommended policy makers to reduce the income inequity to overcome poverty and low growth in Nigeria .Noor et al., (2007) also investigated the impact of economic grown unemployment in Bangladesh over the period of 1970 to 2004 and using ordinary least squares. The result showed that economic growth has negative impact on unemployment. Extra researchers also investigated empirically the impact of unemployment on economic growth such as Amino, et al (2013) for Nigeria, UK Essay (2008) for EU countries, Maria J., et al (2012) for Peru, Rafiq M., et al (2010) for Pakistan; all found that economic growth and unemployment were negatively related. El – Agrody et al. (2010) emphasized on the economic study of unemployment and its impact on Egypt’s GDP (1994- 2004),using Simple and multiple linear regression analysis and involving nine variables viz., privatization, population, consumption, expenditure, interest rates, exchange rates, technology, agricultural domestic product, real wage rates, and agricultural investment. The results revealed a significant positive impact of unemployment, investment, exchange rate and average per capita share of GDP on the Egypt’ s GDP. Privatization and population growth were indicated as the main reasons of increasing unemployment. The study recommended for revision of privatization policy and reduction of the interest rates in order to lower the agricultural unemployment. The above empirical studies conformed significant negative impact of unemployment on economic growth. Hence, taking the above literatures as a hint and base line, this study empirically investigates the impact of unemployment on economic growth in Ethiopia.
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Investigate on the Determinants of Economic Growth in Ethiopia

Investigate on the Determinants of Economic Growth in Ethiopia

Aurangzeb and Ul Haq (2012) asserted that Investment plays an important role in driving growth through increase in productivity levels. Foreign direct investment brings technology and creates employment. It helps to adopt new methods of production and enhances productivity by bringing competition in the economy. Foreign direct investment also introduces to novice management and organizational skills, and explores hidden markets in the economy. It reduces the barriers in adoption of technology and brings improvements in the quality of labor and capital inputs in the host economy. Furthermore investigating the impact of investment on the economic growth using multiple regression technique and found that public investment, private investment and foreign direct investment contribute to economic growth significantly concluded that bi directional relationship of gross domestic production with foreign direct investment and public investment while unidirectional relationship of gross domestic production is found with private investment and recommended that Pakistan should make stronger efforts to attract as much FDI as possible to the foreign exchange sectors in the short term.
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Fiscal Policy and Economic Growth in Ethiopia

Fiscal Policy and Economic Growth in Ethiopia

The purpose of the paper is to examine the impact of fiscal policy variables on economic growth for Ethiopia over the period 1974/75 – 2013/14, a period spanning 40 years. The fiscal policy variables considered components of government expenditure, revenue, and budget balance. To serve the objectives of the study Johnson’s Co integration test, VAR and VECM approaches are employed. The study result indicates that, economic growth and fiscal policy variables have long run relationship. Moreover the capital expenditure, direct tax and budget balance have positive relationship with economic growth in the long run. The main finding other tax has significance and positive impact on the country’s economic growth, In the short run, the error correction term come up with the expected sign and 43% of disturbances corrected each year. Based on the findings the study highlights some policy issues that policy makers should due attention.
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Biofuels, Economic Growth, and the External Sector in Ethiopia

Biofuels, Economic Growth, and the External Sector in Ethiopia

Our findings contribute evidence to the debate on whether or not biofuel production, especially in agriculture-dependent countries, has adverse impacts on food and cash crop production. We do not find negative effects of biofuel on food crops production in Ethiopia, especially when spillover effects are considered. The positive impact of biofuel on food crops is quite strong compared with the negligible effect of biofuels on cash crops. This could be due to the fact that farm households give priority first to food crop production and then to biofuels when deciding land allocation. As out-growers, farm households allocate a certain fraction of their farm land (e.g., up to a third) to growing biofuel crops. Given the small size of landholdings, the remaining land will be used for the production of cereals. In a land constraint setting where food security is a major issue, cash crops will be the first to be replaced by alternative and competing crops such as biofuel crops. Even then, production of cash crops on a very small plot of land could increase due to improved farm management practices that are acquired from biofuel crop activities. The results in the next section do suggest a small increase in cash crop production in some regions and scenarios. However, the impact of biofuel expansion on cash crops is limited. Otherwise, the replacement of cash crops with biofuels crops would have a considerable impact on the external sector of the economy.
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Foreign aid and economic growth in Ethiopia

Foreign aid and economic growth in Ethiopia

Aid squared has produced inconclusive and mixed result in the short run. Current aid squared has produced a result which is in line with the long run equation implying that there is no capacity constraint while the one year lagged difference aid squared support the view that aid has a diminishing return beyond some level and hence capacity constraint in the absorption of aid flow though marginally at 10 percent significance level.. Though it is not statistically significant, rainfall variability does have a negative impact on growth. Major political change from the Derg to EPRDF (D91) has an immediate negative impact on growth. However, the long run effects of such change are not analyzed since the objective was to identify the immediate short run effect of political unrest. In addition, as there was no peaceful transfer of power from the Imperial regime to Derg (D74) and from the Derg to EPRDF (D91), the country experienced a political unrest. Thus the result captures the influence of such political unrest on growth in the short run. However, the coefficient of major shifts in government from the Imperial to Derg regime is not statistically significant even though it has a positive sign. The error correcting term is statistically significant. The coefficient indicates that 45 percent of the disequilibrium in the previous period is corrected in one year. Thus it takes slightly above two year for the deviation adjusts to the long run path.
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The Economic Impact of AIDS in Ethiopia

The Economic Impact of AIDS in Ethiopia

Agriculture is the largest sector in most African economies accounting for a large portion of production and a majority of employment. Studies done in Tanzania and other countries have shown that AIDS will have adverse effects on agriculture, including loss of labor supply and remittance income. The loss of a few workers at the crucial periods of planting and harvesting can significantly reduce the size of the harvest. In countries where food security has been a continuous issue because of drought, any declines in household production can have serious consequences. Additionally, a loss of agricultural labor is likely to cause farmers to switch to less-labor-intensive crops. In many cases this may mean switching from export crops to food crops. Thus, AIDS could affect the production of cash crops as well as food crops.
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