Economics

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Browsing Economics by Author "Abdurezack Hussein"

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    Does Extrrnal Public Debt Affect Ethiopla's Economic Growth?
    (A.A.U, 2023-06-06) Leulseged Abebe; Abdurezack Hussein
    Ethiopia is a highly indebted poor country (HIPC), but empirical research concerning about the relationship between external debt and growth is lacking and ambiguous. In the current research, Auto-Regressive Distributed Lag Model (ARDL) is used to evaluate the connection between Ethiopia's real GDP and external debt, utilizing yearly time series secondary data beginning from 1985 to 2021. The outcome demonstrates that the total stock of external debt has a significant negative relationship with its real GDP. However, the aggregate amount of lagged debt service has a short-run positive influence on the country’s economic growth. This reveals there is a debt overhang effect but not a crowding-out impact. Additionally, labor force and internal conflict exert a negative influence on the nation's real GDP in the short run, while gross capital formation and trade openness have a positive impact. Only gross capital formation and total amount of external debt have long-run positive and negative relationship with real GDP, respectively. The study provides a definite response to the topic of how foreign public debt affects Ethiopian economic growth
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    Foreign Direct Investment in Sub-Saharan Africa: The Role of Institutional Quality, Macro Economic Uncertainty, and Political Risk
    (A.A.U., 2023-06-01) Yoseph Biadigilign; Abdurezack Hussein
    A surge of foreign direct investment (FDI) to the developing world has been observed in recent years. However, Sub-Saharan Africa (SSA) has received less investment compared to other regions on par. This study attempts to examine the roles of institutional quality, political risk, and macroeconomic uncertainty in intimidating the inflows of FDI to Sub-Saharan Africa (SSA). The study applied the panel fixed effect and Dynamic GMM (Arellano-Bond) models for 26 sample countries in SSA, over the period from 2002 to 2021. The findings of the study show that regulatory quality, Control of corruption and enforcement of rule of law promotes the inflow of FDI to SSA. Less Political risk as proxied by political stability and absence of violence/terrorism, and government effectiveness reveals a significant positive effect on FDI inflows, while voice and accountability found to have insignificant effect on FDI inflows to the region. Macroeconomic uncertainties as proxied by real effective exchange rate and inflation rates negatively influenced the inflow of FDI to SSA. Other control variables included in the model, such as openness to trade and rate of return on investment also have positive effect on FDI inflows to the region, whereas labor force and infrastructure availability are insignificant in influencing FDI to SSA. Thus, improving institutional quality, mitigating political risks, and managing macroeconomic variables such as inflation and exchange rates are critical policy implications for attracting more FDI inflows to SSA countries.
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    Good Governance and Poverty Reduction: Empirical Evidence from Selected Sub-Saharan Africa
    (A.A.U, 2025-02-21) Salah Yusuf; Abdurezack Hussein
    The purpose of this study is to investigate the impact of good governance on Poverty reduction in selected Sub-Saharan African countries. The study used panel data from 36 Sub-Saharan African countries over the period 2010 to 2022. The data is analyzed using a fixed effect estimation model and a Granger causality test to investigate a possible causal relationship between good governance and Poverty reduction. The result of the study revealed that effective governance has a positive significant effect on Poverty reduction. Moreover, the economic growth and development of human capital are found to contribute to the reduction of Poverty in sub-Saharan Africa. Nevertheless, the Granger causality test suggested that there is no evidence for a causal relationship between good governance and Poverty reduction. The study suggests that improved effectiveness of government, strengthening economic growth, and enhancing human capital contribute to the reduction of poverty in sub-Saharan African countries.
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    The Effect of Political Instability on Economic Growth in Sub-Saharan African Countries
    (A.A.U, 2022-06-08) Tsegayehu Agmasie; Abdurezack Hussein
    In this study, the relationships between political instability and economic growth in Sub Saharan African countries are deeply explored. Six individual political instability indicators from the World Bank’s world governance indicators database were used and aggregated into a single and more comprehensive political instability index by employing the techniques of principal component analysis. Then the impact of the composite political instability index on economic growth along with other economic variables are modeled by employing three simultaneous equations and estimated by dynamic panel GMM estimation approach which accounts for the endogeneity issues. The results from the GMM estimations reveal that political instability significantly hampers economic growth in SSA through its direct transmission mechanism by disrupting the available resources a country has at its disposal. The hypothesized indirect channel through which political instability negatively affects economic growth through FDI is found to be statistically insignificant. Panel causality tests along with the corresponding forecast error variance decompositions (FEVDs) and impulse response functions (IRFs) are performed to reinforce the results obtained from the GMM estimations. The results show that political instability and foreign direct investment (FDI) Granger-cause economic growth, while the reverse is not true. While it’s found that economic growth is the most endogenous of the main three target variables, FDI is the most exogenous one which is unresponsive to shocks of variables other than its own. The governments and policy makers of Sub Saharan African countries should target political instability as their policy variable since variations in the economic growth other than its own shocks are also explained by the shocks from political instability. Countries in SSA should not ignore factors leading to political instability and policies aimed at decreasing political instability should be pursued by these countries in order to maintain a stable economic growth.