Browsing by Author "Gebremeskel Atnafu"

Now showing 1 - 2 of 2
  • No Thumbnail Available
    Item
    The Effect of External Debt on Private Investment in Sub- saharan Africa
    (A.A.U, 2021-06) Eshetu Antehun; Gebremeskel Atnafu
    This study investigate the E ect of External debt on Private Investment in Sub Sa-hara.The objective of the study is to investigate whether the SSA external debt burden has contributed to weak private investment in the country. For this purpose, two hypothe-ses need to be tested. First, the debt-service ratio is expected to have a negative e ect on private investment. Second, public investment is hypothesized to have positive e ect on private investment. The study is carried out using the GMM and FE the time series panel data analyzed cover the period 2000 - 2019. Gross private investment (PRI) is speci ed as a function of the debt-service ratio (DSR), gross public investment (PUI),External debt stock (ED), GDP rate (GDPr), credit to private sector (CPS). The em-pirical ndings provided evidence for debt overhang problem of the external debt stock accumulation. However, the empirical analysis reveals that the debt service ratio crowds out private investment as hypothesized. This would mean that the scarce resources avail- able in the country are being used to meet the external debt obligations instead of being allocated to productive investment. Moreover, the results con rmed the positive impacts of public investment on private investment. The positive impact of public investment on private investment could also be witness for the absence of crowding out e ect of external debt servicing. The econometric nding with respect to private sector credit also suggested the positive contribution on the private investment in sub Saharan African countries. All in all, the study concludes that the external debt stock overhang and external debt service ratio crowds out private investment in Sub Saharan Africa. While the Government rec- ognizes the private sector to be the key engine of economic growth and poverty reduction, policy makers should raise productivity of capital and increase the demand for the private sector output. To this e ect, it is also suggested that more resources should be allocated to the areas of agriculture and infrastructure. These measures would help to enhance conditions meant to attract more private investment in the countries.
  • No Thumbnail Available
    Item
    The Impact of China and India on African Manufacturing Exports on the Third Market (Gravity Approach and a Test of Flying - Geese Theory for Africa)
    (A.A.U, 2007-07) Gebremeskel Atnafu; Geda Alemayehu
    In this paper, we address two major questions. First, the question of whether China and India displace the Africa manufacturing export from the third market and, secondly, the question of whether there is an evidence Jar shifting competitive advantage from china to Africa as predicted by the flying-geese theory of industrial developmental. The commodity is disagreement down to three – digit STC rev .3 according to the un Comtrade classification . we employed the gravity equation to test whether china and india are crowding out the Africa manufacturing exports from the third market . in contrast to most of the researches which estimate gravity model on average of bilateral trade flows from cross- section data ,we estimated the gravity model on panel data of imports of six third market countries from thirteen Africa export countries for the period 1995-2005 . To test whether there is an evidence of shifting of comparative advantage from china and or India to Africa as predicated by flying - geese theory , we estimated spearman’s rank correlation coefficients on indices of the revealed comparative advantage vectors of the African exporters and china and india for the period 1995-2004 .Both the gravity and flying- gees models predicted some out come. The major finding of this paper is that there is strong evidence that china has been displacing Africa manufacturing from the third market but india has been complementing in the early years. However , the overall third market impact of china and india has been that of complementarity in the later years of the sample period .furthermore . we found an evidence for shifting comparative advantage from china and india to Africa as the flying- geese theory predicts , south Africa being the leading goose. South Africa gained comparative advantage earlier than other African countries and moved to the higher stage of industrialization followed by Kenya The major implication of this study is that , in the world where china and india are reshaping the global economic order dynamically , the outcomes of the traditionally received wisdom of trade liberalization and industrialization policies in the spirit of export promotion may be uncertain.