Development Economics

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Browsing Development Economics by Subject "ARDL, Ethiopia"

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    Assessment Of Public Expenditure And Its Impact On Agricultural Growth In Ethiopia
    (Addis Ababa University, 2021-02) Wondmagegne, Eden; Debebe, Sisay (PhD)
    This research deals with identifying those public expenditure factors affecting agricultural growth in Ethiopia. The study is based on a time series data of 38 years from 1980/81 to 2018/19. During this period, the country’s economy has experienced both upswing and downswing in its agricultural sector. Government expenditure in different sectors including agriculture and its allied activities, education, health and roads construction is expected to promote agricultural growth. Here ARDL approach to co integration and an error correction representation of the ARDL model have been used due to certain advantages. The result of the Bounds test indicates the presence of a long-run co integrating relationship between the variables in the study. The results reveal that in the long-run, the effect of public expenditure through recurrent expenditure, on agricultural growth is significantly negative, while expenditure on education and health to enhance agricultural growth are significantly positive on the short-run that is in line with several earlier studies. Public expenditure in capital and roads construction to enhance agricultural growth is significantly negative in the short-run however public expenditure on capital, education, health, and roads construction to enhance agricultural growth do not significantly affect agricultural growth in the long-run. The discoveries reveal that prudent utilization of government expenditure cans possibly accelerate agricultural development and improve its efficiency.
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    The Nexus between Financial Development, Foreign Direct Investment and Economic Growth in Ethiopia
    (Addis Ababa University, 2021-02) Abamo, Temesgen; Gutu, Zelalem (PhD)
    Foreign direct investment (FDI) has been recognized as a growth-enhancing factor in various economies more especially in less developed countries. It is among the most vibrant foreign inflows that promote economic growth. Foreign direct investment (FDI) improves economic growth; however, the FDI that contributes to the growth is dependent on the recipient countries circumstances. The aim of this study is to empirically investigate the relationship between financial development, foreign direct investment (FDI) and economic growth, and to examine the effect of the interaction variable on economic growth in Ethiopia. The study used the co-integration and Autoregressive Distributed Lags Approach (ARDL) approach, using time series data which covers from 1981-2019. Also the study employed Granger causality test to see the direction of causality. From the result of the bound test there is a long-run relationship among the variables. The obtained results shows that FDI and private sector credit has a positive and significant impact on economic growth, while, the interaction variable has a significant negative relationship with economic growth in the short run. The result also revealed that in the long run private sector credit and the interaction variable has a positive and significant impact on economic growth. However, the FDI to have a positive effect on economic growth of Ethiopia in the long run if the threshold level of financial development should be attained. Moreover the Granger causality test result shows bidirectional causality from foreign direct investment (FDI) to GDP per Capita, private sector credit to GDP per capita and a unidirectional causality from FDI to private sector credit. The result suggest that there is a need to reform the domestic financial sectors to make it more attractive for any foreign firms to invest in, although, this can be considered as a pre-condition for the positive impact of FDI on growth. Thus, the reform of the domestic financial sector should precede policies that would attract FDI inflow into the Country.