Economics

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FOREIGN DIRECT INVESTMENT AND ECONOMIC PROGRESS: APPLICATION OF A DYNAMIC MODEL
(Social Sciences Research Society, 2018) Ogbokor, Cyril A.
Capital movements, whether in the form of foreign direct investment or foreign portfolio investment are considered to have a positive multiplier effect on the economy. The study contributes to the empirical literature by investigating whether foreign direct investment affects economic growth using Namibia as a test centre. The study made use of vector autoregression method to examine this relationship. A quarterly data covering 1990:Q1 to 2014:Q4 was employed. The results found cointegrating relationships among the four variables that were investigated. The estimated long-run equation also suggests a positive relationship amongst the variables that have been examined in the study. Surprisingly, no evidence of causality was found pertaining to the variables assessed in the study. Moreover, real exchange rate and net foreign direct investment contributed more towards innovations in economic growth during the forecast horizon compared to the openness index. The study concludes by crafting opportunities for further inquiries.
Can Foreign Trade Propel Economic Growth in Nigeria? Evidence from Causality Analysis
(JEL, 2017) Ogbokor, Cyril A.
Documented studies in the existing literature pertaining to causality relationships between foreign trade and economic growth indicators are quite enormous. This study investigates the dynamic causal relationship between foreign trade and economic growth in Nigeria during the period extending from 1995:Q1 to 2015:Q4. The study responds to the issue of omitted variable bias by incorporating trade openness and exchange rates as control variables. The study employed the granger-causality tests to determine the causal relationship, and in particular the direction of causality among the variables examined after carrying out the stationarity, cointegration and diagnostic tests. The study found a number of distinctive unidirectional causalities running from trade openness to exports, exports to exchange rates, real GDP to exports, trade openness to exchange rates, as well as from real GDP to exchange rates. These results suggest that, to increase and sustain economic growth, Nigeria should commit huge resources to its infrastructural development, diversification strategy, incentives pertaining to the country’s manufacturing sector, trade promotion policy, as well as having in place, an effective monitoring mechanism of curbing dumping activities of multinational corporations. The study recommends that, in future studies, efforts should be made to increase the variables used in the causality model. It is also suggested that future research endeavours, should engage other causality models in the existing literature to further investigate the issue under consideration.
AN ASSESSMENT OF THE RELATIONSHIP BETWEEN FOREIGN TRADE AND ECONOMIC PERFORMANCE: EMPIRICAL EVIDENCE FROM SOUTH AFRICA
(JEL, 2017) Ogbokor, Cyril A.; Meyer, Daniel
The driving objective of the study was to estimate the impact of foreign trade on economic performance using the economy of South Africa as a test site. The study contributes to the empirical literature by testing for a long-run relationship between foreign trade and economic performance in South Africa by employing quarterly data stretching from the period 1995Q1 to 2015Q4. The method of vector autoregression (VAR) was employed. Variables included in the study consisted of real GDP, exports, openness of the economy and exchange rate. The study found cointegrating relationships among the variables investigated, and that export was found to contribute more towards economic performance compared to openness of the economy and exchange rates. When it came to Granger-causality analysis, the study found a number of unidirectional relationships between the pairs of variables examined in the model. For example, it was found that economic growth granger causes exports and also openness of the economy granger causes exports. The forecast error variance decomposition suggests that economic performance itself accounted for most of the innovations that ensued during the 10-period forecast horizon employed in the analysis. Policymakers could utilize the results of this study, when it comes to policy formulation and design for the economy of South Africa. The findings of the research could be used to improve upon economic policy for South Africa and other developing countries on a similar path. The study creates opportunities for further research endeavours concerning the issue under investigation so as to unveil more evidence on the nature of the relationship between foreign trade and economic performance in the economy of South Africa.
A RECONSIDERATION OF THE EXPORT-LED GROWTH PARADIGM IN NAMIBIA DURING 1990:Q1-2016:Q4
(JEL, 2017) Ogbokor, Cyril A.; Halwoodi, Joseph
A large volume of empirical studies have conceded that international trade can propel development in various ways. This study evaluates the impact of trade on economic growth in the context of Namibia for the period 1990:Q1 to 2016:Q4. The study employed modern time series analysis technique (vector autoregression method) as against the direct application of the method of ordinary least squares regression. The annual data collated by the study were first transformed into quarterly data before estimating the model. The study was driven by four specific objectives. The empirical results arising from the study found that exports, real exchange rate and net foreign direct investment were positively related to economic growth as suggested by the estimated long-run equation. Moreover, the results obtained from the forecast error variance decomposition suggest that fluctuations in economic growth as a result of shocks were mainly explained by economic growth itself. This is not unusual. Moreover, amongst the three explanatory variables used in the model, real exchange rate and net foreign direct investment contributed more towards explaining changes pertaining to economic growth during the forecast horizon compared to exports. The findings of the study support a number of empirical studies that were reviewed. The study, inter alia, recommends the need for Namibia to put in place appropriate exports’ incentives that can potentially assist in boosting the country’s exports in regional and foreign markets. Besides, the study recommends the need for Namibia to invest enormously in transport and communications’ infrastructures, including renewable and non-renewable energy supplies. The study concludes by providing directions on further research opportunities pertaining to the issue under consideration.
DETERMINANTS OF HOUSE PRICES AND NEW CONSTRUCTION ACTIVITY: AN EMPIRICAL INVESTIGATION OF THE NAMIBIAN HOUSING MARKET
(J o u r n a l o f D e v e l o p i n g A r e a s, 2017) Sunde, Tafirenyika; Muzindutsi, Paul-Francois
The demand for and supply of housing are heterogeneous and differ across countries, provinces and cities. In the Namibian context, the housing market has experienced a substantial increase in house prices. Such an unexpected growth rate in house prices suggests that the Namibian housing market may not be sustainable in the long term. This means that there is a high probability of a housing price bubble in Namibia if the house prices continue to increase. The aim of this study was to conduct an econometric analysis of endogenous and exogenous determinants of house prices and new construction activity in Namibia. This study also attempted to establish whether there is evidence of overvaluation of house prices in the Namibian housing market and this is important in identifying the possibility of a housing price bubble in Namibia. In addition, the study is relevant during the current period where Namibia is faced with a continuous increase in house prices. A restricted VAR model with a Johansen cointegration approach was used to analyse monthly data from January 2000 to December 2014. The selection of the data set was aimed at providing representatives for various housing demand drivers and housing supply determinants. For modelling on the supply side, new construction investment as a percentage of GDP was employed. The other variables incorporated as exogenous variables include the economic growth rate, the consumer price index, nominal wages as a percentage of GDP, the short-term interest rate, mortgage loans as a share of GDP and population in the 15-64 cohort as a percentage of GDP. Results show that the house price index in Namibia has proved more sensitive to changes in population, mortgage loans and inflation; whereas the construction activities were found to be more sensitive to the house price index and inflation. Granger causality results show that there is a bidirectional causality between the house price index and new construction activity in Namibia. The study therefore found evidence of overvaluation of house prices in the Namibian housing market, which may lead to a house price bubble in the Namibian economy. Namibian policymakers, through the Bank of Namibia, should come up with policies which ensure that the majority of mortgages given by the banks are for constructing new houses instead of financing the purchase of existing houses.
Education Expenditure and Economic Growth in Mauritius: An Application of the Bounds Testing Approach
(European Scientific Journal, 2017) Sunde, Tafirenyika
This study examines the relationship between education expenditure and economic growth in Mauritius. The study employed the ARDL bounds testing methodology for the period 1976 to 2016. The study found that education expenditure Granger causes economic growth in Mauritius in the short run. In addition, the study also found that economic growth does not Granger cause education expenditure in Mauritius in the short run. However, in the long-run, the study found that there are long run relationships between education expenditure and economic growth in both equations; and this means that an increase in either of the variables will eventually lead to an increase in the other variable. The study, therefore, found support for the hypothesis that investment in education raises economic growth. This means that Mauritius has the potential to benefit from further investments in education in the future.
ECONOMETRIC ANALYSIS OF THE IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN NAMIBIA: EVIDENCE FROM ANNUAL DATA
(Sobiad, 2016) Ogbokor, C. A
The driving objective of the study was to measure in quantitative terms the influence of foreign direct investment on economic growth through cointegration techniques. Namibia was used as a case study. Annual dataset stretching from 1990 to 2014 was also applied. The imperative findings arising from the study constitutes the following: The study found long-run relationships among all the variables under consideration in the econometric model. The estimated long-run equation also indicates a positive association between the explanatory variables and real gross domestic product. In particular, net foreign direct capital was found to have a stronger influence on economic growth compared to openness and real foreign exchange rate. Correspondingly, a unidirectional relationship running from real exchange rate to net foreign direct investments was found. In addition, amongst the three explanatory variables used in the model, openness and net foreign direct investment contributed more towards innovations in economic growth during the forecast horizon compared to real exchange rate variable. The research paper concludes by creating opportunities for further investigations.
REASSESSING THE EXPORT-LED GROWTH RELATIONSHIP THROUGH COINTEGRATION METHODS
(Sobiad, 2016) Ogbokor, C.A.
The purpose of this study was to assess the applicability of the export-led growth nexus in the context of Namibia for the period 1990 to 2013 through the application of the Vector Autoregression (VAR) technique, which incorporates the following processes: Unit root tests, determination of the optimal lag length, testing the stability of the vector autoregression system, cointegration tests, estimation of the long-run equation, diagnostic checks for serial correlation, heteroscedasticity and normality, as well as the pairwise Granger-causality tests. Quarterly time series datasets were engaged. The study found cointegrating relationships among the variables that were examined. Further, the study found that export is a good predictor of economic growth. Therefore, the need for Namibia to pay special attention to developments in the export sector of its economy cannot be overstated. Additional research opportunities for upcoming researchers to further probe the issue under consideration are suggested.
An Econometric Time-Series Analysis of the Dynamic Relationship between Foreign Trade and Economic Growth in a Developing Country: Evidence from Namibia
(AUDOE, 2016) Ogbokor, Cyril, A; Meyer, Daniel. M
Economists have an inclination for quantifying the relationships amongst variables at both micro and macro levels. In this study, the possibility of a long-run relationship between foreign trade and economic growth in Namibia is assessed. Exports, foreign direct investment and exchange rates were used as potential predictors of economic growth, while real gross domestic product served as a proxy to economic growth. Quarterly time-series macro-economic secondary data sets were utilised from the period 1990 to 2013. Firstly, the study found positive relationships amongst the four variables used in the study. Indeed, this positive relationship suggests that the economy of Namibia can potentially be expanded by means of foreign trade. The result is also in line with broad economic theory. Secondly, the study found that economic growth responds stronger to changes in exports and foreign direct investment compared to changes in exchange rates. Thirdly, co-integrating relationships were found amongst the variables used in the study, implying a long-run relationship amongst these variables. Lastly, the study found that exports indeed Granger-cause economic growth. The implications of the research are that the results of the research could be used to improve economic policy for Namibia and other developing countries.
An Econometric Investigation of the Impact of Foreign Trade on Economic Growth: The Case of Namibia
(British Journals, 2016) Ogbokor, Cyril, A; Meyer, Daniel. F
This study investigated the impact of foreign trade on economic growth in Namibia for the period 1990-2012 using the Auto-regression Distributed Lag (ARDL) method. Further, annual time series macroeconomic data was utilised. The results show co-integrating relationships amongst the variables used in the study suggesting the possibility of a long-run relationship amongst these variables. Secondly, the study found positive relationships amongst the four variables used in the study implying that foreign trade could potentially be used to promote economic growth. The result is also in line with economic postulation. Thirdly, the model used for the study was found to be stable from an econometric point of view. Based on these results the study puts forward various policies that would make Namibian exports to have a comparative and competitive edge in international markets. In this context, the study stressed the importance of investing in the country’s export-oriented sectors for the sake of promoting foreign trade and economic growth in Namibia.
Economic growth and tax structure in Zimbabwe: 1984–2009
(Inderscience Enterprises Ltd, 2012) Marire, Juniours; Sunde, Tafirenyika
We examine the tax-growth nexus in Zimbabwe using parametric and non-parametric analysis. We use a two-stage estimation procedure that first generates efficiency scores for the country using a Data Envelopment Approach. We use the efficiency scores in the second stage to normalise growth to get a proxy for potential economic growth. Using this potential growth we run a translog model that allows computation of time-varying elasticities of growth to changes in tax policy. The translog model results we got indicate that economic growth is inelastic to tax structure in Zimbabwe. As such, we recommend policies that rely on non-tax stimuli to the economy to buttress growth. We find that the most inefficient years were those punctuated with bad economic governance and droughts.
Financial sector development and economic growth nexus in South Africa
(Inderscience Enterprises Ltd, 2012) Sunde, Tafirenyika
The study investigated the nexus between financial sector development and economic growth in South Africa using cointegration and error correction modelling and; the Granger causality tests. The results of the study show that economic growth is explained by the financial sector variables and control variables such as inflation, exchange rate, and real interest rates. The Granger causality test results show that there is generally a bidirectional relationship between economic growth and financial sector development which implies that if the economy grows the financial services sector also grows and vice versa.
Sources of unemployment in Namibia: an application of the structural VAR approach
(Inderscience Enterprises Ltd., 2016) Sunde, Tafirenyika; Akanbi, Olusegun A.
The main purpose of the research was to establish the sources of unemployment in Namibia for the period 1980 to 2013 using the SVAR methodology. Empirical results show that persistently high unemployment is the result of a combination of various shocks as well as the hysteresis mechanism. The impulse response functions and variance decomposition functions agree that labour supply, aggregate demand, and real wages seem to be the critical factors affecting unemployment. Moreover, the price shocks affect unemployment in the long run and productivity shocks explain only a small fraction of the forecast error variance decomposition of unemployment in both the short run and long run. This finding is consistent with the controversy of uncertain effects of productivity shocks on the unemployment rate. Aggregate demand policies, deregulation policies and structural labour market reforms can be useful policy instruments to tackle unemployment in Namibia.
The effects of monetary policy on unemployment in Namibia
(KSP Journals, 2015) Sunde, Tafirenyika
The main purpose of the article was to establish the effects of monetary policy on unemployment in Namibia. The article used the structural VAR methodology in a macroeconometric setting to achieve this. The results show that monetary policy affects unemployment in Namibia in the short run and in the long run, it is ineffective. These results differ from the results by Alexius & Holmlund (2007) and Jacobs et al. (2003) who found that monetary policy has a significant role to play in explaining unemployment in both the short run and the long run. This means that there is still need to investigate the other explanations of long run unemployment in Namibia such as the demand and supply related variables so that appropriate policies are propounded to address it effectively.
No miracles here: Trade and economic progress.
(British Journal of Economics, Finance and Management Sciences, 2015) Ogbokor, Cyril A.
Indubitably, striving for greater economic growth that can lead to a general improvement in the well-being of the people constitutes one of the fundamental macroeconomic goals of all modern economies these days. In this study, the possibility of achieving economic growth through trade is investigated. The study employed the unit root test, co-integration test, pairwise Granger-causality test, and forecast error variance decomposition technique to assess the issue under focus by using Namibia as a case study. Further, the study employed quarterly macroeconomic time-series data for the period, 1992 to 2014. The VAR estimates indicate a long-run relationship among the variables investigated. Exports in particular were found to Granger cause economic growth. The forecast error variance decomposition result demonstrates that exports and foreign direct investment contributed more towards innovations in economic growth compared to exchange rate during the chosen time horizon. The study also found that consistently, economic growth itself accounted for a lion share of the innovations that occurred over the selected time horizon. The important message to policymakers in Namibia from the outcome of the study is that the promotion of exports should constitute a crucial part of a country’s macroeconomic policies in order to accelerate economic growth.
Testing the export-led growth paradigm through econometric methods: Empirical evidence from Namibia.
(African Journal of Social Sciences, 2015) Ogbokor, Cyril A.
Despite the large volume of documented empirical studies in the existing literature concerning the export-led model in the last four decades, the exact connection between exports and economic growth remains largely unanswered. Indeed, both theoretical and empirical inquiries are still seeking for definite answers. Accordingly, this study employs the VAR technique to empirically assess the applicability of the export-led growth model in the context of Namibia through the help of quarterly time-series data-sets for the period covering 1990 to 2012. In this regard, the study tested for the existence of a long-run relationship between exports and economic growth. The results of the unit root test indicated that, foreign direct investment and exchange rate variables attained a stationary status in levels, while real gross domestic product and exports only became stationary after first differencing. The cointegration test suggests a stable long-run relationship among the variables used in the VAR specification. The Granger-causality test found a unidirectional relationship running from exports to economic growth. Therefore, the study recommends that trade policies which encourages export expansion should be aggressively pursuit by the government of Namibia, while simultaneously striving towards improving upon the competiveness of its exports in foreign markets.
An econometric study of the long-run relationship between defence expenditure and economic growth: Evidence from a developing country.
(IJECM, 2015) Ogbokor, Cyril A.
The high levels of financial allocations to Namibia’s defence budgets have been heavily criticised because such expenditures is considered as a leakage to the country’s economy. In light of this, the study assessed the impact of military spending on economic growth in Namibia by employing the two-step Engle-Granger approach in the context of a single equation setting. The macro-economic time-series data sets utilised stretches from 1990 to 2014. The study found co-integration relationships among the variables used, suggesting the existence of a long-run relationship among the variables used in the econometric model. Furthermore, the model used passed the stability test. However, the predictive power of the model was found to be very weak given the low value of the adjusted coefficient of determination. In addition, a unidirectional causality relationship running from economic growth to military expenditure was found implying that military spending does not promote or lead to economic growth. Therefore, the need for the government to control its expenditure on defence cannot be over stressed given the findings of the study. Concomitantly, further studies concerning the issue under examination should consider the use of quarterly data sets as against annual data sets.
Exploring co-integration and causality relationships between government expenditure and economic performance in Namibia.
(IISTE, 2015) Ogbokor, Cyril A.
One of the heated discussions among economists nowadays relates to the efficacy of government expenditure as a tool for stimulating growth in the national economy. This research paper contributes to the existing literature by investigating the possibility of a dynamic relationship between government expenditure and economic growth in Namibia through the use of the two-step Engle-Granger approach. Accordingly, the study examines interactions between total government expenditure and economic growth by also including health and education as potential predictors of economic growth. The annual time-series macroeconomic secondary data-set relied upon runs from the period 1990 to 2013. The dependent variable, that is, real gross domestic product serves as a proxy to economic growth; while total public expenditure, as well as, expenditures on education and health operated in the model as predictors of economic growth. First, the study found co-integration relationships among the variables used in the study. Second, a unidirectional causality relationship running from economic growth to the health sector was observed. Further, the study found that government spending and expenditures on education and health are all weak predictors of economic growth. The lesson arising from this study would be that simply pumping a lot of financial resources into particular sectors of the economy is not a guarantee for growth. Forthcoming studies should amongst others direct attention to the type of activities that public finance is mainly used for in the health and education sectors in respect of Namibia.
A study of the determinants of mortgage interest rates in Namibia through co-integration and error correction mechanisms.
(International Journal of Economics, Commerce and Management, 2014) Ogbokor, Cyril A.; Kwedhi, Ndapwa Tulina
Discussions concerning interest rates, especially mortgage rates are increasingly being given a lot of attention in the literature. Indeed, in realisation of this fact, the study attempted to establish the factors that influence the behaviour of mortgage rates in Namibia, for the period 1994 to 2012. More specifically, it explored the extent to which perturbations in mortgage rates are explained by repo rate, real interest rate and risk premium. We invoked and subsequently applied co-integration and error correction mechanisms in order to investigate the issue under consideration. The result of the study suggested that approximately 68% of the systematic variation in Namibia’s mortgage rates’ swings could be attributed to changes in the three explanatory variables that were used in our econometric model. The bank rate in particular was observed to have a stronger influence on mortgage rates in Namibia. In addition, a long-run relationship was found between mortgage rates and bank rates. Therefore, the need for the Bank of Namibia to rely heavily on the use of the repo rate as a way of controlling, monitoring and influencing developments in the Namibian mortgage market cannot be overstressed.
A time series analysis of determinants of savings in Namibia.
(IISTE, 2014) Ogbokor, Cyril A.; Samahiya, Obrien Muine
The driving objective of this article was to empirically establish the determinants of savings in Namibia through the use of co-integration and error correction mechanisms for the period running from 1991 to 2012. We made use of quarterly and annual macroeconomic data sets. The quarterly data used were derived from the annual data set that we used in this study. The article relied heavily on unit root tests, co-integration and error correction procedures as ways of investigating the research issue under consideration. First, the time series characteristics of the variables used were ascertained with the help of the augmented Dickey-Fuller unit root procedure. Second, the long-run relationship between savings and its determinants was examined using the procedure suggested in the literature by Johansen and Juselius. The results of the co-integration tests suggest that there is a long-run relationship between savings and the explanatory variables used in the study. The results suggest that inflation and income have positive impact on savings, whilst population growth rate has negative effects on savings. Further, deposit rate and financial deepening have no significant effect on savings. Additionally, the results re-enforces the work of Iipumbu et al (1999). Finally, the need to achieve a higher rate of savings in Namibia by improving upon income levels cannot be overstretched.

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