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On Forecasting Economic Time Series Data: A
Comparative Study
KULDEEP KUMAR AND DILBAGH S. GILL |
Since the appearance of the book by Box and Jenkins in 1970,
the use of auto regressive integrated moving average model has become
widespread in analyzing and forecasting economic time series data. Sims (1980)
proposed a vector auto regressive model (VAR) model approach as an alternative
to the conventional strategy for constructing macro- economic model. Trevor and
Thorp (1988) emphasized that estimating a V AR model using non-stationary data
may result in unstable econometric relationships and suggested using Bayesian V
AR model to accommodate non- stationarity. In this paper we have compared the
forecasting performance of these models using Australian macro- economic time
series data. |
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The Sources of Sectoral Growth in
Malaysia: An I-O Analysis between 1978-1987
MAZHARUL ISLAM, RAHMAH ISMAIL AND MOHD. NOOR |
This study empirically analyses the sources of sectoral
growth in Malaysia, 1978-1987. Growth rates are examined in terms of how
changes in a sector's output can be apportioned between changes in (I) domestic
final demand (2) export demand, (3) intermediate demand and (4) import
substitution. Result indicates that the manufacturing sector has played a
catalyst role to Malaysian economic growth that means Malaysia has experienced
very high real growth through the rapid expansion of the industrial sector. The
study also reveals that export-oriented industrialization strategy has provided
a strong stimulus to growth. This could be attributed to dramatic change in
policy emphasis during 1970s from the import substitution strategy to a more
outward looking export-oriented approach and also resulted in a substantial
structural change of the Malaysian economy during the study period. The study
recommended that the strategy to encourage growth should focus on marketing and
consumer-oriented production in order to establish export "niches" where
possible. This may be achieved through greater emphasis on an open-economy,
marketing strategy and export-oriented industrialisation strategy while
maintaining a balance between promoting export and reducing imports. |
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Military Expenditure and
Economic Growth : Empirical Evidence from Ghana
VIJAY K. BHASIN
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The present study has empirically tested the
growth-led-military expenditure and military expenditure-led-growth hypotheses
for Ghana by developing and estimating static and dynamic simultaneous equation
models. The growth-led-military expenditure hypothesis seems to describe
Ghanaian data adequately. The Granger causality and Co-integration tests,
however, support the dynamic versions of growth- led-military expenditure as
well as military expenditure-led-growth hypotheses. The speeds of adjustment of
labour and product markets are rather too sluggish. The innovations of output
growth are better predictors of military expenditure's growth. 1ne structural
shocks from the labour market are transmitted to the product market and vice-
versa, and the effects of these shocks are permanent. |
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Foreign Direct1hvestment in ASEAN Economies
P. R. BHATT
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ASEAN region has become one of the attractive investment
locations in the developing world and attracted sizeable FDI during 1987-94.
There was spurt in growth of global FDI flows during 1985-95. The FDI inflows
in ASEAN have increased from an annual average of $8 billion in 1986-91 to 25.5
billion in 1997. They adopted relatively free market, free trade, open capital
account and liberalized policies to attract FDI. The success of ASEAN countries
in attracting FDI may be attributed to a combination of factors that include
political, social, economic stability, buoyant economies with capacity, growing
domestic markets, favourable factor endowments, particularly natural resources
and labour supply. The incentives given by ASEAN countries ranged from tax
holidays, accelerated depreciation allowance, export incentives, import duty
exemption and concession and low-cost credit facilities to subsidized
infrastructure facilities such as industrial estate.
The main vehicle of FDI inflows in ASEAN countries is through mergers and
acquisitions (M & As). FDI inflows through M & As was 72% in 1994 and 66~/o in
1995. During these periods, the economies of the region has shown higher level
of development which has led to stronger M & As as market structure and
technology based competition. The ratio of FDI in gross fixed capital
formulation ranged between 5% to 35% in the region. Intra-ASEAN investment
accounts for only a small share of ASEAN's total inflow of FDI. The econometric
analysis of FDI determinants showed that there was a strong positive influence
of the size of the economy (GNP) on FDI inflows. The investment GNP ratio was
significant for Malaysia and Thailand. However, exchange rate did not have any
influence on FDI.
Foreign Direct Investment (FDI) involves the engagement of considerable assets
and resources and satisfies the requirements of investment in host country. It
provides the much needed foreign exchange to help bridge the balance of trade
deficits. It raises the technology standards, levels of efficiency and
competitiveness of the host country. It helps to improve its export performance
by providing the host country better access to foreign markets. |
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A Market Effort: Model of
Economic Growth
BIJIT KUMAR DUTTA |
Governments have been meddling in economic activities
ostensibly either to promote social welfare or higher economic growth or both
in less developed counties or in non-socialist countries. The fall of the
socialist countries led to concretionary role of the government in LDCs and
NSCs. In there no systematic way of demarcating the role of government in
economic activities, if at all it has to interfere?
We argued that at the initial stage of economic development, government may
interfere in capital formation by imposing tax and thus keeping societal
consumption at a lower level but it must withdraw as after a certain stage of
economic development, the continuation of government economic activities will
lead to contraction of the economy. |
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Fiscal Deficits and Money Growth in
Nigeria: A Reaction Function Specification
RALPH I. UDEGBUNAM
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In this paper, a model of monetary policy reaction to fiscal
deficits and goal variables is specified and estimated for two alternative
money stock measures: Ml and M2. The major finding is that during the sample
period, deficit growth did not lead to money growth: rather there is strong
evidence that deficit growth caused a reduction in M I growth, implying that
the Central Bank adopted a defensive monetary strategy during this period. The
evidence also suggests that the defensive monetary measures were the major
cause of the unprecedented rise in interest rates after the deregulation, in
the early 1990s. It is clear from the evidence that this strategy could not, in
the face of persistent fiscal deficits, economic recession, and high level of
unemployment, stop inflation from accelerating. |
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Impact of Rural Banking Scheme on
Farmers' Income: Evidence from Ondo State, Nigeria
O. C. ISIJOLA AND K. O. OSOTIMEHIN
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The study examined the impact of the Rural Banking Scheme on
the smallholder farmers' income using Ondo State as a case study. Data for the
study were obtained from a field survey of Area Agricultural Credit Officers
and smallholder agricultural loans beneficiaries of the selected banks.
The results obtained from the study showed that amount of loans borrowed from
the bank, cropped farm size, labour input and amount expended on capital inputs
had positive and significant influence on the current farm income realised by
the smallholder farmers.
The study by way of conclusion is of the opinion that with adequate
supervision, if the rural bank branches can increase the amount of loans
granted to smallholder farmers, the increased liquidity can be used to
increase' their cropped farm size, employ more labour and purchase more
improved capital inputs which will invariably lead to higher farm income for
the small holder farmers. |
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Pull-Push Determinants of
Inter-Provincial Migration: Iran's Case Study
HADI GHAFFARJ AND S. P. SINGH
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Investigation of determinants of migration is very important
and significant, because only a proper understanding of the reasons of
migration can help one to adopt a proper decision or policy in relation with
it. The paper attempts to identify the most important pull-push determinants of
inter-provincial migration in Iran, based on the data collected from 1996
Census for 25 provinces of Iran. It applies the OLS regression model to examine
the impact of different variables on inter-provincial migration. It has been
clearly observed that the variables percentage of irrigated area (IRR) and
mechanization (MECH) are the significant variables in out migration (OM) and
the variables amenities (AMN) and mechanization (MECH) are the significant
variables in explaining the variation in immigration (1M). |
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Public Resources and Quality Education at
Elementary Stage: An Evidence of Non-performance in Uttar Pradesh
MOHD. MUZAMMIL
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Salaries and job security increase the efficiency of a
public employee (teacher). Larger educational expenditure in terms of higher
salaries should result in qualitative improvement in education at the level
concerned. The elementary stage of education in Uttar Pradesh (UP) is the
largest at this leve1 in the country. But in terms of quantitative and
qualitative indicators, UP is rated as an educationally backward state.
Teacher is most important in quality improvement. Despite massive increase of
public expenditure at the elementary stage marking an improvement in teachers'
salaries, the quality of education remained unaffected. It emanates from a
larger study conducted in UP on the political economy aspects of education. The
methodology is in the rubric of public choice/rent seeking framework and a
principal-agent perspective. Under the former, the Govt. is seen as responding
to the demands of lobbyists (teachers) in order to maximize the probability of
staying in power. Rent seekers are the employees (teachers) who seek to receive
benefits that are unmatched to their productivity and quality. It uses data 'of
the state budgets and other publications of UP Government. The data on school
performance were obtained from field surveys.
The objectives are:
(i) to study the impact of unionization of teachers in the operation of schools
and quality of education,
(ii) to discover the rate of growth of real salaries vis-a-vis the rate of
growth of expenditure on education,
(iii) to study the growth of public expenditure on elementary education and its
correlation with quantitative expansion and qualitative improvement of
schooling at elementary stage,
(iv) to assess the impact on the operation of education system of the
centralization of elementary education through legislations.
The main findings are :
(1) The privilege of representation in the upper house of state legislature has
been misused by the teachers.
(2) Educational expenditure at the elementary level recorded the fastest
growth.
(3) Educational expenditure at elementary level grew on political pressures of
the teachers' union -unrelated with qualitative improvement.
(4) Teachers' salaries went up in real terms in general, the highest increase
Was recorded in CT grade (primary) teachers in Basic schools.
(5) Educational enactments have made primary teachers more 'free' and
'independent' and less accountable to their duties.
(6) Primary teachers' salaries have increased significantly, no effective
change is observed in quality of education.
(7) Increasing salary expenditure on primary teachers has squeezed out
non-salary expenditure causing constraints to quality improvement.
(8) Teacher unions are opposed to qualitative innovations.
The implication of the study is that educational expenditure ideally needs to
be linked with quality of education in order to provide schools with incentives
to become more effective. |
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