Association among Omani Gross Capital Formation, Final Consumption Expenditure, Exports, and Imports

Abstract

Purpose – The primary pursuit of this investigation is to examine the link between Omani gross capital formation GCF (investment) as a dependent variable and imports, exports, and final consumption expenditure FCE as independent variables from 1990 to 2021 and how these variables impact Omani GCF behavior. Method– The co-integration model’s auto regressive distributed lag (ARDL) bounds test is employed to achieve this investigation. The study scoped over 33 years, starting from 1990 and ending in 2021, entirely considered secondary data sourced from the World Bank (https://data.worldbank.org/indicator/NE.GDI.TOTL.CD?locations=OM),(https://data.worldbank.org/indicator/NE.IMP.GNFS.CD?locations=OM-AD),(https://data.worldbank.org/indicator/NE.EXP.GNFS.CD?locations=OM-AD), and (https://data.worldbank.org/indicator/NE.CON.TOTL.CD?locations=OM-AD). Findings – Results of the statistical analysis demonstrated that, after checking the value of F-statistic and comparing it with I1 Bound, the study concluded that there is a relationship between the independent variables and dependent one, and by conducting the Bounds Test (Long run relationship between variables), its outcomes say that there is a positive long-run link between imports and GCF and a negative long-run exists between FCE and GCF, whereas there is only a negative short-run between exports and GCF. Definition: According to the World Bank, the gross capital formation (formerly gross domestic investment) contains outlays on additions to the economy’s fixed assets with net alterations in the inventories’ level. Fixed assets consist of: Land advancements (fences, ditches, drains, and on). Plant, machinery, and equipment acquisitions. The roads’ construction, railways, and the like, containing hospitals, offices, schools, private residential dwellings, and commercial and industrial premises Inventories are stocks of goods firms hold to satisfy temporary or unanticipated oscillations in production or sales and “work in progress.” As per the 1993 SNA, net acquisitions of valuables are also considered capital formation.