Gross Fixed Capital Formation Research Articles

Long-term relationship between investment and economic growth: a cointegration analysis of OECD countries

This article investigates the impact of domestic investments on economic growth in OECD countries from 2000 to 2020. It identifies factors affecting economic growth and analyzes the relationship between domestic investments and economic growth using econometric models. Empirical data from the World Bank, IMF, and OECD reports supports the positive impact of domestic investments on economic growth in OECD countries. The study also finds a long-term causality between GDP and Gross Fixed Capital Formation (GFCF). These findings offer valuable insights into investment dynamics and their effects on economic growth, informing governments and policymakers in OECD countries.

Governmental Investments statistic and tourism at the Balkans

The Balkan region has proved to be a controversial territory. Through a long history and many controversies, the area rose to a popular destination. Common and uncommon elements make it a unique destination. Tourism has provided a sustainable source of revenue, as in every destination. Public investments are an important element of every activity to flourish and to bring private investments. Through public investments in infrastructure, superstructure, and education, we can provide a better tourist experience. In our paper, we discuss 5 countries of the region, Greece, Serbia, Bulgaria, Montenegro, and the Republic of North Macedonia. All of these destinations drew the attention of other countries and investment institutions like China and Russia. To take a look at public investments and tourism development, we compare core national accounts like the Gross Domestic Product (G.D.P.), Gross Capital Formation (G.C.F.), Gross Fixed Capital Formation (G.F.C.F.), and the inbound tourism at under investigation countries. Data indicate that there was a slowdown in each country’s economy during COVID-19 but then the production increased (Gross Domestic Product (GDP)). The Gross Capital Formation (G.C.F.) has a stable rate for the first years and then increases for each country. Data for the Gross Capital Formation (G.C.F.) for the tourism industry exist only for Bulgaria and show a decrease and a negative Gross Capital Formation (G.C.F.) indication that assets must have been sold. Data for the Gross Capital Formation (G.C.F.) for the transport equipment and total construction have fluctuations without extreme increases or decreases, showing a stable rate of asset accumulation. The findings from the research conclude that till COVID-19 all the economies had a stable rate of growth, and the decrease in tourism activity had a small impact on the decrease of Gross Domestic Product (GDP), except Bulgaria all the other economies slowed down during COVID era, Gross Fixed Capital Formation (G.F.C.F.) for Montenegro and North Macedonia remained stable for the period under study in contrast of the rest countries that were exhibiting a rise from time to time, the general Gross Capital Formation (G.C.F.) accounts always indicate growth in contrast to sectional accounts as they the total accumulated investments or production. Finally, there is insufficient data for the Gross Fixed Capital Formation (G.F.C.F.) for hospitality and tourism which does not allow the researchers to make any assumption with robust data for either the investments or the capital that occurred in other to be invested in the future.

Time Series Analysis of the Foreign Direct Investment in Nepal: Economics Perspective

The main aim of this paper is to identify the major economic determinants of foreign direct investment in Nepal. In doing so, the Johansen-Juselius (JJ) cointegration approach as well as vector error correction model are implemented to identify the relationship among the macro variables. The empirical results revealed that all the variables are stationary at first difference and the evidence of cointegrating vector is obvious based on the JJ cointegration results. In addition, it is found that there is a long run relationship among the variables based on the coefficient of Error Correction Term (ECT). The long run coefficients show that Trade, GDP, exchange rate, and interest rate have a positive impact on FDI in Nepal, while, gross fixed capital formation (GFCF) and inflation (CPI) have a negative impact. Finally, in the short run, only one lag of FDI is affecting FDI. These results suggest that the inward FDI tends to incorporate information from the macroeconomic variables.

An examination of economic growth determined by foreign direct investment and the institutional environment: a subnational perspective

PurposeThe purpose of this paper is to analyse the relationship between foreign direct investment (FDI) inflows and economic growth with a special focus on the institutional environment at the state level. FDI-led economic growth and economic growth-led FDI have two dominant theoretical foundations, but empirical research supports contradictory findings. These perspectives largely ignore the institutional environment, assuming institutions to be background information.Design/methodology/approachTo examine the causal relationship between FDI, the Granger causality method has been used. The impact of FDI inflows and other institutional factors on economic growth has been examined using the panel data regression method. The principal component analysis (PCA) method has also been used to develop indexes for some variables.FindingsResults indicate a two-way Granger causality between FDI inflows and economic growth at the state level. Infrastructures, education expenses, labour availability and gross fixed-capital formation (GFCF) are positive and significant determinants, whilst corruption and FDI inflows are leaving negative impact on state-wise economic growth.Originality/valueThis study contributes to the body of the literature in four different ways: first, it empirically examines the trends and patterns of subnational FDI inflow and economic growth disparity in India; second, it examines the causality between FDI and economic growth. Third, with the institution-based paradigm in international business, it investigates how institutional variables affect the expansion of the economy. Fourth, it extends prior research by examining the link at the state level using a large panel data set made up of 29 states and 7 union territories (UTs) over the years 2000–2019.

Greening the knowledge-based economies: Harnessing natural resources and innovation in information and communication technologies for green growth

The quest for green growth through the sustainable use of natural resources (NRs) and innovation in information and communication technologies (IICTs) has gained the utmost significance in the modern era, and the knowledge-based economies (KBEs) have been at the leading edge of embracing sustainable methods for accomplishing sustainable development objectives. However, the relationship between NRs, IICTs, and green growth remain unexplored. This study evaluates the impact of IICTs and NRs, alongside other key factors such as contractionary export policy (CEP), expansionary export policy (EEP), fossil fuels consumption (FFC), the labor force (LF), and gross fixed capital formation (GFCF) on green growth. Findings confirm that IICTs, NRs, GFCF, LF, and EEP positively affect green growth. The current research employs Slope homogeneity test, cross-sectional dependency test, Westerlund and Edgerton cointegration test, and cross-sectional augmented autoregressive distributed lag estimator to achieve the study's objective. These results highlight the significance of integrating environmentally conscious procedures and relying on technological advances within the information and communication technology sector to promote green development and ecological integrity. In addition, the study indicates that a growing reliance on FFC and the implementation of CEP harm green growth, underscoring the necessity of moving to renewable energy sources and promoting favorable trade policies. This study suggests that policymakers should emphasize IICTs, effective NRs management, GFCF, labor skills, EEP, and the transition to greener energy. Moreover, they should incorporate ecological factors in their trade practices to reconcile economic growth with sustainability goals.

The Dynamic Link Between Budget and Current Account Balance: Evidence from Selected Upper & Middle Income Countries (A Panel ARDL Approach)

This study elaborates the connection between BD and CAD in selected upper-middle-income countries (UMC’s) by employing the panel data over the period from 2000 to 2020. This paper also tries to evaluate that weather the theory of Ricardian Equivalence or Keynesian Approach exists in case of selected upper-middle-income countries. First, we would apply the ADF approach to check the stationarity between the variable. After that, ARDL econometrics approach is adopted in order to check the long-run and short- run association among Current Account Balances (CAB), Fiscal Deficit (FD), Gross Fixed Capital Formation (GFCF), Real Effective Exchange Rate (REER), GDP Per Capita Growth (GDPPCG) and Trade. The findings showed that FD, REER, GDPPCG and trade have positive impact on CAB. While, in the long-run GFCF affects CAB negatively. This paper also pointed out that the Keynesian Theory is more suitable for selected upper-middle-income economies.

Güney Afrika'da Ekonomik Büyüme ve Sabit Sermaye Oluşumu Arasındaki Granger Nedensel İlişkiler: Bir Frekans Alanı Analizi

The purpose of this study is to examine the Granger causal linkages between gross fixed capital formation (GFCF) growth and economic growth in South Africa. To provide a more comprehensive analysis of the Granger causality (GC) relationships between these macroeconomic indicators, this study investigates these causalities in the frequency domain. The methodology is based on decomposing time series into weighted sinusoidal components and performing separate GC tests for each component. Test results reveal that there is feedback between capital formation and economic growth in South Africa in the frequency domain, even at the 1% significance level. Furthermore, the test results indicate that the GC from fixed capital formation to economic growth is detected in lower frequencies compared to the GC from economic growth to capital formation. This means that the severity of the GC from economic growth to capital formation is stronger than the reverse direction GC in South Africa.

Energy-growth nexus for ‘Renewable Energy Country Attractiveness Index’ countries: Evidence from new econometric methods

This study explores the connections between renewable energy consumption (REC), non-renewable energy consumption (NREC), gross fixed capital formation (GFCF), the labor force (LF), and economic growth (GDP) in Renewable Energy Country Attractiveness Index (RECAI) countries for 1991–2016. We quantify the nexus between REC, NREC, and GDP while utilizing a production model framework and including the measures of labor and capital, for suggesting a phase-wise strategy to attain the sustainable development goals. We use robust methodologies including Lagrange Multiplier (LM) panel unit root tests with trend shifts, Westerlund cointegration test, LM bootstrap technique for cointegration with breaks, continuously updated fully modified (CUP-FM) and continuously updated bias-corrected (CUP-BC) estimators, Augmented Mean Group (AMG) approach, fully modified ordinary least squares, dynamic ordinary least squares, Canonical Cointegrating Regression (CCR), and panel causality test proposed by Canning & Pedroni. We compute non-parametric time-varying coefficients with fixed effects for seeing the impact of GFCF, LF, REC, and NREC on GDP. Our results press upon policymakers to shift toward clean energy and REC for attaining the environmental goals (SDGs 6, 7, 13, and 15) and the economic goals (SDGs 1, 2, 8, and 10). While this shift would help developed economies, which have already attained the economic goals, to progress on the front of environmental goals, it would enable developing countries to progress on both fronts in a balanced manner.

Thermodynamic Effect of High-Rise Reinforced Concrete Typology on Asian Cities: Effect of Socioeconomic Obsolescence Factors on Thermodynamic Complexity

The construction of reinforced concrete (RC) apartments played a crucial role in accommodating the substantial increase in urban populations during the post-war period in Asian cities. However, the RC process in these regions exhibits limitations in terms of the building’s life cycle duration. These limitations arise due to two main factors: the inherent hybrid nature of RC and the insufficient measures for addressing inner rebar corrosion, as well as the lack of adequate control over the management of the “structural class” amid rapid economic expansion. This study examines the impact of rapid urbanization and economic growth on the construction industry, with a specific focus on the utilization of concrete buildings. Drawing on Odum’s urban energetics theory, macroeconomic data are analyzed to investigate the patterns and implications of widespread concrete construction during the late 20th century, particularly in Asian countries. The findings are then compared with earlier periods of economic expansion in other countries, aiming to provide a comprehensive understanding of the interplay between urbanization, economic growth, and the use of concrete structures. The application of Odum’s theory enhances the analytical process, offering valuable insights into the dynamics of the macro urban energy system. In this assessment, four countries are selected based on the stage of their urban economic expansion. The selection is determined using the recent changes observed in three key factors: (1) urban concentration, (2) GDP growth rate, and (3) gross fixed capital formation (GFCF) on housing volume. The assessment identifies the point in time when production, represented by the GDP growth rate, surpasses consumption, represented by GFCF on housing volume. Through this assessment, it becomes possible to make macro-scaled predictions about the urban energy system, even with limited archival data available.

Correlate of foreign direct investment and economic development evidence from Nigeria

Foreign Direct Investment (FDI) and other macroeconomic variables such as the exchange rate, economic openness, and public sector investment are significant macroeconomic variables that drive economic growth and development. As a result, every government’s ability to sustain and maintain a balance among them is critical to long-term development. The study's goals were to establish the impact of foreign direct investment on Nigeria's economic development, as well as the impact of the exchange rate on Nigeria’s economic development. The ex-post facto research design was used in this study, as well as secondary data. The explanatory variable was Foreign Direct Investment, and the control variable was the exchange rate. The study spans the years 1981 through 2019. The explanatory variable was Gross Fixed Capital Formation (GFCF), which is a proxy for economic progress, and the model was estimated using the Auto Regressive Distributed (ARDL) Model. The data for this study came from the World Bank Data Base's World Development Indicators of 2019 and the Central Bank of Nigeria's Statistical Bulletin of 2019. According to the study, a 1.4 unit increase in foreign direct investment leads to a 1.4 unit increase in gross fixed capital creation. In addition, a unit increase in the exchange rate causes a 0.03-unit fall in gross fixed capital formation, and vice versa. According to the findings, there is a negligible positive link between FDI and GFCF, but a strong negative relationship between the exchange rates (EXR) and GFCF. As a result, the report suggests that FDI inflows be used to fund capital projects that are not for current consumption, such as good road networks, train lines across the country, and stable electricity supply. Without a doubt, this would lower the cost of doing business in Nigeria and boost profitability. According to our findings, while FDI alone cannot lead to economic growth and development, when other factors such as a favorable climate and simplified pre-investment procedures are available, more FDI will be drawn to key economic sectors, contributing to economic growth and development.

Analysis of Macro Economic Influence on Indonesian Trade

This study aims to analyze the influence of macroeconomic factors on Indonesia's international trade. The variables in this study are trade values, exchange rates, exports, imports, Gross Fixed Capital Formation (GFCF), Gross Domestic Income (GDP), and foreign investment (FDI). The method used in this study is the Vector Error Correction Model (VECM). The VECM method is used in the analysis of long- and short-term relationships. The relationship studied is between the independent and dependent variables in the time series data. To find out the long-term relationship in research, researchers must analyze through the cointegration equation on the VECM test results. The data used in this study is time series data for 1991-2020 taken from World Development Indicators and the Indonesian Central Bureau of Statistics. Based on the results of the short-term analysis of the GFCF variable, imports and exports have no effect on the value of trade in Indonesia. While the FDI, GDP and import variables have a significant effect on the value of trade. In the long term, the variables of exchange rates, imports, GFCF, and FDI have a positive and significant effect on the value of trade in Indonesia.

Analysis of Economic Growth on Carbon Dioxide Gas Emissions in G20 Countries

Aims: The purpose of this research is to analyze the effect of GDP, GFCF, and urban population on carbon dioxide gas emissions. In this case, the member countries of the G20 are the group of countries responsible for 75% of the greenhouse gas emissions produced. The role of the G20 countries is needed in reducing the resulting carbon dioxide gas emissions, to prevent global warming or climate change.
 Study Design: This study used a quantitative descriptive method.
 Place and Duration of Study: The scope of this research is the member countries of the G20 such as Indonesia, South Africa, United States, Saudi Arabia, Argentina, Australia, Brazil, China, India, United Kingdom, Italy, Japan, Germany, Canada, South Korea, Mexico, France, Russia, and Turkiye, European Union with Time Period 2000-2019.
 Methodology: This study uses a descriptive method with a quantitative approach, namely to analyze and determine the effect of Gross Domestic Product (GDP), Gross Fixed Capital Formation (GFCF), and urban population (URB) on carbon dioxide gas emissions in the G20 countries. Furthermore, the data used is secondary data with a panel data regression model, namely a combination of time series data and cross sections starting from 2000-2019.
 Results: The results of this study indicate that GDP, GFCF and urban population have a positive and significant effect on increasing carbon dioxide gas emissions in G20 member countries.
 Conclusion: Based on the calculation results, it is found that the Gross Domestic Product (GDP), Gross Fixed Capital Formation (GFCF), and urban population (URB) in G20 member countries have a positive and significant effect on increasing carbon dioxide gas emissions, both in partial and simultaneous tests. So that the government's role in this case is needed to maintain a healthy environment with increasing economic growth, or in the sense of creating Sustainable Development Goals.

COP27 perspective of resources management: From conflict to COVID-19 of emerging countries

Resources management in the modern era is a crucial perspective of a sustainable environment linked with sustainable development. Therefore, it is crucial to re-estimate the resources-environment management nexus in a new setting. Concerning environmental management from the COP27 perspective, economies are taking various economic, financial, and environmental steps to reduce hazardous emissions in the region. Recently, BRICS economies have invested in renewables and enhanced capital formation to accelerate environmental recovery. In this respect, this study tends to examine the influence of electricity from renewable resources (ELREC), resources management (resources rents), research and development (RDEV) and gross fixed capital formation (GFCF) on carbon emissions of the BRICS economies throughout 1989–2021. Using various diagnostic tests, this study confirms the long-run equilibrium association between the variables. This study uses non-parametric estimation approaches and concludes that ELREC and RDEV significantly enhance environmental sustainability. Except for forest and oil resources, the rest of the forms of the resources increase emissions. On the other hand, economic growth and GFCF significantly lead to higher emissions, which degrades the environment. Resources rents also contribute to increasing carbon emissions.

The Effects of CO2 and NO2 Emissions on Economic Growth in Nigeria

This paper examined the relationship between carbon emissions and Nigeria's economic growth from 1985 to 2021. ARDL approach was adopted in analyzing the data. Gross domestic product (GDP) was used as a proxy for economic growth in Nigeria, while carbon dioxide (C02) emission, nitrous oxide (N02), and gross fixed capital formation (GFCF) were used as the independent variables. The findings revealed that Gross fixed capital formation had a significant positive influence on GDP in the short-run but a significant negative influence on GDP in the long-run. While nitrous oxide ((N02) emissions and carbon dioxide (C02) emissions follow the Kuznets curve of Grossman and Krueger (1995) of positive and negative impacts on GDP in the short-term and long-term, respectively. To have a carbon economy, it is recommended that the Nigerian government should both conceptualize and implement favourable policies and incentives (granting of tax credits to carbon-neutral corporations) from the government as a foundational catalyst for the development of green infrastructure and significant investments in renewable energy technology are immediately needed to keep pace with the country's growing population.

Study on Quality of Air and Economic Development in India: An Argument for Sustainable India

In the last few decades, air pollution hand come as a major global conscience regarding the current impact of both air pollution and climate change on human health. Extreme climate events (heavy rainfall, high temperatures, floods, and droughts) in rapidly growing urban areas endanger human health and economic development. In this study, we find whether there is a relationship between the Quality of air and economic development which take time series data from 1990 to 2019 is used to find the link or effect between air pollution and economic development in India which is examined by Autoregressive Distributed Lag (ARDL) methodology. NO2 (Nitrous oxide) emissions and CO2(carbon dioxide) emissions were employed for Quality of air (Air pollution) and the Gross Domestic Product served for economic Development (GDP). Empirical evidence indicates that emissions of CO2 and NO2 have an insignificant and inverse impact on the Gross domestic product, respectively, GFCF (Gross fixed capital formation) i.e., Domestic Investment has a significantly beneficial effect on economic development (GDP). Based on the results it is advised the adoption and proper execution of additional regulations like the tax on the usage of carbon dioxide for some specific industries releasing substantial levels of greenhouse emissions. Additionally, funds raised from this type of tax ought to be used to fund initiatives that would increase the employment opportunities and economic development of the country.

ANALISA PENGARUH IPM, PMTB, BELANJA TIDAK LANGSUNG DAN BELANJA LANGSUNG TERHADAP PDRB KABUPATEN DAN KOTA DI PROVINSI JAWA TENGAH TAHUN 2015-2019

This study aims to analyse the effect of HDI, GFCF, indirect expenditures and direct expenditures on GRDP in 35 regency and municipality in Central Java Province from 2015 to 2019. The dependent variable in this study is GRDP in 35 regencies and cities in Central Java Province. Four independent variables are the Human Development Index (IPM), Gross Fixed Capital Formation (GFCF), indirect spending, and direct spending. The method used in this study is panel data regression. Based on the study results, all independent variables, namely HDI, GFCF, indirect spending, and direct spending, positively and significantly impact GRDP in 35 regencies and cities in Central Java Province. Therefore, if a region improves the quality of its human capital, investment, and regional spending, it can be associated with an increase in GRDP.Keywords: HDI; GFCF; Indirect Expenditures, and Direct Expenditures; on GRDP

Educational Investment and Unemployment in Nigeria

Education is a fundamental human right and is essential for the development and progress of any nation. It is a general belief that educated individuals fare better in the labour market than the less educated. This study empirically examines investment and expenditures in education, and its influence on unemployment rate in Nigeria from 1991 to 2021. Unit root test, ARDL approach, bound test, Breusch Godfrey serial correlation LM test and the CUSUM test were employed. Unemployment rate (UER) was used as the dependent variable while Federal government recurrent expenditure (GEE), credit to private sector (CPS), average of school enrollment rate (ASE) as proxy for literacy rate, labour force participation rate (LFP) and gross fixed capital formation (GFCF) as the independent variables. Findings revealed that apart from UEM that is stationary at the level, the other variables are stationary at first difference given the 5% level of significance. Labour force participation rate is statistically significant. There is an insignificant positive relationship between government recurrent expenditure on education and unemployment rate in the long -run. On the other hand, credit to private sector, school enrolment rate, and gross fixed capital formation all conform to their a priori expectations, but are insignificant, i.e., statistically indifferent from zero. The study recommended among others that an actionable and working fiscal policy in the educational sector should be established and government should improve on the quality of institutions through better teacher training, investment in educational research development, and the establishment of vocational training centers that provide practical skills to students.

Impact of Market Capitalization on Gross Fixed Capital Formation In Nigeria : 1985-2020

This study examined impact of market capitalization on capital formation in Nigeria for the period of 1985-2020. Data were collected from secondary sources. The model was estimated with ARDL-ECM technique. The variables analyzed are Gross fixed capital formation (GFCF), Market capitalization (MCAP), Number of deals (NOD), change in Value of transaction (CAT), All share index (ASI) and Total listed equities and government stocks (TLE). The unit root resultindicates that CAT, ASI and TLE are stationary at level I(0) while GFCF, MCAP and NOD arestationary at first difference I(1). The ARDL bound test for co integration confirms the existence of co integration among the variables under consideration. The ARDL_ECM parameter is negative(-) and significant which is-0.570142, this shows that 57% percent disequilibrium in the previous period is being corrected to restore equilibrium in the current period. Finally, in the long run all the variables have significant impact on gross fixed capital formation except TLE. It was noted that MCAP, NOD and ASI have negative statistically significant impact on gross fixed capital formation. However, CAT and TLE have positive statistically significant and negative statistically insignificant impact on gross fixed capital formation respectively in Nigeria. The study concluded that market capitalization had negative significant impact on gross fixed capital formation in Nigeria. Hence, recommended that there is need for government to create enabling environment to enhance market participation through transparent and accountability by regulatory authority. This will attract investors to invest in Nigeria capitalmarket and market capitalization will increase as well and capital formation becomes inevitable.

The Impact of Foreign Remittance on Labor Productivity: A Case of Pakistan

This study attempts an empirical analysis of the effect of external remittance on labor productivity in Pakistan. This study used the time series data from 1975 to 2019. The Johanson co-integration approach and Trace and Maximum Lamda tests were used for economic analysis. The personal remittance, Gross Fixed Capital Formation (GFCF), and Officially Exchange Rate (PER) depicted significant and positive relationships and Foreign Direct Investment (FDI) and Trade both variables show positive but insignificant impacts on labor productivity. This study suggests that government should provide incentives for transfer payments to overseas Pakistanis for enhancing the remittances.

Electricity Production and Sustainable Development: The Role of Renewable Energy Sources and Specific Socioeconomic Factors

An eco-friendly and sustainable power production system constitutes the cornerstone of every country’s strategic plan to tackle climate change and enhance energy resource autonomy. Carbon dioxide abatement in electricity generation, in addition to being a necessary condition for t “green” energy transition, can contribute greatly to cleaner industrial production and sustainable development. Emphasizing this key role of the power sector, the present research focuses on shedding light on the impact of renewable energy resources (RES), per capita gross domestic product (GDP), electricity gross fixed capital formation (GFCF) and urbanization in the CO2 intensity, and the sustainability level of electricity production. The analysis is based on a comprehensive dataset of 31 countries including 26 European countries, U.S.A., Japan, Australia, Canada, and New Zealand from 1995 until 2018. The econometric outcomes revealed the strong statistical significance of all variables and a plethora of causality relationships, upon which several policy suggestions are made. Interestingly, GDP per capita beyond a certain level can gradually become an aggravating factor for the electricity carbon footprint. Similarly, the vital role of RES in clean electricity production was confirmed as expected, yet surprisingly, this effect also appears to reverse after a certain percentage of total RES reliance. In contrast to urbanization, the electricity GFCF parameter is estimated to have an adverse effect on electricity CO2 intensity, indicating that the vast amount of new investments in the power sector concerns carbon-intensive technologies. Finally, a dynamic analysis is carried out, revealing to policy makers the necessary time frame after which the implementation of new energy policies can have the full impact on the carbon emissions of electricity generation.