Private Sector Growth Research Articles

The State as an Engine of Inclusive Sustainable Economic Growth and Development

This paper is a qualitative analysis of the critical role of government in promoting inclusive sustainable economic growth and development. This critical role of government transcends beyond an economy’s experience of normal economic life or economic crisis, the type of economic system that is being practiced by a nation, and the level of development of a nation. The reason is that government serves as a stimulator, driver, sparker, lubricator, and the co-ordinator of the other economic units to create a conducive environment needed for private sector growth and the overall development of an economy. Though, the state also has its deficiencies in resource allocation and the management of the economy, a poorly functioning government portends economic doom. The exclusive roles of governments in promoting inclusive sustainable economic growth and development are: smoothening markets activities, promoting better macroeconomic performances, driving, sparking, stimulating, and lubricating the private sector for growth, mitigating social vices, undertaking financial sector cleanup, stabilisation, restructuring, providing stimulus packages to address economic meltdowns or recessions, and combating pandemics. This study concludes that the state serves as an engine of inclusive sustainable economic growth and development. This study recommends that governments must be held accountable by their citizenry and the international community for their actions and inactions and should be prevented from shirking their responsibilities to their societies. They need to be more efficient and proactive in ensuring public sector efficiency so as to spearhead economic growth and development. Again, the roles of the state and the private sector in promoting inclusive sustainable economic growth and development must not be mutually exclusive. Every economy must strive for a healthy balance between private sector and state planning that will lead to inclusive sustainable economic growth and development. Governments must promote effective governance and combat corruption both in the private and public sectors of every economy.

Public investment and private sector performance in Nigeria

PurposeThis study explores the asymmetric linkage between public investment and private sector performance in Nigeria. This is due to the presence of nonlinear structures in the behavior of domestic investment series with evidences of structural time breaks, which fall within periods of global financial crises and oil shocks.Design/methodology/approachMain data on gross capital formation, gross fixed capital formation, domestic credit to private sector, domestic credit to private sector by banks are used for the study span through 1986 to 2017. Evidence of asymmetry spurs the study to adopt the nonlinear autoregressive distributed lag, asymmetric generalized impulse response and variance decomposition and asymmetric granger causality techniques.FindingsIt is shown that positive (negative) investment shocks exhibit a non-negligible and substantial stimulating (dampening) influence on the long-run performance of private sector in the economy. However, there is evidence that negative investment shocks portend a positive influence on the performance of private sector in the short run. This suggests that negative shocks to investment may not dampen the effectiveness of private sector in the short run, and this thus brings to bear the debate on the tenability of public investment as a potent counter cyclical tool in enhancing short-run private sector growth. The nonlinear granger causality also shows a unidirectional nonlinear causality from public investment to private sector performance. However, there is no evidence of bidirectional nonlinear causality.Originality/valueThis study provides quantitative evidence that Nigeria still depends exclusively on public investment, and as an oil-based rentier economy its economic diversification drive still remains bleak.

Do private schools improve public school quality or increase stratification?

Utilizing a 4-year longitudinal dataset (2007−08 to 2010−11) of 212 public secondary schools from two districts in Nepal, I conduct panel regression analyses to determine the association between public school high stakes examination outcomes and measures of private sector competition. I find that there does not seem to be a significant positive or negative association between public school outcomes and the extent of private competition in recent years. However, there is evidence to suggest that the gap between public and private school outcomes is higher in localities with higher private sector growth, providing suggestive evidence of stratification.

The Philosophy of Unfair Dismissal Law in Nigeria

In Nigeria, the past three decades have witnessed a steady growing private sector, but the relationship between employers and employees continues to be a turbulent one and a source of unending litigation. This situation is worsened by the dwindling state of the economy. Paid employment continues to constitute the major source of livelihood of many families and this has made it an important source of livelihood in majority of the households in Nigeria. However, with the employment relationship comes an inherent conflict of interest between the employer and the employee. How best to manage this conflict has been left to the different nations to determine. In Nigeria, the law governs the cessation of an employment relationship but the statute governing dismissal is seemingly still a relic of the received English law as at 1900. The failure to bring the provisions of the statute on dismissal in tandem with the current day realities has brought about a distortion of the balance of interest between the employer and employee. In a bid to ensure stability, the concept of fair dismissal evolved. The aim of this paper is to critically examine the fundamental nature, attitudes, realities, existence and theories that act as guiding principles for unfair dismissal law in Nigeria. This paper examines the evolution of the labour law jurisprudence on unfair dismissal, and its jurisprudential foundation in Nigeria. It seeks to reveal the historical, moral, and cultural basis of unfair dismissal law. The article focuses on finding the answers to such abstract questions as what is unfair dismissal law? and how do judges decide such cases?

The Growth of Private Sector and Financial Development in Saudi Arabia

In an attempt to diversify itself away from the dominance of oil on its economy, Saudi Arabia needs to emphasize on the growth of its private sector. Currently, the private sector’s contribution to economic growth is meager as the oil sector dominates the economy. This study attempts to assess the role of financial development towards the growth of the private sector. Assessing this relationship is important, as it is quite probable that the dominant oil sector attracts the financial resources, affecting the private sector adversely. Johansen’s method of cointegration is applied on the data for the period 1985–2018. The private sector’s gross domestic product has a negative relation with the supply of money, positive relation with bank credit to private sector, and no significant relationship with share market capitalization, as shown by the results of the study. In addition, the private sector’s growth has a positive and significant relationship with government expenditure, investment, and trade openness. Hence, the study recommends further strengthening of financial sector services. Besides the current trend on government expenditure, investment and trade openness should continue to enable the private sector to contribute significantly to the economic growth of the country. A previous study on the private sector’s growth and financial variables is exclusively missing, and makes this study unique.

Kuwait

This 2020 Article IV Consultation with Kuwait highlights that non-oil growth strengthened to estimated 3 percent in 2019, propelled by government and consumer spending. The challenge to reduce dependence on oil and boost savings has become more urgent. The subdued forecast for oil revenues is weighing on near-term growth and fiscal and external balances. Embedding fiscal measures in a comprehensive reform package that promotes private sector growth, strengthens governance and accountability, and improves public services would help build broad support for reforms. A rules-based fiscal framework would improve management of oil revenues. A rule-based framework would help anchor fiscal policy on a long-term objective of intergenerational equity. It should include a well-calibrated operational rule that helps reconcile long-term savings and near-term economic stabilization objectives. Financial sector reforms should focus on bolstering resilience and deepening inclusion. Sustaining reforms to foster private sector-led and diversified growth will be critical. With limited scope for public employment going forward, a vibrant private sector must emerge to absorb the large number of Kuwaitis entering the labor market in coming years.

Republic of Kazakhstan

The political transition has increased the focus on social conditions and regional and rural development. Growth has been buoyed by new spending, retail credit, and oil and gas investments. Inflation has picked up, and the current account has deteriorated. Renewed fiscal consolidation is planned from 2020. Non-oil growth is expected to moderate to 4 percent (potential), as construction, fiscal stimulus, and household borrowing ease. Growth could be higher if decisive reforms drive productivity gains. The state continues to play a strong role in the economy, and the authorities face challenges ensuring that measures are well targeted and effective in promoting private sector growth. The challenges include oil volatility and dependency, reliance on subsidies and other state support, still-impaired banks, and governance vulnerabilities. The authorities are exploring ways to strengthen the fiscal framework, assessing monetary and exchange policies, undertaking a bank asset quality review (AQR), and establishing an independent financial sector regulator. Progress is being made on headline reforms, but ensuring decisive changes on the ground remains a challenge. Risks relate to oil prices and trading partner growth.

SMEs in Cambodia

ABSTRACT Small and Medium Enterprises (SMEs) drive industrial progress, improve an economy’s ability to deal with shocks and are recognized as breeding grounds of innovation which is a crucial part of the Cambodian economy, contributing to both economic and social development. SMEs play an important role in: (i) creating jobs (ii) generating income for low-income people and vulnerable populations, and (iii) fostering economic growth, social stability, and contributing to the growth of a dynamic private sector. This paper focus on the production issues only where it aims to find factors affecting the growth of SMEs, that are divided into three folds such as technology, labor force, and capital. The research will employ the grounded theory as methodology. However, SMEs have many challenges. Access to finance is still the main issue while SMEs bank has been established. Technical knowledge and skills are the main issues for labor including migration problems. Technology updated is still limited for growing SMEs. Keywords: Small Medium Enterprise; SMEs; production issues; labor force; capital

Differences in political orientation and foreign aid utilization in Africa

ABSTRACT This study examines the differences in political orientation and foreign aid effectiveness in Africa. The findings confirm our hypothesis that political parties extend their differences in orientation in utilizing foreign aid in Africa. Precisely, our results show that leftists are more likely to use aid efficaciously on pro-poor growth. On the contrary, rightists are good managers of aid on private sector growth projects. Our results provide a convergence path on foreign aid effectiveness, which has been dominated with contrasting results in the existing literature. The results also give a grasp of how foreign aid can better be allocated to Africa.

Building Bombs, Building a Nation: The State,Chaebŏl, and the Militarized Industrialization of South Korea, 1973–1979

In response to US plans to withdraw troops from South Korea in the 1970s, the Park Chung Hee administration (1961–79) leveraged all defense-related civilian industries to build an independent system of weapons production. In keeping with Park's advancement of military modernization driven by strong private-sector growth, an agenda that he promoted with his banner slogan “rich nation, strong military,” large Korean companies known aschaebŏlwere transformed to serve as government contractors that drove both national economic development and military modernization. A case study of one such company, Hanwha, illustrates how the state's hyper-militarization of Korean industries determined the distinct course and character of South Korea's national development. The study highlights the dynamic interplay that occurred between state actors and private-sector CEOs, managers, and laborers in shaping thechaebŏl-centered economic and defense industrialization.

THE ROLE OF ENFORCING TRANSPARENCY, COMPETITION AND OBJECTIVE CRITERIA IN DECISION MAKING IN SUPPORT OF THE WEAK PARTY OF GOVERNMENT CONTRACTS

The special features of government contracts, such as the accession of these transactions and the prioritization of public interest over private interests, create a situation that undermines the principle of equality of the parties and their free will and weakens the private side of these contracts. The weaknesses on the private side of the contract are not always in the public interest, and exacerbating this situation can lead to a weakening of the private sector and ultimately to the general economy of countries. Therefore, lawyers and economists have come up with ways to protect it from the weak side of government contracts. The fruit of weak support in government transactions is to balance the benefits of executing and executing these contracts and thereby achieve public goals while strengthening and safeguarding the interests of the private sector. One of the most effective ways of supporting the weak side is to create a framework that compensates for non-compliance with the principle of equity in government transactions and provides grounds for fair private sector growth and development. The most important of these contexts are the implementation of the principles of transparency, competition and objective criteria in decision making. In this article, while outlining these principles in relation to government contracts, we will study the role of adherence to each of these principles in protecting the weak side in government contracts.

The portfolios of insurance investments and private sector growth in Nigeria (1990-2018): investigating the nexus

The study investigated the portfolios of insurance investments and private sector growth in Nigeria; for the period (1996-2018). Private sector output is taken as the dependent variable to measure the private sector performance; whereas, cash deposits, government securities and bill of exchange are employed as the independent variables to measure portfolios’ insurance investments in Nigeria. Hypotheses formulated were tested using Ordinary Least Squares (OLS) technique. The study revealed a significant relationship between cash deposit and Gross Domestic Product in Nigeria. Government securities has a significant relationship with Gross Domestic Product in Nigeria. Bill of exchange has a significant relationship with Gross Domestic Product in Nigeria. The coefficient of determination indicated that about 64% of the variations in private sector growth can be explained by changes in insurance industry variables in Nigeria. The study concluded that the portfolios insurance investments significantly contributed to the growth and development of the private sector economy. The study recommends that policy makers should pursue an all-inclusive growth promoting financial system. Awareness should be increased to raise the level of patronage. Relevant agencies like the Police and the Federal Road Safety Commission should prosecute unlicensed and uninsured vehicles. Insurance companies should adopt faster methods of processing claims to enhance their image and patronage. Keywords: Insurance, Investment Portfolio, Private Sector Growth, Nigeria

Budget Implementation: Challenges and Limitations

Finance Minister AHM Mustafa Kamal, along with the Prime Minister Sheikh Hasina, proposed the national budget for fiscal year 2019-2020 in the Jatiya Sangsad on June 13, 2019. The proposed budget, amounting to Tk 5,231.90 billion, is the largest-ever in the history of Bangladesh. This budget will be more challenging to implement as the deficit is about 22.78 per cent or Tk 1,453.80 billion. The proposed budget has set a target to collect Tk 680.16 billion from external sources. This is also the largest-ever target set by Bangladesh in getting foreign loans. If the government can manage this, then private sector borrowing from external sources may gain momentum. Secondly, it has been proposed that the government will take a loan of Tk 473.64 billion from the local banking system. This is likely to create pressure on the banking system. As a result, banks may fail to achieve target of providing loans to private enterprises. Thus shortage of loan products may hamper private sector growth, which in turn can affect investment growth. A revenue target of Tk 3,778.10 billion has been set in the proposed budget. This is very ambitious target and will create extra pressure on the National Board of Revenue (NBR). Such extraordinary tax pressure may lead to disputes between taxpayers and collectors. It's worth mentioning that the target of revenue collection in the current budget was originally Tk 3,392.80 billion. But due to inability of collecting this sum, the target was revised to Tk 3,166.12 billion later. The same fate may be waiting for this year's revenue target as well. The government should be cautious so that the revenue collection target does not create an undesirable situation where taxpayers are harassed by tax collectors.

Interest Rate Liberalization and Credit to Private Sector in Nigeria: ARDL-Cointegration Approach

This study examined the relationship between interest rate liberalization and credit to private sector in Nigeria, using annual time series data spanning from 1986 to 2016. The study employed ARDL (p,q) model as suggested by Pesaran and Shin (1997) to analyzed the data. The study commenced with the Augmented Dickey Fuller (ADF) unit root test and the results reveal that all the variables were integrated at order I (1). While the result of the estimated coefficient reveals that interest rate with the first lag was positive and statistically insignificant. And that a percent increase will lead to a 0.087 percent increase in the dependent variable (interest rate). In the same vain Inflation rate has a negative influence on interest rate and was not statistically significant. A percentage change in inflation will lead to 0.08 percent decrease in interest rate.The coefficient of determination (R2 = 0.78) of the estimated model ARDL(1,2,4,1) shows that about 78 percent of the systematic variation in interest rate(INT) is totally explained and well accounted for by the independent variables. This implies that the ARDL (1, 2, 4, 1) model is of goodness of fit and is quite adequate. Base on the findings the study recommends amongst others that monetary authority should pursue interest rate liberalization policies so as to enhance credit to private sector growth that would further engender economic growth and development in Nigeria.

Global Liquidity, the Private Sector and Debt Sustainability in Sub‐Saharan Africa

ABSTRACTThis article analyses the effect of changes in international financial markets on the debt dynamics in sub‐Saharan Africa in recent years. A key development is the rise of the private sector as both a lender and a borrower in African debt markets, a process that is associated with the growing integration of the region into global financial markets. The article argues that the Debt Sustainability Framework of the International Monetary Fund and World Bank has taken some steps to account for this growth of private sector, cross‐border debt, but such steps still fall short of what is needed. A full appreciation of the importance of private debt implies, first, that debt sustainability in sub‐Saharan Africa be understood in the context of countries’ integration in global financial markets and the global liquidity cycles that characterize those markets and, second, that the interplay between private and public debt be monitored in order to provide a fuller picture of the impact of private sector debt on fiscal sustainability.

The importance of a One Health approach for prioritising zoonotic diseases to focus on capacity-building efforts in Uganda.

Zoonotic diseases constitute a significant threat to the health of humans, livestock and wildlife, as well as to livestock production, and can also have a negative impact on our shared environment and on livelihoods. Uganda is a hotspot for emerging and re-emerging zoonotic disease threats, with the main drivers of this phenomenon being identified as agricultural intensification, proximity to wildlife reservoirs and climate change. The threat of zoonotic disease outbreaks affects not only human healthcare systems but also livestock production, food security, human capital development, wildlife health, environmental health and privatesector growth. Firstly, to prevent, control and mitigate the threat from zoonotic diseases, in March 2017, Uganda prioritised zoonotic diseases using a One Health approach that focuses the limited resources available on those diseases that have the greatest impact at the national level. The prioritised zoonotic diseases in question are anthrax, zoonotic influenza viruses, viral haemorrhagic fevers, brucellosis, trypanosomiosis (African sleeping sickness), plague and rabies. Secondly, in January 2018, Uganda published a National One Health Strategic Plan, which was developed after these zoonotic diseases had been prioritised. In addition, the Ugandan Government and its partners are currently collaboratively addressing several of these previously neglected, endemic zoonotic diseases, such as anthrax, brucellosis and rabies. As a result of these One Health efforts, capacity has increased for early detection of, reporting on and response to zoonotic diseases at all levels. To consolidate the achievements of the One Health approach, the Ugandan Government and its partners should continue to support capacity building for the prevention and control of zoonotic diseases.

Political regimes and foreign aid effectiveness in Ghana

PurposeThis paper has examined the effectiveness of foreign aid on Ghanaian economy under different political regimes.Design/methodology/approachUsing vector error correction and co-integration models on the annual data set over a period of 35 years, the authors demonstrate that foreign aid has had varied impacts on economic growth depending on the political ideology of the government in power.FindingsWith capitalist political philosophy, foreign aid improves private sector growth through infrastructural development. On the other hand, a government with socialist philosophy applies most of its foreign aid in direct social interventions with the view of improving human capital. Thus, each political party is likely to seek foreign aid/grant that will support its political agenda. Overall, the results show that foreign aid has a positive impact on the growth of the Ghanaian economy when there is good macroeconomic environment.Practical implicationsThis implies that the country experiences economic growth when there are sound economic policies to apply foreign aid.Originality/valueThe practical implication of the findings of this paper is that donor countries and agencies should consider the philosophy of the government in power while granting aid to recipient countries, especially in Africa. The results are robust to different proxies and models.

Long- and Short-run Relationship Between Firm Creation and the Ease and Cost of Doing Business

To promote private-sector growth, many countries have implemented reforms aimed at making it easier and less costly to do business. Using data from Philippine cities and municipalities from 2011 to 2015, this paper tested for the relationship between business creation and the ease and cost of doing business. The results provide evidence that the overall ease and cost of doing business is indeed associated with business creation, but the relationship becomes more apparent with disaggregation. In particular, lower cost of doing business is found to be a much stronger predictor of business creation than ease of doing business. The specific indicators that drive this relationship are minimum wage, price of electricity, price of water, and price of land from the “cost” dimension, and number of days to process a new business permit from the “ease” dimension. These relationships have implications on policy making, especially in designing programs that target firm creation.

Finance, Growth, and Transition in the PRC

China’s experimentation with its financial markets and institutions is centered around a primary mission of channeling capital to state-owned enterprises and, to a lesser extent, the growing private sector. Future growth rates in value and the related concept of GDP are dependent, in part, on the success of financial-sector restructuring. Economic development strategies and the outcomes of such strategies are never determined solely by local conditions but are overdetermined by changing global conditions. The nexus connecting local conditions to global conditions is partly made of financial relationships by which global capital flows are directed toward certain corporate structures, providing the potential for intensified exploitation, expanded value creation, and sustainable rates of national growth. It is imperative that those deploying Marxian and/or other heterodox tools to uncover existing relationships shaping the “nature” of future social formations integrate financial processes and networks with global corporate and political relationships.

Government Borrowing Behaviour: Implications for Private Sector Growth in Nigeria

This study seeks to examine the relationship between government borrowing behaviour and private sector growth in Nigeria. It utilises the Structural Vector Auto-regressions (SVAR) model to analyse the dynamics of government borrowing behaviour on the growth of private sector in Nigeria. The results from impulse response functions and variance decomposition appear to provide evidence that government borrowing behaviour has the tendency of impacting negatively on the effectiveness of private sector grow in Nigeria. This result can be explained, based on the fact that government has higher capacity to borrow than the private sector and this tends to crowd-out private sector in mobilising funds for investment and thus impacted negatively on their capacity to grow. The study, therefore, recommends that both fiscal and monetary authorities should improve on measures and policies that could enhance private sector growth, as higher government debt could create burden for future generations, disrupt movements in interest and exchange rates as well as hinder private investment. Doing this has the potentials of improving performance of private sector and the aggregate economy in Nigeria, since empirical literature is replete with evidence of existence of these channels.