Growth Nexus Research Articles

An Empirical Investigation and Analysis of Foreign Aid- Economic Growth Nexus in Sierra Leone (1980-2023)

Sierra Leone, being a small and poor developing country, colossally relies on foreign aid, cardinally as a result of infinitesimal Gross Domestic Product (GDP) and improper resource management. The study elects to investigate and analyse foreign aid-economic growth nexus in Sierra Leone for the period 1980-2023. The study uses time series secondary data obtained from various sources such as the International Financial Statistics (IFS), Central Bank of Sierra Leone (CBSL), Ministry of Finance (MoF), World Development Indicators (WDI) and Sierra Leone Central Statistics Office (SLCSO). Various macroeconomic variables including investment to GDP ratio, exchange rate, terms of trade, inflation and public debt were specified in the model used in this study. A time series growth model was estimated using ordinary least squares (OLS) and Newey-West estimation techniques. The Hendry’s general-to-specific method was used to arrive at the estimated model. Stationarity test, using Augmented Dickey-Fullah Generalised Least Squares (ADF-GLS) and the Perron Vogelsang tests for unit root, was carried out for all variables in the model to avoid spurious regression results which are common with time series analysis of macroeconomic data using OLS technique. The study empirically reveals a positive and significant impact on economic growth in Sierra Leone for the period being investigated. The study, therefore, provides key recommendations consistent with the findings, among which, is the need for policymakers to exercise tremendous efforts to further attract foreign aid to Sierra Leone in order to boost output and economic growth, ensuring that such resources are well managed.

Asymmetric Effect of Green Energy and Economic Growth on the Environmental Deterioration and the Environmental Kuznets Curve Validation in MENA Countries

ABSTRACTThis study aims at investigating the contextual factors surrounding the nexus between economic development and environmental degradation by utilising the Environmental Kuznets Curve (EKC) hypothesis and incorporating CO2 emissions indicator. The environmental quality, energy source, economic growth nexus evaluation is heavily dependent on the level of economic growth. The study examines impact of different levels of economic expansion following an Environmental Kuznets Curve (EKC) hypothesis across Middle East and North Africa (MENA). Additionally, the present study examines the asymmetrical relationship that exist between economic growth and green energy, and the environmental quality. The study employs panel data ranging from 1996 to 2020 in the context of MENA nations. Several econometric tests were employed, second generation unit root tests, CIPS and CADF, Westerlund cointegration test. This study extends prior studies by applying the Panel Non‐Linear Autoregressive Distributed Lag (PNARDL). The Westerlund test validates a long run association among the variable of the study. The EKC hypothesis is validated in the short run for the MENA countries. It also reveals that a positive and negative shocks to the green energy decreases CO2 emissions. The positive shock to GDP results in an increase in CO2 emissions. Moreover, the study revealed a negative and significant relationship between FDI and CO2 emission. A positive and significant relationship was found between trade openness and CO2 emissions. Our findings suggest that the MENA nations should switch to green energy sources to lessen the impact of non‐renewable energy consumption on the environment and promote sustainable development, since non‐renewable energy is believed to have the greatest impact on economic activity.

Climate Change, Government Agricultural Expenditure, and Agricultural Growth Nexus in Afghanistan: An Investigation with FMOLS and DOLS Approaches

Agriculture is one of the main providers to Afghanistan’s economy. Since 2002, the government, in collaboration with donor organizations and the private sector, has undertaken various projects in the agricultural industry. However, a notable upsurge in atmospheric CO2 emissions has resulted in significant climate change influences in contemporary decades. Therefore, this article examines the causal association between climate change, government agricultural expenditure, and agricultural growth in Afghanistan from 2002 to 2020. Despite evidence that climate change may be a primary driver of Afghanistan’s agricultural production decline, no specific studies have addressed this matter comprehensively. This article’s empirical investigation reveals a negative association between CO2 emissions and agricultural production, indicating that rising emissions are linked to decreased agricultural output, subsequently impacting Afghanistan’s agricultural growth. Both theoretical considerations and empirical findings highlight the importance of adopting clean and green energy solutions and technologies to mitigate pollution in Afghanistan. Furthermore, the research underscores that the impacts of carbon dioxide emissions on agriculture production exhibit robust long-term dynamics, contributing to the heterogeneity of the findings. Additionally, the study establishes a positive correlation between government agricultural expenditure and agricultural production. Consequently, it is strongly recommended that the Afghan government take proactive initiatives to enhance the agricultural sector. This can be accomplished by allocating more financial resources and implementing projects that promise long-term benefits for the country’s agricultural development.

Investigating The Nexus of Child Marriage and Economic Growth in Indonesia

The issue of ending child marriage attracts global attention, especially in developing countries. However, the link between married children and economic growth remains in question. The purpose of this article is to utilize regional macroeconomic indicators to quantify the association between child marriages and the Indonesian economy. The analysis shows a negative relationship between marriage at a young age and the economy using panel regression and simultaneous equations model. The results also demonstrate that marriage at an early age might decrease economic growth, as it has an undesirable effect on health and education. Therefore, this paper delivers a suggestion related to the policy strategies, primarily educational policies and health, that support the Indonesian Government in ending child marriage.

Trade openness, telecommunication infrastructure, institutions and economic growth nexus: The case of landlocked African countries

This research analyses the effects of openness, telecommunications, and institutional nexus on economic growth in African countries using a panel model with data from 16 landlocked countries from 1996 to 2021 and employing the pooled mean group estimation technique that mitigates bias from country heterogeneity and discerning short-term and long-term equilibrium dynamics and two-step system-generalized method of moments (GMM) estimation for robustness check. The empirical findings indicate that openness exerts a significantly positive effect on economic growth in the models. This supports the neoclassical model, suggesting that being landlocked should not impede economic growth, but rather, growth should depend on opportunities available to each country. However, institutions and telecommunications show a mixed correlation with economic growth. These findings can guide landlocked developing countries in enhancing their exports and fostering skill acquisition to attract advanced technology. In conclusion, policymakers should improve macroeconomic policies, telecommunications infrastructure, and institutional structure to strengthen the sustainability of economic growth in African landlocked countries.

Public Debt – Economic Growth Nexus: A Systematic Literature Review

The purpose of this study was to present a systematic literature review on the public debt-economic growth nexus. The objective was to provide policymakers and researchers with significant insights on the impact of public debt on economic growth and to provide reliable evidence on the gaps in the literature that require their urgent attention. The study used a systematic review of the literature contained in two databases, namely Semantic Scholar and Google Scholar. The study shows that public debt above the threshold is detrimental to economic growth, while low public debt is conducive to growth, and that the degree of non-linearity in the debt-growth relationship varies considerably depending on the economic status and debt burden of the country. Policymakers in each country should identify the tipping point at which further public debt begins to impede growth. Debt policy should take into account not only fiscal constraints, but also the effectiveness of governance and the possible consequences of eroding public confidence. The study also shows that institutional quality, public investment, production expenditure, foreign direct investment and exports are among the variables that significantly affect the relationship between public debt and economic growth. Policymakers should control the level of public debt and its drivers to support longer-term economic growth. The study also recommends that countries account for public debt and ensure that such debt is acquired only to finance profitable investments that generate future returns, and not for consumption, deficit reduction, wasteful spending, or political purposes.

Does Institutional Quality Enhance the Effect of Health Outcomes on Economic Growth? Insights from Sub-Saharan African Countries

Institutional quality (InQ) plays an important role in shaping economic growth (ECG), influencing how economies develop and perform. The literature addresses the nexus between InQ and ECG and the link between health and ECG; findings are often contradictory, creating knowledge gaps. Importantly, research on the interplay between InQ, health, and ECG in Sub-Saharan African (SSA) countries is particularly limited. This study aims to address this gap by evaluating how health impacts ECG, with an emphasis on the mediating role of InQ in the health–growth nexus in SSA. This study examines these interplays across 35 SSA countries from 2012 to 2022. The life expectancy at birth (LEX) and real gross domestic product per capita (GDP) are used as proxies for health outcomes and ECG, respectively. The system generalised method of moments estimator is employed to analyse data. Results show that the LEX has a strong positive effect on economic growth in SSA countries. Furthermore, the InQ indicators (such as control of corruption, government effectiveness, rule of law and political stability, and absence of violence) are positively correlated with ECG. When the LEX interacts with InQ indicators, InQ is identified as a key channel through which LEX influences ECG. The findings confirm that InQ plays a crucial role in the health–growth nexus, with the positive impact of LEX on ECG being more pronounced in countries with higher levels of InQ, while the effect is weaker in countries with lower levels of InQ. The findings of this study have crucial policy implications, highlighting the intricate link among institutional quality, health outcomes, and economic growth. This study’s findings provide essential insights for policymakers to design focused strategies that improve InQ and health outcomes to achieve sustained ECG in SSA.

Paving towards the sustainable development goals: Analyzing the nexus of financial technology, business-centric-tourism, and green growth

The world is facing crucial challenges such as environmental degradation, social inequality, and slow economic growth due to the current transformative era. These challenges constitute a significant barrier to unlocking the world's full potential. In response, green growth has emerged as a focal point in global discourse due to the pivotal shift of legislators and researchers from conventional economic growth to sustainable and green growth. This research will examine the influence of financial technology and business-centric-tourism on green growth for a full panel of 148 worldwide economies and four different income-levels during the period spanning 2004–2021. The financial technology index comprises twenty-one enabling and integrated variables that capture the intersection between finance and technology. The two-step system GMM (Generalized Method of Moment) corroborated by the 2SLS (Two-Stage Least Square) method indicates that financial technology and business-centric-tourism endorse green growth for the world overall, while mixed results were observed at different income-levels. Moreover, energy transition, globalization, and business environment positively influence green growth, while it is negatively impacted by urban transition and socio-economic conditions. This study aligns its outcomes with the SDGs (Sustainable Development Goals) of 2030 and adds value to business literature on green growth by offering significant policy implications for achieving balanced and inclusive growth.

Exploring the nexus of economic growth, energy mix, services, trade openness, and environmental quality: Evidence from N11 countries

Despite considerable research on the connections between economic growth, energy consumption, trade, and environmental sustainability, a notable gap persists in understanding the varying effects of these factors at different levels of resource use. This study seeks to fill this gap by utilizing quantile panel regression analysis to investigate the intricate interactions among these variables in the N11 countries. Our results indicate that economic growth has a negative impact on environmental sustainability, particularly at higher levels of resource consumption. In contrast, the consumption of renewable energy has a positive effect on sustainability, whereas reliance on non-renewable energy and trade openness produces adverse outcomes. These findings highlight the urgent need for policymakers to pursue a balanced approach to economic development that emphasizes environmental sustainability and considers the social implications of the transition.

Trade openness, hydroelectric power production, foreign direct investment and economic growth nexus in Nigeria

Trade openness, hydroelectric power production, foreign direct investment and economic growth nexus in Nigeria

Foreign direct investment inflow and the economic growth nexus in Tanzania

PurposeA shortage of investment capital is one of the main issues facing most developing economies, including Tanzania. Policymakers, economists, and governments in these countries have been debating how to overcome this obstacle and improve economic growth through foreign direct investments (FDI). The present study endeavors to examine the relationship between FDI and economic growth in Tanzania during the period of 1991–2021. The analysis considers financial development, capital formation, and labor force involvement as intermediation variables.Design/methodology/approachThe study uses time series data to estimate an autoregressive distributed lag (ARDL) model, as well as Granger causality tests to investigate the relationship between the variables under study.FindingsThe findings show a long-run co-integration between the studied variables. However, only FDI and labor input have a significant impact on gross domestic product (GDP) growth in both the short and long run. Bidirectional causality exists between FDI, labor input, and GDP growth in the short and long run.Practical implicationsThis study contributes to an understanding of the relationship between inbound FDI, labor input, and economic growth in Tanzania, as well as updating the government to improve its financial system to gain more from FDI inflows and hence boost growth-enhancing effects.Originality/valueThis study provides insight into the relationship between inbound FDI and economic growth in Tanzania, which is a critical policy concern in developing economies. Extant studies’ results remain controversial, and this is the first study in Tanzania to investigate the FDI-growth nexus, by considering financial development, capital formation, and labor input simultaneously.

An Empirical Analysis of Africa Continental Free Trade Area Economic Growth Prospects in the SADC Region: Evidence Using Autoregressive Distributed Lag-PMG Estimation Techniques

Inter-SADC trade relations of indebted small countries and their potential of ushering economic growth from AfCFTA are unclear in both the short and long run. The study aims to empirically examine if there are AfCFTA economic growth prospects for SADC nations in the short and long term through an examination of the trade openness-economic growth nexus, and how the external debt impacts economic growth. A panel of eight SADC countries is used from a period spanning 1996-2022. The study employs Autoregressive Distributed Lag (ARDL) and the Pooled Mean Group (PMG) estimation techniques. The findings suggest that trade openness impacts economic growth positively at the 1% level in the long run, whereas external debt impacts economic growth negatively at the 1% level in both the long and short run. The study also finds that causality runs from economic growth to trade openness and is unidirectional. SADC nations are urged to minimise the overreliance on external debt in the funding of domestic consumption needs as it has negative consequences on economic growth in the long term.

Interdependence of halal entrepreneurship and Islamic finance for creating a strong halal ecosystem

Purpose Ethical entrepreneurship and financing models based on Islamic principles are insufficiently researched and discussed in the emerging plural economic landscape. So far, Islamic theorists have made commendable efforts in this direction. To fill the knowledge gaps, this study aims to explore more rigorously the interdependence of halal entrepreneurship and Islamic finance in creating a strong halal ecosystem. Design/methodology/approach Using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) methodology, a systematic literature review (SLR) of 33 articles from 2001 to 2024 was conducted to answer three research questions. Publications were obtained using purposive sampling from the Scopus database. They were selected based on the ranking of high-quality journals, global coverage relevance to research and base years of publications. Findings Three key findings emerged from the SLR using the PRISMA protocol. First, halal entrepreneurship and Islamic finance complement each other by providing Shari’ah-compliant financial instruments, fostering ethical practices, enhancing market reach and ensuring business operations adhere to Islamic principles, thereby creating a cohesive halal ecosystem. Second, the strategic integration of halal entrepreneurship and Islamic finance – through innovation, sustainability practices, Shari’ah-compliant products, effective marketing and regulatory support – promotes economic growth, social welfare and sustainable development within the halal ecosystem. Third, Maqasid-ul Shari’ah principles guide halal entrepreneurship and Islamic finance by ensuring ethical standards, promoting social justice, emphasizing sustainability and ensuring that business and financial practices benefit society and adhere to Islamic ethical standards. These findings aid in developing a theoretically grounded conceptual framework for future empirical investigation. Practical implications Practically, policymakers, Islamic financial institutions and halal entrepreneurs can leverage this integrated approach to drive economic growth, social welfare and sustainable development, aligning operations with Maqasid-ul Shari’ah to ensure ethical standards and societal benefits. In addition, the findings aid in developing a theoretically grounded conceptual framework for future empirical investigation, both theoretically and methodologically. Originality/value Given the paucity of studies in this multidisciplinary area, this paper offers new insights into the interdependence of halal entrepreneurship and Islamic finance, grounded in the finance–growth nexus theory and Maqasid-ul Shari’ah principles. Unlike other exploratory studies, this research presents a theoretically grounded conceptual framework, paving the way for future empirical investigations.

Higher Education and Economic Growth Nexus: Evidence from India

The study attempts to explore the causal relationship shared between Indian economic growth and higher education sector. Time series data for the period 1980-81 to 2021-22 has been considered for the analysis by making use of Auto Regressive Distributive Lag Model.

Examining the effects of national intellectual capital on economic growth: does digital services trade restrictiveness matter?

Purpose The moderating role of digital services trade restrictiveness to the effects of national intellectual capital on economic growth has been largely ignored in the existing literature. As such, this paper aims to examine how national intellectual capital and digital services trade restrictiveness affect economic growth. In addition, the moderating role of digital services trade restrictiveness in the relationship between national intellectual capital and economic growth is also examined. Design/methodology/approach In this study, a sample comprising 62 countries worldwide is used. The national intellectual capital for each country is computed using the index of national intellectual capital. Data pertaining to digital services trade restrictiveness are extracted from the digital services trade restrictiveness index (OECD Statistics on International Trade in Services database). To ensure the robustness of the findings, the generalized method of moments (GMM) is used in the analysis. Findings The findings of this study confirm that national intellectual capital supports economic growth. Accumulating intellectual capital at the national level plays an essential role in supporting economic growth. The authors also find evidence to confirm that digital services trade restrictiveness negatively affects economic growth, particularly for high-income and lower-middle-income countries. Interestingly, digital services trade restrictiveness deteriorates economic growth across countries globally, except for upper-middle-income countries, with a weak effect. The empirical results also confirm that the joint effects between national intellectual capital and digital services trade restrictiveness are negative and significant. As such, findings from our analysis suggest that digital services trade restrictiveness moderates the relationship between national intellectual capital and economic growth. Practical implications The findings of this study provide valuable implications for policymakers to formulate and implement policies aiming to improve national intellectual capital to support sustainable economic growth. In addition, limiting digital services trade restrictiveness across countries appears to provide both direct and indirect effects in enhancing sustainable economic growth. Originality/value To the best of the authors’ knowledge, this is the first empirical study conducted to examine the moderating role of digital services trade restrictiveness on the national intellectual capital – economic growth nexus.

Finance–growth nexus and sustainable development in West Africa

PurposeWith the rising global emphasis on sustainable development (SD) and the attendant race to attain the sustainable development goals (SDGs), this study empirically examines the effect of the finance–economic growth nexus on SD in West Africa for the period 1970 to 2020.Design/methodology/approachThe study adopted the panel autoregressive distributive lag (PARDL) and rests on the estimates of the pooled mean group (PMG) model in line with the outcome of the Hausman test.FindingsThe result indicates that financial development reinforces the positive influence of economic growth on SD in addition to the direct incremental impact they wield on SD. This suggests that financial development is one of the “influencing factors” and is positioned to potentially improve the relationship between economic growth and SD in West Africa. Findings further reveal that foreign direct investment (FDI) enhances the achievement of SD in West Africa whereas carbon dioxide (CO2) emissions and natural resource rent (NRR) are found to exert a deteriorating impact.Practical implicationsSince financial development is found to enhance the growth–SD relationship, it is crucial to pursue domesticated, inclusive and self-sustaining growth policies as well as promote financial inclusion, remove bottlenecks and inefficiencies in the financial system and adopt the principles of the 3 Rs - “reduce, reuse and recycle.”Originality/valueCompared to previous studies that examined the effect of financial development and growth on SD separately, the present study interacted both to see how financial development can influence the economic growth–SD nexus.

Savings and Sustainable Economic Growth Nexus: A South African Perspective

The savings behavior of individuals has been a topic of both macroeconomic and policy importance throughout history. Theoretical and empirical research shows that savings result from several demographic and economic factors working together to produce long-term, sustainable economic growth. This study therefore examined the nexus between domestic savings and sustainable economic growth in a South African perspective between 1990–2023, emphasizing the critical role that savings play in fostering long-term economic stability and environmental resilience. The ARDL framework was used to analyze data from the World Bank and the South African Reserve Bank. The results of the study demonstrate that corporate savings have a major effect on sustainable economic growth, especially over the long term. When corporate savings rise by 1%, the economy expands by 3.12%, which highlights the significant multiplier effect of investment. The extent of this impact depends on factors such as the efficiency of capital allocation, technological capacity, financial market development, government policies, and macroeconomic stability. These factors collectively determine how effectively corporate savings are transformed into productive investments that drive sustainable economic growth. Conversely, savings made by the government and the public, especially in the long run, have no appreciable impact on sustainable economic growth. Given that domestic savings mobilization is the most suitable channel for financing capital accumulation to support economic growth and development, the study suggests reviewing current policies to encourage domestic savings mobilization. This paper contributes to the broader discourse on sustainable economic policies in emerging markets, offering actionable insights for policymakers, financial institutions, and stakeholders promoting a more sustainable economic future for South Africa.

English Linguistics in the Nexus of Economic Growth and Cultural Evolution

This article investigates the profound role of English linguistics in shaping economic growth as well as cultural evolution in a world that is highly globalized. With the language ascending toward its status as a global lingua franca, it has greatly influenced international trade, labor mobility, and digital communication, thereby enhancing international economic integration. The economic benefits of knowing English include more competitive information technology and business process outsourcing industries in countries with higher proficiency levels, such as India and the Philippines. Also, there is the cultural dimension of advancing globalization that questions the internationalization of English, linguistic imperialism, and cultural homogenization. On the other hand, while several scholars have contended that the spread of English erodes linguistic diversity, others point out that English is also adaptive: local cultures combine English with native languages to create hybrid forms, including the renowned "Hinglish" and "Singlish."

The triangular nexus of trade, institutional quality and economic growth in China-ECOWAS and US-ECOWAS relations

This study explores the relationship between trade, institutional quality, and economic growth in the ECOWAS region from 2000-2022, with a focus on trade interactions with China and the US. Using the AMG estimator and IV-2SLS methods, the study disaggregates trade data into imports and exports and categorizes institutional settings as either strong or weak. Results indicate that trade with China and the US positively impacts ECOWAS economies, especially through imports. The positive effects are amplified in countries with strong institutional frameworks. To foster economic growth, policymakers should strengthen governance, enhance transparency, and reduce corruption. Emphasizing trade diversification and supporting export-oriented industries, alongside financial sector reforms, are crucial for sustainable development. This study offers a detailed analysis of how trade and institutional quality interact to influence economic growth in ECOWAS, providing critical insights for institutional reforms and trade strategies in the region.

Market Capitalization and Economic Growth Nexus A Mediation Analysis for selected countries

The study examined the mediating role of market capitalization in the relationship between economic growth and macroeconomic variables in twenty countries, including foreign direct investment, gross fixed capital formation, government spending, and inflation. The study has used panel data of twenty countries from the period of 2002-2021. The selection of countries involves three criterions, first; the study selected three regions; Asia, Europe, and Mena region. Secondly, among those selected countries, the study tried to select all three categories, higher income countries, middle income countries, and upper middle-income countries. The selection of these countries follows the criteria of GDP growth rate of 2021. Thirdly, these economies are either emerging economies or the economies who have established the stock market and getting its benefits for sustained GDP growth rate e.g. Australia, China, and Germany etc. Panel regression results show that foreign direct investment, gross fixed capital formation, consumption expenditures, inflation, GDP per employed person, and education expenditures all contribute to economic growth in selected countries, whereas an increase in the real effective exchange rate reduces growth. Hayes (2022) employs a mediation analysis approach that confirms market capitalization as a partially mediating variable between the rate of economic growth and various control variables in case of selected 20 countries. Providing more favorable policies for investors and enterprises, such as special economic zones and free tax breaks. Furthermore, emphasis on the money supply and preserving the currency's balance between face and interior worth. Increased foreign direct investment raises the country's workforce demand.