Source Of Capital Formation Research Articles

Methodical approaches to analysis of owned and loan capital of agricultural organizations

In the article, the authors note that the main sources of capital formation are own funds. The authors examined in detail the movement of equity and borrowed capital. Factors have been established where the indicator of profitability of sales had a negative impact. The authors analyzed their own and borrowed capital using the method of coefficients. As a result, the financial independence ratio indicates that the organization will cover all liabilities at its own expense. The organization is financially independent of borrowed funds and it has enough own funds to finance current activities. A low value of the financial leverage ratio indicates a missed opportunity to increase the return on equity by attracting borrowed funds into its activities.

Foreign Direct Investment in the West African Region: Analyses on the Values of Inflow and Outflow

With regards to the ongoing development in investment activities in the Economic Community of West African States(ECOWAS) and the entire African continent is because of institutional reforms and initiation of sound investment policies. Foreign direct investment(FDI) inflow and outflow severs as a source of capital formation for most developing and least developed countries. This paper provides an overview and analyses of the flow of FDI to the ECOWAS region by considering 16 nations under this region in determining their performance towards FDI attraction and their contribution to outward FDI across the globe by the use of the quantitative method. The outcome shows that there is a continuous decline in FDI inflow to the ECOWAS region over the past 10 years. The result also proves that Ghana and Nigeria are the major recipients of foreign direct investment inflows in the West African region. The result further indicates that Nigeria is the major contributor of outward FDI from the ECOWAS region. It is recommended that the region should increase its outward FDI.

Effect of Domestic Saving on Capital Formation in Kenya

Kenya’s average rate of gross capital formation of 20.13% of GDP over the period 2006-2017 falls short of at least 25% necessary for developing countries to experience sustainable growth. The attendant effects of low capital formation have entrenched unemployment rate above 39% line and consigned more than 65 per cent of the country’s population to living on less than $ 2 a day. The statistics suggest the need for urgent policy intervention aimed at accelerating capital formation in Kenya. But whether the government should respond by mobilizing more domestic saving or not is the question which this study sought to answer. This is because majority of the previous studies that investigated the effects of domestic saving on development indicators limited themselves to growth-saving nexus. Those that investigated the effect of domestic saving on capital formation either restricted themselves to a bivariate framework or controlled for a few sources of capital formation. This implies that the effect of domestic saving on capital formation is not clear. Besides, the response of capital formation to shocks in domestic saving is not clear. The purpose of this study was to investigate the effect of domestic saving and the response of capital formation to shocks in domestic saving. The study was anchored by Solow’s capital accumulation model within a correlational studies research design. Data over 1974-2017 period was sourced from the World Bank. ARDL bounds test found the existence of cointegrating relationship among gross capital formation, gross domestic saving and the controlled variables when gross capital formation was specified as the target variable. The short-run dynamic model estimates indicated that ECM term corrects 39.56% of deviations from long run equilibrium in one year. ARDL estimation indicated that in the long run, gross domestic saving has positive significant effect on gross capital formation. The results were robust for IRFs analysis which found the response of gross capital formation to innovations in gross domestic saving to be positive and significant. The study concluded that in the long-run, Kenya’s capital formation will be driven by domestic saving. Therefore, to achieve high capital formation in the long-run, the study recommended policies that enhance positive effects of domestic saving for consideration by the government of Kenya. Keywords: Kenya, Capital Formation, Domestic Saving DOI : 10.7176/JESD/10-16-17 Publication date : August 31 st 2019

The Impact of Public Sector Restructuring On the Economy

This research examined the impact of public sector restructuring on the economy. Secondary source of information was used for the study. The findings from the study shows that public sector restructuring draws our attention to the issues affecting the smooth implementation of restructuring efforts especially in the developing countries. The specific objectives of the study are to examine the attainment of the planned resource allocation and the economy, the relationship between efficiency and booming economy, the relationship between functional organization and the relationship between accurate source of capital formation and the economy. Content method o data analysis was adopted to elicit data for this study. The paper revealed, among other things that the public sector had over the years been weakened with an over expanded public expenditure profile, persistent deficits financed by domestic and external borrowing with resultant high debt service burden, breakdown of the traditional instruments of control leading to corruption and misappropriation of funds, incidence of ghost workers, poor costing of programmes and projects, a large portfolio of abandoned/on-going projects especially in efficient and wasteful parastatals. Not only that the system has accumulated pension arrears but some states and agencies of the federal government are beginning to accumulate salary arrears and payments due to contractors and suppliers. Amidst these challenges, public sector restructuring is a demanding task and should not be seen as a quick solution for problems militating against our national development. It was recommended among others that the it is advisable to eliminate duplication of organizations to save cost and to channel the resources to other project.

The Impact of Public Sector Restructuring On the Economy

This research examined the impact of public sector restructuring on the economy. Secondary source of information was used for the study. The findings from the study shows that public sector restructuring draws our attention to the issues affecting the smooth implementation of restructuring efforts especially in the developing countries. The specific objectives of the study are to examine the attainment of the planned resource allocation and the economy, the relationship between efficiency and booming economy, the relationship between functional organization and the relationship between accurate source of capital formation and the economy. Content method o data analysis was adopted to elicit data for this study. The paper revealed, among other things that the public sector had over the years been weakened with an over expanded public expenditure profile, persistent deficits financed by domestic and external borrowing with resultant high debt service burden, breakdown of the traditional instruments of control leading to corruption and misappropriation of funds, incidence of ghost workers, poor costing of programmes and projects, a large portfolio of abandoned/on-going projects especially in efficient and wasteful parastatals. Not only that the system has accumulated pension arrears but some states and agencies of the federal government are beginning to accumulate salary arrears and payments due to contractors and suppliers. Amidst these challenges, public sector restructuring is a demanding task and should not be seen as a quick solution for problems militating against our national development. It was recommended among others that the it is advisable to eliminate duplication of organizations to save cost and to channel the resources to other project.

The essence of equity capital and its structuring for accounting needs

The paper considers various interpretations of the essence of equity capital. The concept of equity capital is viewed from the perspective of property as a venture capital, i. e. business property, which does not guarantee profits and dividends, and for which there is no clear schedule of returning funds to investors and shareholders.The most common equity capital components in national and foreign practice are examined and compared. It is pointed out that the equity components mainly used in Ukraine are defined by the National Accounting Standards. Alternatively, the structure of equity capital components in foreign practice relies on the Conceptual Framework of Financial Statements, but it is further detailed by national standards of each country and depends on its policy and accounting characteristics. The structure of equity capital in foreign practice may be influenced by shareholders’ decisions on the establishment of funds (additional capital), allocation of profits, transactions with treasury shares. It is made clear that in most countries equity capital components include joint stock capital, surplus reserves, and retained profit.The article reviews the classification of equity capital, viewed as the key factor, and determines its influence on accounting principles and policies. It is concluded that in regulatory documents, there are no clear lines between types of equity capital. The paper also discusses various views of scholars on equity capital arrangement. It is found that in research works, equity capital is classified based on various characteristics, but the majority of researchers consider sources of equity capital to be the main criterion. In addition, there is no consensus among academics as to what types of equity capital can be singled out by the criterion described.Taking into consideration some proposals of scholars and foreign practice related to ac- counting of equity capital, the author develops a generalized structure of equity capital which is based on the sources of capital formation and includes: invested capital, particularly registered capital (statutory and mandatory share capital), corrective capital (unpaid and withdrawn capital), additional capital (capital received from investors for stock that exceeds the par value of the stock, i.e. additional equity capital); acquired capital (assets received for free, capital formed from revaluation of assets, other capital) and reinvested capital (retained profits (uncovered losses) and surplus reserves). The above equity structure can be used to prepare financial statements in order to increase its informational value.Proposals are given on how to improve methods for accounting of equity capital, in particular accounting of additional capital invested by founders in the account entitled “Non-registered investments of owners”.

ЕКОНОМІЧНІ АСПЕКТИ ПРОТИДІЇ КОРУПЦІЇ В УКРАЇНІ

Corruption in Ukraine has been widespread since the country's independence and remains one of the destructive factors for economic development. The traditional way to combat this problem in Ukraine has been the adoption of various laws and regulations, as a result, today there are more than a hundred such acts, which in general do not significantly affect the current situation. No less important problem is the specifics of the perception of corruption in Ukraine, in some areas it is considered almost the norm. The article aims to study the relationship between the spread of corruption in Ukraine and the movement of shadow financial flows, as well as to develop recommendations on ways to minimize the role of corrupt revenues as a source of capital formation. The article describes the types of liability for corruption crimes provided by the current legislation of Ukraine, describes the areas of the economy where corruption is greatest, and leads to a significant reduction in the efficiency of their operation. The dynamics of the corruption perception index in Ukraine were analyzed in comparison with a number of other countries, which allowed determining its slow downward dynamics. The decisive role of corruption as one of the key factors of illicit enrichment of public figures and the formation of shadow capital, in general, has been identified, and the effectiveness of law enforcement efforts to combat corruption has been described. The system of anti-corruption measures should be comprehensive and include some measures both to punish crimes and to create financial barriers to the movement of shadow financial flows and the legalization of proceeds from corruption. The implementation of an effective anti-corruption policy is largely related to the use of economic methods to combat this phenomenon, including increased transparency in tax and customs spheres, market management methods of state-owned enterprises and the land market, and revision of approaches to remuneration of civil servants. An equally important role in such a system should be played by information policy, which is designed to raise awareness of market participants about their rights and to form a clear negative perception of corruption in society.

Temporal patterns and disparities in household fixed capital formation in agriculture: an analysis of Indian states

Among the two sources of capital formation in agriculture i.e. public and private, the latter acquires an important place as far as flow of capital funds to agriculture is concerned. Private capital formation in agriculture mainly comprises of household capital formation. The study attempts to explore the temporal trends and the extent of disparities in farm capital formation accruing from the household sector. It was found that while household capital formation grew at an impressive rate during the pre-reform period the growth sharply decelerated during the immediate post-reform period. A significant revival in growth was observed during the decade of 2000s which could be a result of the consistent efforts on the part of government to increase farmer's investment in the agricultural sector. Disparities across states with respect to level of household capital formation reduced during 1980s but increased thereafter in general and during the decade of 2000s in particular.

To problems of institutional support for innovation development of coal industry

The development of the economy of Ukraine in modern conditions requires substantial strengthening of interconnection of the elements of innovation process through the establishment of institutional frameworks for large-scale structural and innovation transformation. This is especially topical for the coal industry as it feels the significant impact of institutional environment.The problems of the institutional environment of innovation development of coal enterprises are considered. They relate to: identifying and disclosing the components of institutional support of innovation development of the coal industry; clarifying the content of the institutional environment of innovation development of the coal industry; determining the directions of institutional support formation for innovation development of the coal industry; trend changes in the institutional environment of innovation development of industry in Ukraine taking into account industry specifics; conceptual positions of institutional support of innovation development of the coal industry; proposals on improving the organizational-economic mechanism of innovation development of coal production; systematization of factors of state regulation of innovation development of the coal industry based on market transformation processes in the economy of Ukraine. As to solve the problems of institutional support of innovation development of the coal industry in a great importance are the generalized approaches of scientific schools «economic security of industrial enterprise» according to classification features, external and internal factors that reduce the level of economic security, constituent elements of the institutional mechanism of economic security of industrial enterprise, consideration of the factors influencing the risks associated with the implementation of investment and innovation projects in the coal industry and measures to minimize their impact through the creation of innovation structures - technology parks. The recommendations on improving the regulatory and legal support of innovation development of the coal industry are given both in general and for the coal Donbas in current emergency situation. The coal industry enterprises should implement the institutionalization of their activity through the process of «investment» in different areas (human and productive capital, implementation of various social priorities, formation of the state policy of energy independence, etc.). To ensure the most positive outcomes of their social and industrial activity coal enterprises need to accumulate and efficiently manage not only the significant material, financial, intellectual, human, and other resources, but also to focus on maintaining a high level of capitalization based on the optimization of different sources of capital formation. The problem of technical and technological modernization of coal mines is extremely urgent for overcoming the unprofitability and improving the efficiency of the domestic coal industry. This issue is of a particular relevance now, when the recovery of the coal industry in Ukraine is significantly complicated by the need to overcome the consequences of the fighting in the Donetsk and Lugansk regions.

Financial sector performance and economic growth in Nigeria

Towards the end of 2010, banking halls in Nigeria were crowded with people. Following the Central Bank of Nigeria’s advice, banks were updating records of their clients. The essence was for the banks to be better informed about their clients and their sources of funds with a view to eliminating or limiting the problem of money laundering in Nigeria. This is only one of several policies or reforms that the financial sector in Nigeria has gone through in recent times. The numbers of banks were pruned down through the recapitalization programme, non-performing microfinance banks were weeded out, and five bank chiefs were accused of mismanagement and replaced. The Nigerian Stock Exchange also experienced difficulties leading to the exit of its Chief Executive Officer. Practically, every aspect of the Nigerian financial system has in recent times experienced one form of reform or challenge but these are the sources of capital formation for the real sector in Nigeria. In view of these how well has the sector performed its role as a driver of economic growth? This work using data obtained from the Central Bank spanning 24 years was able to establish that there is a positive relationship between the performance of the sector and economic growth in Nigeria. Key words: Financial sector, economic growth, performance.

Labour as a Source of Value and Capital Formation: Ibn Khaldun, Ricardo, and Marx – A Comparison

Exclusive writings on the contribution of Ibn Khaldun to economics in the English language have not been many, the references to his work also remain scanty and far between. Even in what little is available mostly authors talk about his views on professions, markets and the cloud he castes on merchants. The present paper avoids treading the familiar tracks. It sees close similarities between the views of Ibn Khaldun (1332 - 1406), David Ricardo (1772 - 1823) and Karl Marx (1818 -I823) in regarding labour as the measure of value and source of capital formation in the course of economics maturing to an academic discipline. The three agree directly or indirectly that labour creates economic surplus that it does not get. Even so, the policy implications each derives from this conclusion are interestingly much different. Ibn Khaldun did not -- indeed imbued with Islamic faith he could not - think of workers ' predicament becoming a source of social turmoil. Ricardo implicitly saw labour exploitation in a free enterprise system of organizing production but himself being a great capitalist he could not swallow the pill and once tended to regard cost of production - wages plus profit - as the measure of value. Marx regarded exploitation of labour as the intrinsic vice of capitalism that revolution alone could obliterate.

Constraints on development: small businesses in Saudi Arabia

The shift of emphasis towards 'small is beautiful' in both developed and developing countries has been justified by both the quantitative and qualitative contribution of the small business sector to socio-economic well-being. Typically small businesses account for over 90 per cent of firms and between 30 and 40 per cent of total employment (68 per cent in the case of Japan) in most developed economies;' a similar picture emerges in the developing world, with, in most cases, the proportion of total employment being much higher (60-80 per cent).2 The Bolton Committee in the United Kingdom provided qualitative reasons to confirm the significant role which small businesses can play in the economy. Small businesses are the seedcorn of future large businesses; they are more flexible and can adjust production more quickly to market change; they are a source of innovation and provide opportunities for those who wish to initiate their own business. They produce various specialised products and services which cannot be produced economically in large quantities and they allow larger firms to concentrate on the main activities of their business by providing spare parts and other services to them.3 In relation to developing countries, Staley and Morse have stressed the importance of small businesses as a source of capital formation, particularly in an environment where investment opportunities are very limited.4 There is general acceptance therefore that small business can contribute significantly to the growth and expansion of the economies of both developed and developing countries. This, in turn, justifies the necessity of promoting small businesses in order to enable them to contribute effectively to the development process. The emphasis of research in both developed and developing economies has been upon the identification and extent of the small business finance gap. Much evidence has been accumulated over the years on the inability of small businesses in most sectors of the economy to finance themselves either from internal or external sources. This has led to a criticism of financial systems which fail to provide institutional finance over short and long term, to small businesses for establishment, expansion, relocation,

Commodity Taxation and Input Subsidies in Pakistan's Agriculture: A Preliminary Analysis

It has been argued in the literature that. capital formation is the key to economic development. Apart from expansion in productive capacity, capital formation is also a source of embodied technical change and progressive modernization. Although aid could be a source of capital formation, it is undependable and inconsistent with the phrase that capital is made at home [Nurkse (1953)]. Agriculture, being a sector of major proportions in developing countries holds a pivotal position as a major contributor to capital formation. In the early stages of economic deVelopment, it must fund industrialization, finance capital imports and act as a ready market for industrial goods. It may, however, be remembered that agricUlture can play this role only within certain limits and that excessive resource transfers from agricUlture can prove to be self-defeating and must be avoided [Timmer (1988)]. What has been the role of Pakistan's agriculture in this respect, is a controversial issue. There are studies [Hamid (1970); Khan (1985) and Qureshi (1987)] that hold that agriculture's role in capital formation in Pakistan has, at best, been dismal. Others [Chaudhry (1973); Government of Pakistan (1986, 1988)] have argued that agriculture in Pakistan was heavily taxed and made significant contributions to economic de,:elopment. The controversy arises as the former set of studies dealt with direct taxes alone as against the coverage of local and indirect taxes and taxes implicit in price and exchange rate policies in the latter.

Economic Development of Petroleum-Exporting Countries

In this study the contribution of petroleum revenues, as a source of capital formation, for the economic development of the exporting countries is considered. Initally, the question of significance of capital as a necessary factor for economic development is investigated. The overall rate of development is greatly affected and limited by shortage of productive factors, and among the scarce factors associated with underdevelopment capital is a very important one. However, the effectiveness of capital itself is limited by the absorptive capacity of the given economy. The availability of noncapital factors and their relative elasticities not only determine the rate of development but generally in the short run set a limit to the amount of capital which can efficiently be invested. For the purpose of this study the assumption is that absorptive capacity in some of the petroleum exporting countries is not the limiting factor to economic development.